Ian Reynolds
Above is the Nvidia headquarters in Santa Clara, California. It's home to a business worth US$ 3,000,000,000,000.
That's bigger than the GDP of both Italy and Canada. Below is the monthly chart of Nvidia and CIsco going back to the Internet / dot com bubble. Cisco dropped 90% as the bubble popped.
Back in 2007/8/9 it was the banks that were too big to fail but they're way too well capitalised to do so now, and also the risk has been passed to countless trading apps and fintechs. So the risk isn't so concentrated.
But in the US stock markets that concentrated risk is pretty much the only thing keeping the markets afloat.
Nvidia, other chip stocks, Apple, Microsoft, Meta, Google and a few more.
The public, pension funds, hedge funds, US politicians, trendfollowing algorithms, and my dog are long and buying more.
Be careful when everyone is in the same trade.
NVIDIA Monthly
CISCO Monthly
Breaking
Hartnett: Gold Just Surpassed The Euro As The World's 2nd Largest Reserve Asset[Zerohedge]
In Focus
China
China Manufacturing PMI August 2024
A slow week of data from China but the slow sinking of the economy continues as the manufacturing PMI ticked lower.
China new home prices rise more slowly in August, survey shows[Reuters]
Japan
A reprieve for a Japan as typhoon ShanShan batters the country. There was another typhoon a few weeks ago.
Economic statistics were mixed this week.
I can't feeling that typhoon Carry Trade will be back battering the Japanese economy soon.
Japan Core CPI YoY
Japan Unemployment Rate July 2024
US Economy
Headline statistics are still holding up but the anecdotal evidence is of a rapidly slowing US economy.
Record credit card defaults and plunging pending home sales support the narrative from Dollar General, Walmart and the like. CPI wasn't lower which may change Powell's mind on a cut in September. Markets have priced in a 50bp cut and it would take a black swan event to have a cut higher than that.
Markets may be over optimistic here.
US Durable Goods Orders July 2024
US House Price Index June 2024
US GDP Q2 2024
US Pending Home Sales July 2024
US Core PCE Index July 2024
Dollar General warns poorer US consumers are running out of money[FT]
Allstate Approved to Raise Home Insurance Rates by 34% in Wildfire-Prone California[Bloomberg]
RV Downturn Turns Apocalyptic With Largest Dealership Offering 55% Discounts[Zerohedge]
In The Background
CRE / Banks / CLOs
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Moody’s Cuts Debt on Offices Backed by Pimco to Lowest Junk
Bitcoin / US Election
The adoption curve of Bitcoin is now twice as fast as the Internet was in the late nineties. There are still some that think it doesn't have any value, doesn't work or is a fad. But that's now fading fast.
Countries, companies, institutions and younger savers are now embracing the change.
Look out for crypto and particularly Bitcoin to be key features of the US election as the political parties thrash around to try to remain relevant.
Dubai Courts Confirm Employment Salaries Payable in Cryptocurrency [LinkedIn]
Uber CEO Says App Will Eventually Accept Crypto as Payment[Bloomberg]
Canada
Extending home mortgages when the owner can't pay the monthly payments seems like an insane credit decision but that is what is happenning now in Canada.
These are mortgages where the interest rate goes up and down with the market. At the same time, the payment stays the same, so less and less goes toward the principal.
That means the loan term or amortization is extended at renewal time.
Lending money to people that can't pay is the specialist niche of countries with high debt / GDP ratio. But countries can print more money to kick the can down the road. Home owners can't.
Canada Wholesale Sales July 2024
Canada Average Weekly Earnings YoY June 2024
Canada GDP Q2 2024
Europe
Germany GDP Q2 2024
Germany Car Registrations July 2024
Germany CPI August 2024
EU CPI August 2024
After years of Germany supporting the other less productive EU nations, some way less productive, Germany has become the sick man of Europe. I can't see Greece and Italy helping support Germany financially.
Australia
Australia Monthly CPI Indicator (YoY) July 2024
Australia Capital Expenditure Q2 2024
Australia Retail Sales July 2024
The concern in Australia is now palpable. Flat retail sales, falling house prices and the sharply lower price of iron ore along with the sharp detiorioration of the New Zealand economy should give the RBA a chance to cut rates but with YoY inflation at 3.5%, way higher than they want, that's going to be a tough ask. We all know a recession is coming but who will take the blame - the RBA or the Government. Should be both of them for being completely out of touch with the economy.
Australia’s fall in disposable income is the worst in the world[AFR]
The number that should scare all Australians[AFR]
Only 1 per cent of Chinese steel mills are currently profitable.
What's Next ?
Bank of Canada and NFP on Friday will take the focus the week.
This time of year is normally quiet with traders in London on holidays and very low stock market volumes bear that out. And markets tend to drift higher supported by retail buyers.
This Week's Important Economic Indicators [London time]
![This Week's Important Economic Indicators [London time]](https://vip.suberia.capital/hs-fs/hubfs/indicators-Aug-28-2024-10-22-07-7726-AM.jpg?width=658&height=523&name=indicators-Aug-28-2024-10-22-07-7726-AM.jpg)
