Aug 3, 20234 min read

Brazil -50bps / CROSSJPY's ⏬ / UST long-ends, credit / QCOM weaker, AAPL tonight / BoE next

Qualcomm gave light forecast, phone chip sales fall 17% >> risk for AAPL tonight, and he implied volatility for put options on Apple is at one of its lowest levels in history right before their earnings release later on today...market sees no risk..
BoE most likely +25bps - been expected and priced for long while, UK had a composite PMI of 50.8 in July
Swiss manufacturing PMI 38.5 (forecasts 44 , previous 44.9) - U.S ADP employment July 324K (estimate 190K..) stronger again, Services PMI in Sweden jumping from 45.9 to 52.7,
Russia strikes Ukraine's Danube port, driving up global grain prices
Chinese EV maker BYD is rocketing up Fortune’s Global 500 ranking. Meanwhile, Chinese battery giant CATL made it in the Global 500 for the first time
Fitch sent a warning on 23rd April : - said it would maintain its AAA rating as long as Congress resolved the debt-ceiling impasse with no damage to financial markets. If default becomes a serious risk, however, “the US’s rating would likely be placed on rating watch negative and further rating action could be considered.” >>> IMHO, the downgrade came (at least partly) because of 'dysfunctional budget process', ie none of them in politics at mom are prepared to adjust /reduce spending etc.. if necessary...!
As Grundlach says ''US budget deficit is near 9% of GDP in an economy not viewed as being in recession. That means if a year ago we actually (*shock*) balanced the budget, GDP would have been near -6% last 12 months. If rates stay at 5.5% long enough interest payments will go up another $1 TRILLION''
Brazil central bank kicks off rate cuts more aggressively than expected (50bps cuts), Westpac says Reserve Bank of Australia now on hold until first rate cut in September 2024
US mortgage purchase applications fell 9.5% over the past 5 weeks
The BIS estimated that by the end of last year Chinese household debt reached 61.3 per cent of its economic output, compared to 47.7 per cent for the average of emerging economies, and 74.4 per cent in the United States and 68.2 per cent in Japan
"China's CAC said on Wednesday children under the age of 18 should be limited to a maximum of two hours a day on their smartphones. Investors were not impressed." ...I bet many parents will never say it, but parents and teachers elsewhere around the world love the idea..
Amazon Clinic expands doctor visit marketplace to 50 states

Market :

Recall yesterday's words from most big banks economist 'this Fitch move means nothing'' , ignore and move along...>>> the point is, markets been very quiet, poor liquidities, low implied vols, risk has rallied hard on short covering, ignoring strong usd and higher yields, long-ends breaking down (through 4.10% in yield terms), still 75bps of inversion out there !!! beware
USDJPY, CROSSJPY's should stay heavy, JPY been oversold/carry trades, it worked, but beware too, basically, in short-term, beware on whatever is owned out there (AI trades, NVDA?...)..Japan Chief Cabinet Secretary Matsuno says watching FX moves closely, as expected!
BTC should/could well have a decent move down on 'long-end UST' moves, long GOLD while sub $1950 also at risk, XAG had a decent dump yesterday, must hold around $23 for the bulls
One should worry/plan/hedge/consider the risk of a decent credit event now, particularly if long-end rates continue to sell-off