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The event we have been watching for years, and for once, a surprise. Markets having at one stage priced in 3 cuts before the end of the year, then back to 2 then 1 as Powell keeps telling us he's happy with rates where they are. And now he's hinting that he is going to cut.
Isn't he? If he is, why is he?
US Equities
Economic Indicators Released Overnight
Xi Warns Unpaid Bills to Companies Could Damage Trust in Beijing [Bloomberg]
US to take 10% equity stake in Intel, in Trump's latest corporate move [Reuters]
From $50 billion to bust, investors count cost of Evergrande's market tryst [Reuters]
After a year of intense scrutiny, Powell delivered his final Jackson Hole address. Normally a complete non-event, this year there is more than just the hint at rate cuts.
It's not just Powell under scrutiny. The whole board is under scrutiny.
On 8th August, Adriana D. Kugler suddenly quit. Now Federal Reserve Governor Lisa Cook is the latest figure targeted by the Trump administration over claims of mortgage fraud.
When the last interest rate decision was made, Fed Vice Chair for Supervision Michelle Bowman and Governor Christopher Waller both voted against the decision to leave the benchmark interest rate unchanged, favouring instead a quarter-percentage-point reduction to guard against further weakening of the job market. This was the first time the whole board hadn't agreed the decision since 1993
Non-voting members were also getting into the action
Cleveland Fed President Beth Hammack: Divisions Grow Inside Fed Ahead of Decision on September Rate Cut [Wall St Journal]
Ex FED members also: Bullard says Fed can cut rates 100 bps into 2026, expects September cut [investing.com]
As the US Treasury thrashes around trying to raise revenue, doing OK with tariffs but a drop in the ocean, but failing abysmally in trying to cut costs, the urgency to cut rates to save on interest payments, is becoming all-consuming. A Gold revaluation is becoming more likely with co-opting stablecoins (not even in the dictionary yet) to support US treasuries still a pipe dream.
Something has to give and it could be the FED. Could this be the end of it's chequered history.
It's up to the following academics to get their ship in order and lead by example. The markets could make this very ugly if the FED loses investors' trust.
We were expecting to break the wedge with Powell's speech but it's still going. 22nd September is where the lines converge.
What's not to like about the monthly Silver chart. Candles will be getting longer soon.
Beautiful bear flag forming in oil. Looking for a big move down as bigger than expected US interest rate cuts cause concern about it's economy.
SPOT BRENT Daily
BTC showing the way. A decent bounce but what was Powell really telling us?
We're getting into the big haircuts now, and it's starting to hit mainstream news. Along with credit card defaults, car loans, student debts that have been ignored by markets, they will have their day soon.
US Economic Indicators
Remarkably clear week of US data, all eyes on Powell with everyone, even some of the FOMC, disagreeing with him.
Treasuries rallied but not enough, given the signal. What happens when they do cut?
USD though , via DXY, broke and closed lower. We're right at 15 year support again.
China Economic Indicators
Not much here either, data or interest rate cuts.
Long end rates ticking up as the PBoC doesn't think short end needs cutting. Dangerous game to play. They don't want their currency appreciating just about now.
China 10 Year Government Bond Yield Daily
Japan Economic Indicators
Across the many measures of inflation, CPI going lower despite BoJ and MoF narrative that it's too high. Terrible trade numbers highlight how fragile the economy is. One day this week not a single JGB was traded. And that shows in the charts. 10 year rates trending higher.
Japan 10 Year Government Bond Yield Daily
EU Economic Indicators
German GDP lurches lower. The last interest rate cut raised 10 year rates 25bps. ECB will only cut again if FED does.
Germany 10 Year Government Bond Yield Daily
UK Economic Indicators
As Bank of England predicted CPI rising towards 4% but they're cutting anyway. Markets already nervous about Reeves' ability to fund the country, let's hope The Old Lady doesn't lose it's credibility as well.
Even I'm surprised how the inverse heads and shoulders, that I added a week ago, is coming along.
Canada Economic Indicators
Inflation steady but still too high. Now strong retail sales defying narrative of housing crash. Trump/Carney are cooking up a deal. Let's see where that pushes price.
Canada to Drop Many Counter-Tariffs in Olive Branch to Trump [Bloomberg]
Air Canada to resume flights after pay deal struck with union [BBC]
Time for a Fib. Triple bottom and blow off top give us pretty good Fib levels to play with.
Australia Economic Indicators
All the talk in Australia is about the extreme amount of tax locals have to pay. Tax on tax on tax. Weak government and very low productivity, unaffordable housing and union activity. All adds up to 25 million (and counting) unhappy citizens. And did I mention highest immigration rate per capita?
Aussie heading back to the scene of the crime and that 15 year resistance still casting it's shadow.
AUD/USD Daily
Labor’s spending made RBA’s job harder: Lowe [AFR]
RBA forecast misses explain its data dependence [AFR]
Red tape ‘hairballs’ choking economic growth: Productivity tsar [AFR]
NZ’s house price crash - could it happen here? [News.com.au]
Chalmers flags super tax raid to fix ‘unfair’ system [AFR]
USD-CAD revision to trade deal in the pipe and monthly Core PCE in the US will be in focus.
When markets digest Powell's speech, the conclusion may not be about rate cuts, rather it could be about political appeasement.
Watch Bitcoin for direction and how that plays out in US equities.