Read on the Trading Floor - 05 Mar 2024
Today’s focus… 5%, ATH, Super Tuesday and much more
Macro Themes At Play
Theme 1 - 5%
Theme 2 - Services PMI Day
Theme 3 - Super Tuesday
Theme 4 - Going for Gold
Further reading and listening of note
Theme 1 - 5%
China has set an "ambitious" 5% growth target, given the prolonged real estate deflationary spiral, loss of household confidence, dwindling domestic demand and Trump tariff war on the horizon. That's 8% nominal growth given they also reasserted their 3% inflation target. Military spending was a sole bright spot amid the broad economic slump and once again it is clear that "officials won’t rely on massive stimulus to spur expansion as they try to break the country’s reliance on debt-driven growth."
Steno Research - 3 TAKE-AWAYS FROM LI QIANG’S SPEECH
The NY Times - Is China’s Era of High Growth Over?
Bloomberg - China to Refine Real Estate Policies to Boost Ailing Sector
Bloomberg - Global Funds Are Returning to China Stocks, Morgan Stanley Says
SCMP - ‘Two sessions’ 2024: risks ahead but China’s economy to stay on long-term, tech-led course
Bloomberg - China Sets GDP Goal That Needs Policy Support ‘From All Fronts’
S&P Global - China's Two Sessions prioritizes industrial upgrades to sustain economic growth
Theme 2 - Services PMI Day
Europe drifting rather than surging towards recovery as the outperformers US and UK come back to the pack.
Spain Services PMI 54.7 vs Exp 53.5
France Services PMI 48.4 vs Exp 48
Germany Services PMI 48.3 vs Exp 48.2
Eurozone Services PMI 50.2 vs Exp 50
GBP Services PMI 53.8 vs Exp 54.3
CAD Services PMI 46.6 vs Exp 45.8
USD ISM Services PMI 52.6 vs exp 53.
Theme 3 - Super Tuesday
It maybe super, but its hardly exciting as Biden and Trump are all but guaranteed to earn their respective nominations. Analysts are watching for a protest vote vs Trump, is he underperforming his pre-election polling averages, will the "uncommitted" momentum grow following Michigan Dem's protest vote, will there be another block of low turnouts as the electorate struggle for a real lack of enthusiasm for either candidate and of course is this the end of the road for Haley?
FiveThirtyEight - What To Watch For On Super Tuesday
FT - Which swing states will decide America’s White House race?
Axios - Biden's "uncommitted" vote problem ahead of Super Tuesday
Theme 4 - Going for Gold
Gold has joined the party (ZeroHedge - 'We Have Liftoff!' - Spot Gold Takes Out Record High), heading towards record highs ahead of Powell’s two-day congressional testimony. (Poor Gordon, he always makes the news when gold surges.... The Telegraph - Why Britain is still paying the price for Gordon Brown’s gold bullion blunder)
The list of ATH is impressive, they've all occurred after the Fed increased its policy rate from 0% to 5.5%.
Bitcoin $69k with Coinbase and MicroStrategy following suit (WSJ - Bitcoin’s Stunning Climb to New Records, Explained in Charts
Nikkei > $40k... 1989 record highs taken out
SPX, Nasdaq... every US stock index has breached new highs, corporate credit remains strong and earnings robust
Nvidia $2trillion company, Microsoft is a $3trillion
Inflation breakevens are now drifting higher, gold and crypto pumped, equities rallying and FCI soft... financial conditions are becoming too easy to tame inflation sub 2% as the US economy has the potential to reaccelerate. Maybe that's not what authorities have planned for us ....
Gryning times.... we need a period of hot nominal growth (an economic boom), to inflate away the massive debt boom of not just the post-pandemic era, but the post-Global Financial Crisis era.
Lyn Alden Feb Newsletter - Economic Reacceleration. "For nearly a year and a half, there have been opposing forces of loose fiscal policy and tight monetary policy playing out in the U.S. economy, and navigating the interaction of these forces has been a big part of success or failure for investors during this period."
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NY Fed (Liberty Street Economics) - Expectations and the Final Mile of Disinflation
FT - UK Treasury told to do more to track value for money on gilt sales
Times - Jeremy Hunt will cut national insurance by 2p in the budget
FT - Jeremy Hunt set to give motorists £5bn tax break in the Budget
ZeroHedge - Israel Opts Out Of Gaza Talks In Cairo, Contradicting Prior White House Optimism
Al Jazeera - Israel’s war on Gaza live: Hamas presents truce plan to mediators
Axios - Israeli minister lambasted at White House about Gaza and war strategy
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