Morning Macro 21st November
A crushing day for equities which collapsed after the huge Nvidia earning report. The S&P500 lost $2 trillion in 5 hours while Nvidia opened +6% and closed -3.15% on the day. In fact, S&P500 gapping up over 1.4% and closing lower down more than -1.5% has only happened twice in history (April 2020, and April 2025). Note also liquidity has collapsed, top-of-book S&P liquidity yesterday was $5mm vs $11mm YTD average. Bitcoin falls again, down -8.9% in 2 days and even gold sells off, unable to rally in ‘risk-off’ environment implies hedge funds are liquidating ALL position across asset markets. And of course, the UK doesn’t want to miss out on the bad news. Softening retail sales and higher-than-expected public borrowing data this morning.
Both S&P 500 and the Nasdaq close below key support, S&P 6,552. (Chart 1, Bloomberg) Let’s, see how today plays out, but remember retail traders have record long positions while hedge funds have been short and will add to shorts here. If equities can’t rally on good news ……..
Also note the next key US data, November payrolls, come out on 16th Dec, AFTER the Fed meeting. With the OIS pricing just 33% chance of a Fed cut on 10th, equites will likely direct the OIS market in the short term.
September jobs report beat on the headline +119k jobs created (+51k expected) but it’s old news and usually revised. Jobless claims also rose to 232,000, above estimated number of 223,000. The key for the Fed is the unemployment rate which rose to 4.4% from 4.3%. Even Powell has said the unemployment rate is now more important than payroll numbers. From a trading perspective the U.S. unemployment rate trends very well! (Chart 2, MacroEdge Research)
Private Equity stocks are imploding. (Chart 3, Topdown Charts, LSEG)
UK retail sales fall -1.1% MoM (est 0%), +0.2% YoY (est +1.5%). UK government current budget deficit tracking £15bn more than projected in March at £84bn ytd.
Bitcoin -23.8% so far in November, worst month since June 2022. Third-worst month this decade. As a “Store of Value” lets look at drawdowns from their recent peak, Gold -7.8%, Bitcoin -34% MicroStrategy -68%. Bitcoin has 0.0% return since March 2024 with the gold +96%. And it’s supposed to be defending investors from fiat currency debasement. Despite regular 70% drawdowns!
SoftBank stock falls over -10% as Asian markets open.
Why are stocks falling? Because if you take the numbers in this chart seriously, the hyperscalers will hold at least $2.5 trillion in AI assets by the end of this decade. Assuming a depreciation rate of 20%, that would generate $500 billion in annual depreciation expense. This is more than their combined profits for 2025. (Chart 4, @PeterBerezinBCA)
Trump talking to Try Sec Bessent about Fed Chair Powell (this rhetoric will only increase as equities fall). “I mean, Scott, you got to work on this guy. He’s got some real mental problems. No, there’s something wrong with him. It’s just, sweetheart. I’ll be honest, I’d love to fire his ass. He should be fine. Guy’s grossly incompetent. And he should be sued for spending $4 billion to build a little building…” “..the rates are too high, Scott. And if you don’t get it fixed fast, I’m going to fire your ass, okay?”……. words from a ‘respectable’ President!
This is where the “debasement trade” comes from. Japan’s debt at 240% of GDP leaves no good options. If Japan stabilizes the Yen by allowing yields to rise, there’s a fiscal crisis. If it keeps rates low, the Yen goes back into a devaluation spiral. Too much debt is a killer. (@robin_j_brooks)
Fearing renewed Israeli strikes, Iran asks Saudi Arabia to mediate US nuclear talks revival. Pezeshkian wrote letter to Crown Prince bin Salman before his White House visit, seeking ‘diplomatic solution’
France November business confidence 98 vs 100 expected
Scary chart of the day, which will presumably get worse as AI replaces low-income jobs. (Chart 5, YouGov Poll)
Data today – Global flash PMIs, UniMich consumer & inflation expectations.
