The Saturday Hark Back - 23 Mar 2024
Capturing the themes of the week when there’s more time to digest them.
The Hark Back
The key narratives that drove markets last week:
Theme 1 - Doves and a "Hawk"
Theme 2 - Chinese impulse supporting commodities and RoW growth?
Theme 3 - Animal Spirits drive us to ATH
Theme 4 - Apple vs Mag 7
Theme 5 - The Campaign Trail
Theme 6 - Bitcoin outflows
Theme 7 - Ceasefire
Top 10 Reads of the Week on Harkster.com
Top 5 Podcasts of the Week
Week Ahead Previews
Theme 1 - Doves and a "Hawk"
RBA - dropped their rate hike forward guidance
SNB - got ahead of the curve, a gift from Jordan to the next governor at his last meeting
BoJ - out of NIRP, YCC and ETF buying but promised "unlimited" bond buying
Fed - goldilocks. Higher growth, slightly higher inflation but still 3 cuts in 2024, 2025 and 2026... Is the Fed just correcting their own homework with the SEP forecasts?
BoE - hawkish dissent vanishes, with the last two votes for a hike disappearing.
PBoC - CNY fixed higher... a trade everyone saw coming but 3months into the year was tough to pay the premium to hold
Banxico - cut as expected... the EM CB's that hiked first to maintain high real yields, are the same ones cutting first and ahead of the DM CB's
Norges - see you in Dec, potentially Sept...
Please find below a list of Central Bank recaps curated from Harkster.com, your research inbox...
FT - Bank of England’s Andrew Bailey says rate cuts ‘in play’ in upbeat take on UK economy
NatWest - Divergence, doves and a G10 first
JPM - US Rates: Fed and BoE rate cuts, see you on the flipside
Bloomberg - Banxico’s Governor Says Future Rate Cuts to Be Evaluated One-By-One
Bloomberg - Switzerland Surprises With Rate Cut, Moving Ahead of ECB and Fed
ING - Bank of England sticks to the script and keeps rates on hold
FT - Policymakers convinced holy grail of ‘immaculate disinflation’ within reach
Nordea - First cut most likely in September according to the Governor
Reuters - Bank of Canada says quantitative tightening should end in 2025
The Next Economy by Florian Kronawitter - A Dovish Powell
Rabobank - FOMC Post-Meeting Comment March 2024
Rabobank - JPY - Ueda (Way To) Go!
Theme 2 - Chinese impulse supporting commodities and RoW growth?
After a week of CB moves, which ranged from dull to surprising, the CNY fix has probably caused the biggest uncertainty. After holding USDCNY all year despite diverging growth, rates and CB policy, the market was caught off guard by the weaker than expected fix. Brent Donnelly spoke about this a few weeks ago. Chinese authorities have a need for a weaker ccy (have you seen a CNHJPY chart lately?) as well of course the risk of Trump's autumn re-election (and incoming tariff policy). Now was the time to move, not when he's voted in or on the real campaign trail at the end of the summer vs Biden. With other ACB's set to follow suit with JPY and CNH weakness, ccy wars may well be reignited. As CNY fix goes, so does DXY and one can expect USD to outperform in G10 along with the CNY deprecation trend as there will be limited need to diversify away from the USD. With copper, oil and gold leading the commodity sector higher, the tailwind currents of Chinese momentum (incremental targeted support) as well as a dovish Fed are driving a rebound in all assets. However, with the world focused on JPow and his dot plot, has China quietly turned a corner from its Q1 nadir?
Bloomberg - Onshore Yuan (CNY USD) Falls to Four-Month Low After Key Level Breached
ZeroHedge - Is China Prepping For Yuan Devaluation: Renminbi Tumbles After PBOC Pushes It Below Key Support Level
Paulo Macro - USDCNH starts to move — initial reactions
Steno Research - China move confirmed!
JPM Global Commodities - Copper — The sleeping giant awakes
Steno Research - Chinese Momentum: Driving Markets or a Crowded Consensus?
Steno Research - Macro Nugget: China is booming!
UBS - What should investors do with their allocation to Chinese equities?
Steno Research - Trade Alert: Booking profits in commodities
Isabelnet - Gold Flows
Theme 3 - Animal Spirits drive us to ATH
CB policy allows ATH as JPow & Co don't want real rates to run high, BoJ are still buying unlimited bonds, assets are reflating and scarcity remains a key constraint as $$$ chase "real" homes as hedges for the printing press... ARK, QQQ, Gold, SPX ... printer is still on and policymakers don't want to stand in the way of the party. We're living in a goldilocks simulation. 3 cuts despite raising growth forecasts, AI productivity gains and China impulse now supporting the RoW. What a happy place the market has found itself in, unless you're an FX trader as pairs remain moribund relative to the fun being had in the equity (Reddit IPO) and crypto pits.
Steno Research - Head fake reflation incoming!
