Articles

According to Reuters sources, Italy will confirm its commitment to get its deficit to GDP ratio below 3% in 2026 in the upcoming medium-term structural budget plan.

This article was written by Adam Button at www.forexlive.com.

US markets have been bounced around today by worries about Nvidia but thankfully Europe doesn’t have any AI to worry about. French stocks steadied today as Macron makes a wild play at holding onto power while Germany leads the way.

• Stoxx 600 +0.3%
• German DAX +0.6%
• Francis CAC +0.2%
• UK’s FTSE 100 +0.3%
• Spain’s IBEX +0.1%
• Italy’s FTSE MIB +0.3%

In terms of the DAX, here is how the monthly chart is shaping up and that candle is hard to bet against:

This article was written by Adam Button at www.forexlive.com.

Alright, alright, alright… enough about Nvidia already.

Shares of the company are down 4% and the Nasdaq is down 1.4% in a move that’s gone in lockstep. The options market is pricing a +/- move of 9% in NVDA shares when earnings are reported after the bell and that will easily move the Nasdaq 2% tomorrow.

I tend to think this shakes out much like the FOMC decision — lots of angst and then lots of relief.

That said, it takes a lot to justify a $3 trillion valuation and even the slightest sign of distant weakening and the whole AI trade can come unravelled.

Yesterday, I wrote about the short report on SMCI and today, shares are down 26% and have erased much of the meme-style runup to start the year. Easy come, easy go.

This article was written by Adam Button at www.forexlive.com.

• Prior was -4649K

Details:

• Gasoline -2203K vs -2265K expected
• Distillates +275K vs -1083K expected
• Refinery utilization +1.0% vs +0.2% expected
• Production mbpd 13.3mbpd vs 13.4mbpd prior

API data released late yesterday:

• Crude -3400K
• Gasoline -1860K
• Distillates -1400K

Ahead of the release, WTI crude oil was trading lower by 77-cents to $74.78.

This article was written by Adam Button at www.forexlive.com.

US markets are set to open slightly lower today with futures seeing the S&P 500 down 0.1%, the Nasdaq-100 down 0.2% and the Russell 2000 down -0.4%.

Here are the biggest movers pre-market from Newsquawk:

• $SMCI -10%: To delay 10-K filing for FY24
• $NVDA -0.2%: Earnings await after-hours
• $PVH -9.5%: EPS disappointed & backed FY24 rev. decline of 6-7%
• $FL -7%: Despite comp. sales beating, but guide unch. & desks note it now trades with a forward P/E of 20, which is expensive for retail sector
• $KSS +2%: EPS & GM’s beat w/ stellar FY profit guide
• $ANF -11%: Despite a solid report, although noted it continues to operate in an increasingly uncertain env.
• $SJM -4%: Top line light & cut FY outlook
• $AMBA +19%: Loss per shr. not as deep as exp. & rev. beat; Next Q sales guide also topped
• $BOX +5%: EPS & rev. beat w/ strong Q3 & FY outlook
• $ELF + 3%: Approved $500mln share repurchase prog.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

SMCI falls more than 9% pre-market on the news that the company is to delay the 10-K form for FY2024.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

Gold briefly touched the recent highs around the 2530 level in the Asian session but eventually erased all the gains made this week and extended the drop below the 2500 level.

This is mostly noise as there has been no catalyst for such a move. We can see in the 1 hour chart below that gold is now trading in a range between the 2530 resistance and the 2480 support. We might remain stuck here until next week as that’s when we will get the top-tier economic data.

These are generally the times when people’s gains get chopped out. For the buyers, it might be better to wait to go long around the support or on the break of the resistance, while the sellers should look to go short around the resistance or on the break of the support.

Nonetheless, waiting for a catalyst might be a better idea.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

Newsquawk shared a nice preview on Nvidia reporting Q2 earnings today after the US market close. The release will likely be around 20:20 GMT/16:20 ET.

