📈 **Macro-News round-up**
#MarketNews
🤔 The Fed minutes released yesterday show a stance in line with what we have seen so far. However, some are calling it hawkish, as it acknowledges that some of the Committee members even suggested the possibility of raising interest rates. However, it is also true that they mention easing measures in case the economy slows down unexpectedly. On the other hand, they also note that the Fed’s balance sheet will normalise more slowly, i.e. the QT will sell fewer assets than expected, and therefore fewer dollars will be withdrawn from circulation and liquidity will be maintained, which is positive for Wall Street.
🗣️ Yesterday we heard that, David Solomon, the CEO of Goldman Sachs, stated that he anticipates the Fed won’t lower interest rates this year because government spending has made the economy more robust.
📊 In any case, US 2-year bond yields remain elevated, but they were already elevated before the minutes were presented. We are in the vicinity of 4.85%.
🚀 Nvidia: Yesterday, at the close of trading on Wall Street, we learned the results for the second quarter of Nvidia’s fiscal year. Revenues for this period amounted to 28 billion, exceeding analysts’ expectations for 26.8 billion in revenues. CEO Jensen Huang raised his excitement by referring to the report as the beginning of a “new industrial revolution,” and the results did not disappoint.
📈 Nasdaq futures have already taken flight and are now approaching the 19,000 point level at 18,875 points.
However, SP500 futures remain very cautious. They are trading only slightly above the 5,350 level.
🗓️ This afternoon we will see US PMIs as well as new home sales. So far, what seems to be clear is that the bad macro data in the US is encouraging their stock markets.
📉 Europe: European PMIs remain weak, with the ratio mostly below 50, but improving from previous data. Germany’s services sector manages to move to 53.9. UK PMIs are above the European average, but below expectations. In any case, the prevailing tone is of a services sector outperforming the manufacturing sector.
🇺🇸 The dollar index DXY seems to have weakened after the Fed minutes, although it seems to have clear support at 104 points. However, the EURUSD has retreated slightly, but remains above 1.08. The GBPUSD cable is the one that has not retreated against the dollar. The GBPUSD cable is the one that has not retreated against the dollar, and trades above 1.27. The announcement of early elections in the UK added volatility, but we will report on this in the geopolitics section.
Geopolitics:
🤔 Yesterday, Rishi Sunak announces early elections. There were those in Sunak’s Conservative Party who expected months of preparation time. In fact, the scheme was so covert that even his chancellor of the exchequer, Jeremy Hunt, seemed taken aback. While some ministers supported the decision, Tory MPs were mostly disappointed as they processed the fallout from a vote that might lose them a significant number of seats. The timing of Sunak’s statement, according to Stratton, a former press secretary for Downing Street under Conservative Prime Minister Boris Johnson, may have something to do with higher-than-expected inflation figures.
🤔 However, there may be other reasons. In a recent interview, Andrew Bridgen, a former party colleague of the UK PM, claimed that Rishi did not want to go down in history by getting the UK into a war with Russia. Is he leaving because the UK is going to go to war?
📰 The Financial Times publishes a powerful article suggesting that Slovakia’s president could emerge radicalised from his assassination attempt. Citing the views of European officials who worry the recovery of the Slovak prime minister, the journal suggested that Fico could become “a more disruptive force within NATO” like Orban.
⚔️ Former Texas Congressman Ron Paul has published an interesting article on his website, entitled: The Vietnamization of Ukraine. Here are the main points:
🇺🇦 As Ukraine’s defeat appears more likely, some US officials are calling for escalating involvement, including facilitating missile strikes inside Russia. But Russia has warned of retaliation against any country directly involved in attacks on its territory. But as Nuland and her fellow neocons see their Ukraine project failing, they demand escalation. This could pull the US deeper into the conflict in a way reminiscent of the Vietnam War escalation. The official rationale for supporting Ukraine has shifted from defending democracy to preventing further Russian aggression.
