Read on the Trading Floor - 13 May 2024
Today’s focus… Tariffs, Inflation, AI, Roaring Kitty and much more
Macro Themes At Play
Theme 1 - Tariffs vs Deval
Theme 2 - CPI countdown
Theme 3 - AI in the headlines
Theme 4 - Has Roaring Kitty returned to haunt short sellers?
Further reading and listening of note
Theme 1 - Tariffs vs Deval
As Biden starts the ball rolling on pre-election Tariffs and Trump also signals his intent to do MAGA tariffs, whether your Red, Blue or indifferent, tariffs get support and will only build in excessiveness over the campaign trial. After all, Trump supporter Robert Lighthizer doesn't just want to neuter the Fed but also favours the use of tariffs to force a co-ordinated dollar devaluation.
So how will Xi respond?
Will they deval USDCNY now before Trump gets out of the court room and seriously on the campaign trial? Do they risk waiting to see if Trump even wins? Does a deval suit their intention to re-build household domestic confidence? In fact, is there anything for China to worry about? Can they simply export EVs to the US via Mexico? Furthermore, the FT highlight that the "100 per cent (tariff) will mean almost nothing to the US EV market, where Chinese goods are already kept out by a combination of 27.5 per cent tariffs, plus exclusion from the Inflation Reduction Act’s EV tax breaks for consumers."
Some further reading of note...
Steno Research - THINGS ARE HEATING UP IN USDCNY (AGAIN)!
FT - US set to impose 100% tariff on Chinese electric vehicle imports
Bloomberg - Biden to Hike Tariffs on China EVs, Offer Solar Exclusions
Nikkei Asia - Mighty dollar pushes Asian governments to boost currency protection
FT - Dangers of dollar nationalism hang over the world economy
Theme 2 - CPI countdown
The market, Fed and Biden's campaign staffers will all be keenly watching Wed's print. Biden's team need some good news as "inflation" is a key headwind on the campaign trial.
For the mkt with US data showing signs of slowing down, positioning lightened by the April correction and as we enter a seasonally strong period for duration, all this mkt needs is CPI to come inline or softer and stocks will be heading to the moon.
Bloomberg - This Round of Inflation Data Will Matter Greatly
FT - Support for Joe Biden’s economic policies wanes amid inflation fears, FT poll finds
WSJ - Investors Crowd Into Soft-Landing Trade Ahead of Crucial Inflation Data
Morningstar - Markets Brief: All Eyes on US Inflation
The Morning Hark - The Morning Hark - 13 May 2024
Steno Research - THE WEEK AT A GLANCE: IT’S GETTING HOT IN HERE! CPI WEEK..
WSJ - Stubbornly High Rents Prevent Fed From Finishing Inflation Fight
Saxo Bank - Is US data finally slowing down?
Theme 3 - AI in the headlines
Axios - Tech's AI answer war heats up
FT - How Microsoft’s multibillion-dollar alliance with OpenAI really works
FT - US and China to hold first talks to reduce risk of AI ‘miscalculation’
Seeking Alpha - Arm forges ahead in AI chip development
BlackRock - Equity Opportunities Beyond AI
Bloomberg - Intel, Apollo Near $11 Billion Ireland Plant Deal, WSJ Says
Theme 4 - Has Roaring Kitty returned to haunt short sellers?
Bloomberg - GameStop Surges as ‘Roaring Kitty’ Return Adds Fuel to Rally
ZeroHedge - GameStop's 'Roaring Kitty' Returns, Sends Shares Skyrocketing As 'Million Apes Go Insomniac'
Source ZeroHedge
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Top Pieces
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Nikkei Asia - BOJ cuts purchases of Japanese government bonds in hawkish signal
Macro Musings - Mary Daly on Fed Policy, the Economic Impacts of AI, and the Future of the Fed’s Framework
Schroders - The Value Perspective with Henry Engelhardt
Odd lots - Viktor Shvets on How the Fed Has Become a Prisoner of Its Own Making
Bloomberg - Trump Pledges Across-the-Board Tax Cuts If He Returns to Office
The Dispatch - Will the Trumpification of the Libertarian Party Actually Hurt Donald Trump?
FT The Big Read - Can Europe’s economy ever hope to rival the US again?
Nikkei Asia - China to start selling 1tn yuan in long bonds for economic support
Apollo Academy - Fed Hikes Having a Smaller Negative Effect on the Economy
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