Jerome's Remarks to Joby's Surge
In this issue of the Peel:
Market Snapshot
Happy Thursday, apes.
I swear, this guy. Few things in our lives have been more of a roller coaster than the direction Fed Chair JPow drives markets. Such a hater.
And equity markets were feeling a little bit of that hate on Wednesday. The 3 U.S. majors were each broadly higher prior to Powell’s public appearance yesterday, turning most lower right up until the closing tick, seemingly in reaction.
Despite his best efforts to re-traumatize the investor psyche, treasuries were mostly lower throughout the day’s main session. A lot of decline in yields, although minor, can be attributed to strong demand at the 7-year note auction held during the day as well. USD rode the wave higher, as expected, with the DXY crossing above 103.
Let’s get into it.
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Banana Bits
Macro Monkey Says
JPow Speaks
No, there wasn’t an FOMC meeting or anything. But, much like the Lebron James Decision to go to Miami, Fed Chair Jerome Powell took his talents elsewhere on Wednesday.
Specifically, he took his talents across the pond to the ECB. Meeting and speaking in a semi-informal manner, JPow dazzled us with words of wit and wisdom while worries only grew.
Exactly 4-weeks from yesterday, the next FOMC meeting is set to take place. Markets are currently pricing in 81.8% odds of a 25bps hike at said meeting, with the remaining 18.2% given to another pause.
Prior to yesterday, however, those odds sat at just 75%. Maybe JPow’s essentially screaming from the rooftop that “WE’RE RAISING TWO MORE TIMES” might’ve had just a lil’ something to do with that.
In all seriousness, reminding markets that just because we paused once doesn’t mean we can’t f*ck your calls once again in July seemed to be the Chair’s main goal.
Clearly, he did that successfully.
But, there was plenty more on the minds of JPow and the audience alike, leaving the Fed chair to drop some additional color commentary throughout the meeting. Included in those words of wisdom were things like:
Rapper and noted spaghetti-lover Eminem once famously questioned, “How many times can I say the same thing different ways that rhyme?” Jerome Powell is wondering the exact same thing.
?"Rapper and noted spaghetti-lover Eminem once famously questioned ..."
"Naturally, however, the Fed Chair and FOMC will speak in this particularly vague manner ..."
?“We know we’ve hiked a lot, very fast, and that monetary policy has a lagged effect, but we’re not where we need to be on inflation, so we plan to keep rates elevated for longer. We do not know what the terminal level will be or when that will end.”
Naturally, however, the Fed Chair and FOMC will speak in this particularly vague manner just to keep you guessing in case things don’t go according to plan. Like the cool kid in high school, credibility is everything to the Fed and its chairs.
What's Ripe
Joby Aviation (JOBY)?↑ 40.22% ↑
领英推荐
Pinterest (PINS)?↑ 6.59% ↑
What's Rotten
Cava Group (CAVA)?↓ 7.33% ↓
General Mills (GIS)?↓ 5.17% ↓
Data Peel
Thought Banana
Fish But No Chips
Don’t worry, Brits; we’re not talking about you guys (why would we?).
Anyway, we are, in fact, talking about two much more relevant countries: China and the U.S.
As you may be mildly aware, China and the U.S. don’t exactly have a loving relationship. Kind of like parents that are separated but still married, they might not want each other right now, but the love behind the marriage is (probably / hopefully) still there.
"Sure, the odds are low, but they are not 0% ..."
?In this case, if the love is entirely gone, we could very well be looking down the pathway toward a possible nuclear war, so let’s focus on this one today.
Sure, the odds are low, but they are not 0%, so when we see things like continued fraying to the economic love these countries have for each other, it has to be top of mind.
Semi stocks were down almost across the board for the day as news came to light that the U.S. is pushing for further restrictions on the chips that American companies are allowed to sell to China. Once again, one particular company seems to be in mind.
Nvidia was not at all happy with the news. CFO Colette Kress made sure the world knew it too, identifying the potential for “permanent loss of opportunities for the U.S. industry to compete and lead in one of the world’s largest markets.
?"... they are simultaneously allowing homegrown Chinese players to develop competitive and potentially better tech ..."
Specifically, she’s referring to the fact that if the U.S. government goes overboard on the restrictions, they are simultaneously allowing homegrown Chinese players to develop competitive and potentially better tech of their own that’ll get sold to buyers that otherwise could’ve been Nvidia or AMD customers.
Tough call. Regardless, this ban, just like Nvidia’s A100, seems focused pedantically on Nvidia’s new chip, the H100. We’ll see if they can simply just “find a workaround” for this multi-10-bands chip.
The big question:?Will the U.S. and China ever be friends again? Does this fray-on-chip technology lead to further escalations of conflict? How does the industry look from a global perspective in the next 5-10 years and beyond?
Banana Brain Teaser
Yesterday?—?What do you use from your head to your toes, and the more it works, the thinner it grows?
Soap.
Today?— Below are 3 pairs of words. Find the words that fit in the middle of each pair of words to create two new words, one front-ended and one back-ended.
Example: EVER - ______ - HORN
Answer: EVER - GREEN - HORN
Shoot us your guesses [email protected]?with the subject line?“Banana Brain Teaser”.
Wise Investor Says
“Investing is a continuous learning process. Stay curious, adapt to changing market conditions, and never stop educating yourself.”?— Mohnish Pabrai
How would you rate today’s Peel?
Happy Investing,
Patrick & The Daily Peel Team
Realtor Associate @ Next Trend Realty LLC | HAR REALTOR, IRS Tax Preparer
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