Market Update: Fri 2nd Aug
Huge payrolls miss
gm
**MACRO** - I would like to start today with a famous quote by Warren Buffet: "it's not looking good bruv". Geopolitical tensions surrounding Iran and Israel, coupled with what has felt like weak tech earnings, sent stocks lower again yesterday with SPX and NDQ closing 1.4% and 2.4% lower, while futures are continuning those losses today down 1.1% and 1.7%. Just feels like to me we had such a great run in stocks that maybe negative headlines now have a stronger impact as everyone attempts not to lose at the game of chicken. Well I am writing this at 1.29PM BST so we are just about to get payrolls, for which consensus is 175k. I would note that given war + bad earnings we have seen quite a big move lower in interest rates with 10Y now sitting at 3.94%, the first time it's been sub 4% since February this year. So payrolls just came in and wow that was a big miss; 114k it came in, and unemployment rate at 4.3% vs 4.1% expected. For me this now makes certain that the Fed will cut rates in Sep, the question is do we see a 25bp or a 50bp rate cut. We're seeing interest rates move a lot lower on this move with 10Y now down to 3.8%, that's a huge move lower. Stocks don't like it either and have fallen even further on the numbers. It begs the question as to whether the Fed has left it too late and that will be the market's primary concern. My gut here is this is the turning point where we now start to see the Fed become very dovish, and we just have to hope economic data holds up.
**CRYPTO** - Has been trading like shit again with BTC dropping as low as 62k yday before recovering. I think the main thing affecting crypto right now is election odds...Kamal has hit new highs and actually leads in one poll, while Trump has dropped to 49% chance of winning on Polymarket, 18pts off the highs. For the first time in a while I do feel a little worried about crypto. There is a dark path where the Fed has left it too late and the US economy goes into a recession as Trump loses and Kamala wins while Gensler stays on and has a free licence to quash our hopes and dreams. We really need a Trump win lol, I think if he lost I would be selling a significant amount if not all of my crypto unless we saw clear signs of a change in wind from Dems re policy. So yeah...precarious times actually and I suppose it's pretty much all election + macro related now...have to keep tabs of all the new information we get and think very carefully. This is not meant to be bearish btw, the scenario where we get rate cuts a soft landing a Trump win and pro crypto still very much exists, it's just that it all feels rather binary with a 50% probability now.
GL today