Read on the Trading Floor - 21 Nov 2023
Today’s focus… USD shorts, Housing, Altman, Nvidia and much more
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Macro Themes At Play
Theme 1 - Softer USD now a clear consensus seasonal EOY trade
We arrive at the Fed minutes and they're once again stale, who on the board hasn't spoken over the past few weeks to the press? It's been a relief and interesting few days to trade without waves of Fed speak, they've kindly taken an extended break ahead of Thanksgiving.
The minutes are expected to be hawkish, in-line with the higher for longer mantra that the Fed speak continues to deliver. However, the market has moved on, is selling USD looking ahead too a Q2 if not Q1 US recession as labour market weakens, covid savings dwindle, credit tightens and the US economy gaps down to the RoW. CNH and JPY are leading the momentum as the former is trading below the fix for the first time since the summer. (ING FX Daily - Renminbi shorts on the run | Article)
The US data continues to soften with the lowest US existing home sales print this afternoon since 2010...
MishTalk - Existing Home Sales Sink 4.1 Percent, Down 19 of the Last 21 Months – MishTalk
FT - US existing home sales hit 13-year low as high interest rates bite
Calculated Risk Newsletter - NAR: Existing-Home Sales Decreased to 3.79 million SAAR in October; New Cycle Low
Source Calculated Risk Newsletter
Theme 2 - AI, Altman, Washington, Nvidia Earnings, MSFT and China
They're all intractably linked... OpenAI's philanthropic endeavours, Altman's chip funding in the ME, Washington's impact on Nvidia's exports to China, Huawei's advancement in chips, MSFT investments and hiring policies... the past few days has been like watching a new series of Billions as control of the direction of AI, it's commercial viability and what it means for humanity are seemingly at stake.
Some key points that @HarksterHQ found interesting in Understanding AI Substack .... Firing Sam Altman hasn't worked out for OpenAI's board
OpenAI isn’t a tech startup—it’s a non-profit organization with a complex history, an unusual corporate structure, and a mission to “to ensure artificial general intelligence benefits all humanity."
The problem facing the board now is that there’s no easy way for OpenAI to return to its roots as an elite research organization. If OpenAI isn’t going to aggressively commercialize its technology, it can’t afford to employ hundreds of top-tier AI researchers or spend billions training new models. OpenAI’s top talent is likely to follow Altman to Microsoft, leaving OpenAI as a shell of its former self.
Ultimately, this isn’t going to do much to slow the growth of potentially dangerous AI. It’s just going to shift power over AI to companies like Microsoft and Google that may be even less concerned about safety than OpenAI was under Altman.
Further reading and listening of note from our AI custom channel on Harkster.com
Politico - How a billionaire-backed network of AI advisers took over Washington
FT - ‘I’ve never seen anything like this’: how OpenAI’s dramatic weekend unfolded
The Gryning Times - Nvidia
FT - Nvidia investors weigh risks from US’s China chip rules ahead of earnings
MS Thoughts on the Market - Ed Stanley: The Cutting Edge of AI
Bloomberg - (NVDA) Nvidia’s $240 Billion Rally to Test Whether Great Is Good Enough
Theme 3 - Truce in Gaza?
U.S. President Joe Biden: 'My team is in the region shuttling between capitals. We're now very close, very close, to bringing some of these hostages home very soon. But I don't want to get into the details because nothing is done until it's done.'
Reuters - Netanyahu, Hamas leader indicate deal on Gaza truce and hostages is close
Steno Research - Great Game: Truce in Gaza?
ZeroHedge - Gaza Ceasefire Deal Reached, Announcement Imminent: Netanyahu
ZeroHedge - ZeroHedge - Xi Urges Immediate Gaza Ceasefire In BRICS Meeting, As Beijing Hosts Summit Of Muslim Xi Urges Immediate Gaza Ceasefire In BRICS Meeting, As Beijing Hosts Summit Of Muslim Nations
Theme 4 - the market isn't listening to the Central Bankers
BoE/ECB continue to push back against market pricing for 2024 and the plethora of cuts that are seen as early as Q2. Like a disgruntled teenager the market is waiting for 'hotter' data to accept that CB's may not be able to reduce monetary policy rates as fast as is currently anticipated.
Bloomberg - BOE Governor Says UK Interest Rates May Have to Rise Again
FT - BoE’s Bailey warns markets not to expect inflation to fall quickly
Bloomberg - ECB Interest Rate Cuts: Markets Too Optimistic, Simkus Says
Econostream - ECB's de Cos: Too Soon to Talk About Rate Cuts
Econostream - ECB's Villeroy: Interest Rates Likely to Remain Unchanged Next Few Quarters
Source MacroVisor - Euro Area - Hike or Cut?
Those that hiked first (Latam / CEE) are the ones leading the cuts...
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Top Pieces
Discovered on Harkster.com
Reuters - US SEC sues Kraken crypto exchange over failure to register
Capital Flows and Asset Markets by Russell Clark - PRO-LABOUR POLITICS AT WORK
BNYM Short Thoughts - Asset Transformation, Deposits & Reserves
ZeroHedge - "Only Conviction For 2024 Is Market Consensus Won't Equal Success"
NY Fed / Liberty Street Economics - What if the Fed had stuck to AIT Rule?
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