Read on the Trading Floor - 15 April 2024
Today’s focus… Iran, Israel, Tesla, Halving and much more
Macro Themes At Play
Theme 1 - Restraint in the Middle East?
Theme 2 - Retail Sales, Earnings, Tesla cuts, Apple
Theme 3 - The Halving
Further reading and listening of note
Theme 1 - Restraint in the Middle East?
The market has spent the day unwinding Friday's angst. I'm certainly no Middle East geopolitical expert but the current assumption is Iran gave enough warning to Israel and her allies for the historic attack to be a case of "escalation to deescalate". Whether that is true or not comes down to Netanyahu and how he responds. Biden's stance in the public is clear "You got a win. Take the win" (Telegraph). Mr. Price is comfortable digesting a one-off event, the "real panic" and/or aggressive portfolio realignment will come if Iran/Israel escalates into a broader, longer and more devastating tit-for-tat attacks.
For markets, deep OTM Crude calls will be utilized as portfolio hedges and should now price the fatter tail of a potential increased risk premia of an escalation in attacks between Iran/Israel. However today Crude / Brent have dropped over 1% as the short-term tension is released. Bloomberg's Javier Blas believes "unless Israel and Iran engage in tit-for-tat attacks that disrupt oil flows, OPEC+ has more than enough spare production capacity to control a price rally".
Bloomberg - Iran Attacks Israel: What It Implies for Global Economy, Markets
Reuters - US will not take part in any Israeli retaliatory action against Iran
Bloomberg - Iran's Attack on Israel Upsets OPEC+ Search for Goldilocks Price
ZeroHedge - Iran Threatens America's Military Bases Across Middle East If US Supports Israeli Counterattack
Axios - Israel will retaliate against Iran attack, defense minister tells U.S.
FT - Oil traders bet Iran will want to keep its exports flowing
Bloomberg - Israel—Iran Conflict: How Hostilities Began, and Could They Now Escalate?
BNYM Special Report - Israel-Hamas-Iran & Markets
Axios - U.S. urges Israel to "be careful and strategic" regarding response to Iran attack
Theme 2 - Retail Sales, Earnings, Tesla cuts, Apple
Away from the WW3 headlines we've had (another) strong retail sales as US households defy expectations once again. The increase in gas prices had a particular positive support to the print. With US fixed income having repriced into the weekend due to risk averse flows, 10s are back out to 4.65% and levels last seen in Q4 2023.
Source: Tradingeconomics.com
GS's slimline look has beaten expectations and leads a stronger earning session including Charles Schwab revenue beat.
NY Times - A Slimmer Goldman Sachs Posts Hefty Jump in Profit
Morningstar - Magnificent No More? Apple and Tesla Stocks Weigh on the Market
Reuters - Charles Schwab revenue beats estimates on higher asset management fees
Tesla has announced a 10% headcount cut as the company realigns to a slowdown in EV demand
Apple - more bad news for Cook as Apple loses its smartphone crown to Samsung.
Theme 3 - The Halving...
Is bitcoin a safe haven or a risky asset? Did it sell off over the weekend due to the impending US tax date or the VAR shock generated by the Middle Eastern tensions? The well flagged halving is now upon us, and the overbought RSI as well as some of the memecoin euphoria has been washed away over the recent 10-15% correction. What will we look like in a post halving world? Given the Fed curve repricing and of course the ETF launch has now been behind us, what will the story be that now drives XBT and the broader crypto-verse... inflation? de-dollarization? will the inflows dry up?
Bloomberg - Bitcoin (BTC) ‘Halving’ Will Deal a $10 Billion Blow to Crypto Miners
The Pomp Letter - Why Did Bitcoin's Price Drop Over The Weekend?
Ecoinometrics - [http://The risk of more rate hikes is not priced in]The risk of more rate hikes is not priced in
Unchained - What a Weekend
Steno Research - Crypto Crisp: Hong Kong Rhymes With Bitcoin and Ethereum ETFs
London Crypto Club - Reassuring Predictability
Source: GS via The Daily ChartBook
👏 If you found this briefing helpful, please show the desk some appreciation by giving it a ‘Like’ or a ‘Comment’ at the bottom of the page.
Top Pieces
Discovered on Harkster.com
Saxo Markets - Macro: Something's brewing in China
DB CIO Weekly - Higher for a bit longer
Steno Research - Macro Sunday #45 - Is the next move a rate hike? Guest: Danny Dayan
Bloomberg - How Electric Utilities Will Handle Booming AI Datacenter Demand
Saxo Markets - COT: Hedge funds propel multiple commodities positions beyond one-year highs
FT - Blackstone nears deal to buy former Britishvolt site in northern England
Odd Lots - What Surging AI Demand Means for Electricity Markets
ECB - Philip R. Lane: Disinflation in the euro area: an update
Stay informed throughout the day with our new commentary channel (‘Intraday Market Colour’) highlighting key notes, topics du jour, and HarksterHQ’s market updates around key data points and headlines.
Available on the Harkster Research Platform.
The information provided in this post is for general information purposes only. No information, materials, services, and other content provided in this post constitute solicitation, recommendation, endorsement or any financial, investment, or other advice. Seek independent professional consultation in the form of legal, financial, and fiscal advice before making any investment decision.