TheBRRR’s Thoughts

GM.

US markets are inching higher in a broad rally today. The strength is in the face of dire performance from China’s equity markets, as Chinese stocks continue to drift lower amidst an ongoing recession and collapse in both retail and investor confidence.

As covered on Friday, Chinese sovereign wealth funds have begun buying index funds to restore confidence, but have been fairly conservative so far - only deploying single-digit billions of dollars.

The job may require an order of magnitude more than that.

Elsewhere, crypto continues to bleed lower. However the relentless post-ETF selling may be slowing down now that FTX liquidated its $1b+ GBTC position last week.

$40,000 remains a strong level of support for now, but we’d like to see it regain $44,000 sooner rather than later. If not, we expect weakness and a retest of $35,000 at some point over the next few months.

Macro News

Dimon, Bankers Warm on Trump Presidency

WHAT HAPPENED:

• Shifting Wall Street Stance: Many Wall Street executives are no longer speaking out against Donald Trump, with some considering supporting him over Joe Biden.

• Jamie Dimon's Praise for Trump: JPMorgan Chase CEO Jamie Dimon, a longtime democratic party donor, commended Trump's economic and immigration policies, proclaiming he was “right” on many major issues.

• Reluctance to Fund Anti-Trump Efforts: Financial executives show little interest in funding movements against Trump, doubting their effectiveness.

• Waning Support for Haley: Financial support for Nikki Haley, Trump's primary rival, is diminishing among Wall Street executives.

WHY IT MATTERS:

• Influence on Political Funding: Wall Street's stance can heavily influence political campaign financing and public perceptions.

• Economic Policy Implications: The perceived business-friendly policies of Trump might sway executives, impacting economic decisions.

• Shaping Political Landscape: This trend reflects Trump's consolidation as the probable GOP nominee, affecting broader dymanics.

• Market Sentiment Indicator: Wall Street's position could signal investor sentiment and potentially influence market trends.

ZeroHedge

BRRR’s Take: With Biden’s approval rating setting a new low last week, it’s no secret that the country is questioning if there’s a better path forward. Trump was a friendly President to Wall Street - from passing for tax cuts to bullying Jay Powell into lowering interest rates.

Market Summary

US Stocks Climb to ATH, Chinese Stocks Fall to Multiyear Lows

WHAT HAPPENED:

• U.S. Market Surge: S&P 500 futures reached a new all-time high, topping their previous record set on Jan 2, 2022, after 746 days. The rally is tech-led, with Nasdaq futures outperforming, driven by chatbot enablers and chipmakers.

• Notable Corporate Movements:

  • Tesla, Intel, and PayPal saw premarket advances.

  • Boeing shares declined by 2.5% following regulatory recommendations for door plug inspections.

  • Archer-Daniels-Midland Co. dropped 13% after its CFO was placed on leave amidst a new investigation.

  • Digital World Acquisition increased by 7.4% in response to political developments.

  • Macy’s Inc. shares rose 3.2% after rejecting a takeover bid.

  • Spirit Air jumped 5.7% amid ongoing merger discussions with JetBlue Airways.

• China's Market Response: The Chinese Plunge Protection Team intervened as the CSI 300 Index fell by 1.5%, indicating continued volatility and government efforts to stabilize the market.

• Global Economic Indicators: Oil prices steadied, with Brent crude holding above $78 a barrel. The U.S. Dollar Index showed a slight dip.

• Earnings Season Outlook: Key earnings reports from companies like Netflix Inc., Tesla, and Intel are anticipated, potentially influencing market trends.

WHY IT MATTERS:

• Reflecting Investor Optimism: The surge in U.S. markets, especially the S&P 500 reaching a new high, mirrors strong investor confidence and expectations for steady economic growth.

• Tech Sector's Pivotal Role: The significant role of technology companies in driving market trends is evident from the Nasdaq's performance.

• China's Economic Stability Concerns: The intervention by China's Plunge Protection Team highlights ongoing economic challenges and efforts to maintain market stability in China.

• Earnings as Market Catalysts: The upcoming earnings reports are crucial in shaping market expectations and could further influence market dynamics, especially in the technology and consumer sectors.

Zerohedge

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The BRRR is meant for informational purposes only. It is not investment advice. Please consult with your investment, tax, or legal advisor before making any investment decisions.