Morning Macro 9th October
Palladium rose +7.85% yesterday, up +14.3% in 3 days, as S&P500, Nasdaq and Gold made new all-time highs. All too easy but watch out for the resurgent U.S. dollar, a clear double bottom with USDJPY +3.86% this week, and EURUSD down -1.1%. (Chart 1 U.S. dollar Index, Bloomberg). The real risk here is the Fed not cutting as aggressively as the market expects with 44bp cuts priced by year end.
FED: MAJORITY EMPHASIZED UPSIDE RISKS TO INFLATION OUTLOOK
*FED: A FEW OFFICIALS COULD HAVE SUPPORTED NO RATE CUT IN SEPT.
*FED: MOST SAID LIKELY APPROPRIATE TO EASE POLICY MORE THIS YR
Strange things going on in private credit with a 14.5% drop in private equity stocks (Blackstone, KKR, Apollo, Carlyle) in just 3 weeks, while the S&P 500 dances higher every day.
Copper rises +10.1% in 12 days, following the precious metals rally or a sign a rising demand from China? Probably the former but worth considering.
CHINA TO TIGHTEN EXPORTS OF RARE EARTH AND RELATED TECH……. watch out: REMX, MP, NB, USAR, UAMY, TMQ, TMC
AMD jumps another 11.4% on the open AI deal, up +43% on the week.
USDJPY has broken form the 10-year interest rate differential, the BOJ has let the currency go to save the bond market (Chart 2, USDJPY vs 10-year interest rate differential, Bloomberg)
Israel’s Channel 14 reported the Israel-Hamas ceasefire will come into effect today at 12:00 noon (10:00BST/05:00EDT), according to Al Arabiya.
*INDONESIA’S 10-YEAR BOND YIELD FALLS TO LOWEST SINCE DEC. 2021
BMW shares slumped 9% on Tuesday, after the German automaker said volumes in China were below expectations and that the U.S.-European Union tariff agreement has yet to materialize.
Power grid stocks consolidating after their big run earlier this year, look for a new break out higher: VEG, NRG, CEG, VST.
Nvidia, a perfect breakout, retest of support and then a break higher. I think it’s over-priced, but the market doesn’t care what I think! It’s going higher, trade the price action. (Chart 3, Bloomberg)
We have just witnessed the largest Retail Investor buying EVER. Retail has bought over +$100B of US stocks in the last month, the largest 1M buying on record. (Chart 4, Morgan Stanley QDS, Exchange Data Feeds, Marlin Capital)
The private credit cesspool…. First Brands Lehman moment….*FIRST BRANDS CREDITOR SAYS UP TO $2.3 BILLION ‘SIMPLY VANISHED’, SEEKS INVESTIGATION
Breaking down Russell 2000 Index:
- 57% of index is currently profitable 4
- 1% of index is currently unprofitable
- 2% of index doesn’t currently have earnings data available
- Since 4/8/25 closing low:
- Profitable part of Russell 2000: +22%
- Unprofitable part of Russell 2000: +53% (Source, @LizAnnSonders, Bloomberg)
Ken Griffin Calls Flight to Gold ‘Really Concerning’ “We’re seeing substantial asset inflation away from the dollar as people are looking for ways to effectively de-dollarize, or de-risk their portfolios vis-a-vis US sovereign risk”
No key data today – US government shutdown!
