US Budget Deficits Are Exploding Like Never Before
Some economists and investors warn that the Biden administration’s fiscal spending—it’s pouring hundreds of billions of dollars into programs to bolster domestic manufacturing of electric cars and semiconductors, and to repair roads and bridges—could rekindle inflation and make it hard for the Fed to dial back its rate hikes. Source: Bloomberg
Watches of Switzerland shares plunge by a quarter after Rolex buys retailer Bucherer
The UK’s biggest seller of Rolex watches lost nearly a third of its value on Friday after the Swiss brand bought Bucherer AG, taking its first major step into retailing. Watches of Switzerland Group Plc shares fell as much as 30%, wiping out almost £500 million ($629 million) in market capitalization. Rolex unveiled the surprise move to buy Bucherer late Thursday, prompting analysts to question what the deal means for Watches of Switzerland’s future relationship with the brand. Peel Hunt’s Jonathan Pritchard noted that Rolex accounts for half of the company’s sales, and cut his rating on the stock to hold from buy. Rolex executives assured the UK’s biggest retailer of the brand that it will continue to be allocated watches by the same distribution system, Watches of Switzerland Chief Executive Officer Brian Duffy said in an interview. Source: Bloomberg
After the outstanding Nvidia figures and outlook, analysts have raised the avg price target for the chip giant from $520 to $620
Source: HolgerZ, Bloomberg
Turkey's Aggressive Rate Hike Triggers 5-Year CDS Drop!
The Turkey Central Bank has taken a significant step in its battle against inflation by implementing a supersized rate hike of 750bps, bringing rates to 25%. This move was unexpected, as the market had anticipated a more "modest" hike to 20%. Turkish fixed income assets have responded positively, with the Turkey 5-year CDS retreating below 400bps. Even Turkey's US Dollar-denominated bonds saw a boost from the news. With the Central Bank of Turkey adopting a more orthodox approach to its monetary policy, the question arises: can they successfully bring inflation back to reasonable levels? To provide context, the latest inflation figure for the month of July was at a staggering 47.8%... Source: Bloomberg
Going into Jackson Hole, the probability of a September hike is just 20%, well below 50%, so not likely. But, as shown below, the probability of a hike in November (see below) is now 50/50
What will it be when Jay is done? Source: Jim Bianco
Chinese stocks slid in early Friday trading, an indication of entrenched investor pessimism even after authorities urged the nation’s top financial institutions to help stabilize a struggling market.
The CSI 300 Index of shares in Shanghai and Shenzhen dropped as much as 0.7% shortly after the opening bell, extending its slump this month to 7.7% and keeping it as one of the world’s worst performers this year. A key gauge of Hong Kong-listed Chinese firms declined a maximum 1.3%. The selling came after the China Securities Regulatory Commission used a seminar Thursday with executives from the country’s pension fund, some large banks and insurers to ask them to boost support for the market. The market’s indifference isn’t necessarily a surprise, given regulators have held similar meetings regularly in the past and they have rarely had a significant impact. Source: Bloomberg
NASDAQ's bearish cross. The 21 day has now crossed the 50 day moving average.
NASDAQ futures putting in the biggest down candle in a long time and it looks like we have a new short term trend channel to watch. Source: TME
Images of Powell arriving at Jackson Hole have just surfaced. $SPY
Source: TrendSpider
