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Aug 25, 20234 min read

Fed's Harker / GDPnow 5.91% / TRY / Powell's speech next up this afternoon



  • Jackson Hole meeting : all about the r*, all eyes and ears on J Powell who speaks at 1600 CET, Lagarde not until 2100 CET, for choice and since many of you asking, imho 'high for longer' is going to be the message (as opposed to systematically higher till something breaks..), wouldn't be shocked if Lagarde is a little 'dovish', after all these PMI sub 50..

  • WSJ-Timaraos's latest : The Fed's Jackson Hole conference sometimes gets treated as the Super Bowl of central banking when it might be better characterized as "nirvana for nerds" given the wonky paper discussions

  • Atlanta Fed GDPnow for Q3 is 5.91%

  • Fed's Harker : favoured remaining on hold for longer in two different interviews with MNI and CNBC yesterday

  • Rosenblatt raised its price target on NVDA to a Wall Sreet high of $1,100 (from $800), and maintaining its buy rating. $1100 would put NVDA on par to MSFT!

  • UK construction companies go under at fastest rate in a decade. More than 4,000 operators become insolvent within a year as cost inflation and housebuilding slowdown bite

  • TRY rallies as Turkey 'stuns' markets with the biggest rate hike in years!, the CB hiked by 750bps, USDTRY dropped from 27.5 to 25.5 approx, back to 26.50 TRY again

  • JPMorgan CEO Jamie Dimon calls for more investment in oil and gas: 'We aren't getting this one right”, 'investing in the oil and gas complex is good for reducing CO2'

  • Highly likely' Prigozhin is dead but no 'definitive proof, says UK defence ministry

 

Markets :

  • SPX500 - NQ ''reversal'' in many short-term minds and comments this morning, few realized that 100 PE on NVDA was a little too rich, see Thread below too ! After a spectacular move in NQ and NVDA this year... so all needs to be put in relative terms...slightly overhyped price action in 2023 IMHO, that huge beat : mostly 'priced in'

  • USDollar slightly stronger, UST 10's 5bp higher to 4.25 again, 2y back to 5% all about the r*

  • Copper, metals recovering last few days, PALL futures now have the largest net spec short position on record

 


MS : The title this year is “Structural Shifts in the Global Economy”. While Fed Chairs have sometimes moved mkts at Jackson Hole, Seth Carpenter suspects Powell will not signal a major shift. Seth suspects he will try to keep a hawkish tone; reiterate commitment to 2 percent inflation; reinforce the “higher for longer” theme; but refrain from giving explicit near-term guidance. The title of the symposium suggests some discussion of the neutral rate of interest, also called r*. Conceptually, if the policy rate is above r*, then monetary policy is slowing the economy, and if the policy is below r*, it is stimulating the economy. More generally, r* should have implications for debt sustainability, the level of the yield curve, and other asset prices. But in the best of times, estimating r* is hard; in a post-Covid world, it is doubly so. The mkt has to pay attention, of course, because a shift in r* should imply a shift in the exp path for the policy rate and thereby the yield curve as a whole


Jackson Hole may well showcase academic research suggesting that r* has risen - we think the Fed is done hiking, but we will only know after the fact if r* has risen





slow burn of higher rates AND government forcing repayment of covid loans... the big driver

Nothing to do with Brexit...??..









Madness, why would anyone do this..


need to raise a lot of cash to pay for those court appearances?..

made a complete mockery of the justice system?



have a great Friday and lovely weekend ahead

Team PVM

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