The Gryning Times - Record Highs
Adam Mancini - SPX Just Put In The Biggest Green Week of The Year. Peak, Or More To Come? March 25 Plan
TKer by Sam Ro - There's a more important force than the Fed driving the stock market
TKer by Sam Ro - The truth about the hundred of billions of dollars worth of stock buybacks
Theme 4 - Apple vs Mag 7
An AI laggard, China demand weakening and of course legal tests from authorities on both sides of the Atlantic are weighing on Apple's momentum relative to META, Nvidia and the Mag 7 index.
Bloomberg - Nvidia, Meta Stock Gains Turn Magnificent Seven Into Two
Bloomberg - Apple (AAPL) Loses $115 Billion in Market Value as US, EU Regulators Close In
AlphaPicks on Wall Street - Apple Might Not Grow On The AI Tree
Fortune - Apple hit with massive antitrust case from DOJ, 16 states after 5-year probe into smartphone market
Seeking Alpha - The United States v Apple part 3
Bloomberg - Apple Is in Talks to Let Google Gemini Power iPhone AI Features
Theme 5 - The Campaign Trail
Trump lines up Powells replacement, Biden tries to apply pressure on Netanyahu, Sunak is trying to keep the band together, Leo steps down and have Labour misjudged the benefit of adding VAT on fees?
Capital flows and Asset Markets by Russell Clark - TRUMP OR BIDEN? DOESN'T MATTER - THE POLITICS IS THE SAME
The Telegraph - Labour’s private school tax raid ‘could cost taxpayer £1.6bn a year’
WSJ - Trump Economic Advisers Float Three Names for Fed Chair
Axios - Biden and Netanyahu to hold first call in a month amid public split
FT - Sunak to promise help for Britain’s small businesses in effort to woo voters
FT - Rishi Sunak struggles to maintain grip on power as 65th Tory MP calls it quits
The Telegegraph - Sunak urges Tories to ‘stick with the plan’ as leadership talk grows
Reuters - Trump 2024: Messianic messaging, a GOP transformed and RFK Jr’s impact
Bloomberg - What Ireland Prime Minister Varadkar's Exit Means for Political Landscape
Theme 6 - Bitcoin outflows
Inflows / outflows yoyo, if you're trading just on the latest flow number good luck, what's your true edge? Just to stay long until the April halving? The news cycle around crpyto has turned south, with its use in China money laundering cases, whales tp'ing and ETH's problems have led the press chasing a negative
Bloomberg - Bitcoin Had a Flash Crash
Fortune - SEC probing crypto companies in Ethereum investigation as hopes for ETF dim
FT - The mystery oh the Hampstead mansion and the £1.4bn bitcoin haul.
Steno Research - CRYPTO CRISP: PROFIT-TAKING
Coindesk - Bitcoin Slips to $64K as Large Grayscale GBTC Outflows Continue
ZeroHedge - The 4th Bitcoin Halving Explained
Bloomberg - Bitcoin Is Down 10% on Slowing ETF Demand (BTC)
Theme 7 - Ceasefire
International pressure is building, momentum is on the side of a short term pause as conditions on the ground tragically worsen.
FT - US to call for immediate ceasefire in Gaza in UN resolution
Axios - U.S. Gaza ceasefire resolution vetoed by China, Russia at UN Security Council
OilPrice - Hopes of a Gaza Ceasefire Are Putting Oil Prices Under Pressure
Axios - Blinken unloads on Bibi: "You need a coherent plan" or face disaster in Gaza
Politico - EU leaders call for ‘sustainable ceasefire’ in Gaza
Axios - House eyes April breakthrough on Ukraine and Israel aid
Top 10 Reads of the Week on Harkster.com:
ING - AI will fundamentally transform the job market but the risk of mass unemployment is low
Nordea - EM Traffic Light March 2024
The Bear Cave by Edwin Dorsey - More Problems at Hershey (HSY)
FT - The world needs reminding — governments are not good at picking winners
Reventure Consulting - Airbnb owners selling at 50% loss in Palm Springs
Man Institute - Center Stage: What’s Next for Credit in 2024?
Axios - U.S. wins China’s support on UN’s first AI resolution, securing its success
SCMP - China EV exports, slammed by West’s trade barriers, find greener pastures with free-trade partners
The majority of these links appear in our new "HarksterPro - Intraday Market Colour" channel. If you click on "Select Channels", you should find under "Added Recently" our latest additions to the app. @HarksterHQ will use this new channel to flag good articles/sources of content as well as headlines/market moving events.
Top 5 Podcasts of the Week:
BlackRock - Dynamics Down Under: Deciphering APAC's Economic Landscape RECORDED LIVE
BofA - Rate hikes mostly kept these markets from emerging, but shifting cycle helps EM
JPM At Any Rate - Global Rates, FX, Economics: Will the Scandinavian doves fly?
FiveThirtyEight - How Worried Should Democrats Be About The Polls?
The Market Huddle - Suit Up and Head to MidTown (guest: Erik Renander)
The Week Ahead
Looking forward to next week...
After the excitement of all the CB's, the market is drifting towards spring break and Easter holidays.
MacroHive - It's a Dove World
ABN Amro - The week ahead
Nomura - US Consumer Confidence, French, Italian and Spanish Flash Inflation, Tokyo and Australia CPI
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