The Morning Call---Bank of Japan capitulates. Carry trade back on.

 

The Morning Call

 

8/7/24

 

The Market

         

    Technical

 

            Tuesday in the charts.

            https://www.zerohedge.com/markets/technical-turnaround-tuesday-stocks-rebound-recession-fears-recede-now

 

Note: while the S&P had a decent day, it (1) rallied to its 100 DMA, then immediately backed off [not good] and (2) closed Monday’s huge gap down open [also not good]. Of course, there remains another gap down open to be filled (the DJIA also closed its Monday gap down open and it has no additional gap down open higher up).  Follow through.

 

Bank of Japan capitulates. Carry trade back on. Are any of following posts relevant now?

            https://www.zerohedge.com/markets/capitulation-yen-plunges-nikkei-soars-after-bojs-uchida-says-will-not-raise-rates-when

 

            Warning signs of a breakdown.

            https://politicalcalculations.blogspot.com/2024/08/warning-signs-for-breakdown-of-order.html

 

            The crash---a bottom or the beginning?

            https://www.zerohedge.com/the-market-ear/crash-bottom-or-beginning

 

            But where are the new lows?

            https://allstarcharts.com/where-are-the-new-lows-24/

 

            Stocks stage rally in wild reversal.

            https://www.bloomberg.com/news/articles/2024-08-05/stock-market-today-dow-s-p-live-updates?srnd=homepage-americas&sref=loFkkPMQ

 

            Investors brace for more volatility.

            https://www.ft.com/content/aab1d5e1-ad45-4f5e-b3ad-f55d426dc939

 

            Morgan and Goldman clash over the unwind of the yen carry trade.

            https://www.zerohedge.com/markets/how-long-until-carry-trade-unwound-goldman-and-jpmorgan-clash-over-answer

 

            What is the yen carry trade?

            Yen Carry Trade Blows Up Sparking Global Sell-Off - RIA (realinvestmentadvice.com)

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

Weekly mortgage applications were up 6.9% while purchase applications were up 1.0%.

 

Month to date retail chain store sales grew faster than in the prior week.

 

                        International

 

The June Japanese leading economic indicators came in at 108.6 versus forecasts of 109.3.

 

The June German trade balance was +E20.4 billion versus expectations of +E23.5 billion.

 

The July Chinese trade balance was +$84.6 billion versus estimates of +$99.0 billion.

 

                        Other

 

                          Q2 household debt increased.

                          https://www.calculatedriskblog.com/2024/08/ny-fed-q2-report-household-debt.html

 

            Monetary Policy

 

              From the Fed whisperer: no need for an emergency rate cut.

              https://www.wsj.com/economy/central-banking/fed-september-rate-cut-jobs-report-market-selloff-08c982fd?mod=economy_lead_pos2

 

              The case for a 50 basis point cut in September.

              https://www.nytimes.com/2024/08/05/opinion/interest-rates-federal-reserve.html

 

              On the other hand, economic conditions aren’t that bad.

              https://www.nytimes.com/2024/08/06/business/economy/recession-markets-stocks.html

 

            Recession

 

              An industrial renaissance has started.

              https://www.apolloacademy.com/a-us-industrial-renaissance-has-started/

 

              And the services sector of the economy is just fine.

  https://wolfstreet.com/2024/08/05/despite-the-recession-emergency-rate-cut-buffoonery-the-services-sector-expands-strongly-on-growth-in-new-orders-employment-inflation-pressures-still-there/

 

 

                          No recession but the risk may be rising.

              https://www.capitalspectator.com/us-isnt-in-recession-now-but-downturn-risk-may-be-rising/

 

              Weekly business cycle indicators.

              https://econbrowser.com/archives/2024/08/weekly-business-cycle-indicators-data-through-7-27

 

    Bottom line

 

            What caused the pullback?

            https://alhambrapartners.com/weekly-market-pulse-whiplash/?src=news

 

            Bitcoin as a store of value.

            https://econbrowser.com/archives/2024/08/bitcoin-as-store-of-value

 

    News on Stocks in Our Portfolios

 

 

 

What I am reading today

 

           

 

 

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