Expectations

• Q2 EPS: 0.64
• Q2 Revenue: 28.48 bln
• Q3 EPS: 0.70
• Q3 Revenue: 31.41 bln

Market Reaction

Options market implies a 1.3% swing in the S&P 500 for the first day of trading after Nvidia published the results, and a swing of 10% in either direction for the stock itself. At Tuesday’s close, Nvidia held a 6.6% weight in the S&P 500 and an 8.2% weight in the Nasdaq-100.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

There is more than one Fed put.

Early this month, I wrote about the one that saved equity markets. It’s also one that backs the real economy and is the one that 99% of financial commentary is written about, particularly lately.

What worries me is the other one: It’s the call on the Fed or other central bankers to buy bonds when liquidity disappears. The most-forgotten moment of the pandemic was when Treasury yields shot higher as the fears peaked in March 2020. That went against everything the fundamentals were pointing to (and ultimately did).

That episode was symptomatic of a Treasury market with way too much leverage. It’s something that Zero Hedge writes about today: The basis trade. As they highlight, there is now a $1.1 trillion notional short position in US Treasury futures.

It’s a constant accident waiting to happen and no one in a position to do anything about it is going to act. We just all assume the Fed will be there to clean up the mess when it unwinds, as it partially did during the yen carry trade rout.

This article was written by Adam Button at www.forexlive.com.

Less than a week after the BLS revised the 2023 job gains by -818K, Goldman is now arguing that the number was probably closer to -300K instead.

The reason?

Goldman says businesses avoided reporting unauthorized immigrants to the unemployment insurance system, which pushed and reported employment in last week’s benchmark revisions.

It is all water under the bridge except for the politicians out there who may have a vested interest in the number.

This article was written by Greg Michalowski at www.forexlive.com.

• Japan’s Trade Ministry eyes 2.3596 trillion yen for FY2025/26 budget
• US MBA mortgage applications w.e. 23 August 0.5% vs -10.1% prior
• Wang Yi urges US to treat China as equal and halt suppression in trade and tech
• JP Morgan joins other banks looking for more USD downside
• WTI gives up all the Libya gains and trades below $75
• Knowing election results in advance doesn’t give an investing edge
• Israeli US Egyptian Qatari negotiators meet in Doha for Gaza ceasefire talks
• Swiss investor sentiment -3.4 vs 9.4 prior
• Eurozone Money M3 annual growth 2.3 vs 2.7% expected
• What to expect from Nvidia’s report?
• Citi predicts zinc to reach $3100/t by 4Q with aluminium also set for gains
• Libya’s Sarir oil field nears shutdown as production is halted
• French consumer confidence 92 vs 92 expected
• What are the main events for today?
• Today’s FX option expiry levels for the NY cut
• Swedish trade balance 6.5B vs 8.7B prior
• BoJ Himino says there is no set timeframe for economic stability
• Sentiment mostly mixed across major asset classes
• Consumer confidence data shows further cooling in the labour market
• Interesting reaction in the AUD to today’s CPI data
• With Aussie CPI out of the way the calendar ahead is another quiet one

Markets:

• USD leads, EUR lags on the day
• European equities higher;
  S&P 500 futures flat
• US 10-year yields down 2 bps to
  3.806%
• Gold
  down 0.77% to $2,505
• WTI
  crude down 1.97% to $74.04
• Bitcoin
  up 1.03% to $60,047

It was yet another
quiet session with no market moving data. There wasn’t even any notable news
release. It was hard not to fall asleep.

In the
markets, there’s been very little movement. The only notable mover has been
crude oil as it extended the drop below the Monday’s spike level on Libyan oil
production halt news.

Looking
ahead, we just have Nvidia reporting earnings after the close.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

Japan’s Trade Ministry is set to ask for 2.3596 trillion yen in its preliminary budget request for FY2025/26, according to Jiji.

This article was written by Arno V Venter at www.forexlive.com.