It’s Monday and the market is preparing for its last big week before summer. Vacations, the beach, all that. This Monday will not be THE crazy day, but everyone will have to go through it to reach the next step which will not be without pitfalls, between consumer confidence, American and British GDP and PCE, just to talk a little again about inflation, you will admit that there is reason to wonder how it will end. We know that at the moment we are gifted at finding the good in a bad number, we simply hope that it will last a few more days… Even if we still see certain doubts appearing on the horizon.
The Audio of June 24, 2024
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The tech in question
Like every Monday, it’s not easy to find interesting things to talk about – especially as this week begins, it’s especially at the end of the week that things will heat up. So we can already come back to the “correction” that has occurred on the AI since last Thursday. We don’t really know what happened and we recovered quite well on Friday – just to save the furniture – but as Nvidia’s & Co recovered at the end of the session, we began to hear more and more voices who question the sustainability of the continuation of the monstrous stock market rally of artificial intelligence. To be frank, this is not the first time that we have asked questions and each time, after a few days of doubt, the sector started to rise again as if nothing had happened. Will this be the case again? The answer should be known in the coming days.
In the coming days, because this week we will have some quarterly publications that will allow us to see how AI-related companies are positioning themselves, since Micron will be one of the stars of the week. We know how close Micron is to this popular theme and depending on what they tell us, we will be able to know or try to find out if the machine is still working. Micron will release its numbers on June 26 after the close. Micron will not be alone, since there will be FedEx which will publish and which will give us clues on the state of the consumer, just like Nike which will also be out.
A passage through the macro
And above all, this week we are going to go through a big stage of macroeconomic figures, this evening we will have the Dallas FED manufacturing Index, tomorrow consumer confidence on Wednesday sales of new homes and the stress tests of banks in the USA – you know the banks, with the 63 regional banks which are on the verge of the abyss and which want to take a big step forward. And then on Thursday there will be US GDP and PCE on Friday. And again, I’m not even talking about the central bankers who will speak, there are between two and three every day.
The week will therefore be very hot and we will have to find something to argue about each time. However, I think the GDP will be very interesting to watch. We have been noticing a slowdown in American economic growth for several months and if this continues, we will find ourselves a little too close to the ZERO level of growth, which would not be completely impossible, since we see that the things are slowly deteriorating, unemployment is on the rise again, job creation is called into question with each publication – publication where we are given an extraordinary figure before correcting downwards the following month when no one anymore to do nothing. To put it simply, there are more and more clues that the economy is failing, clues that we don’t want to see or worse, that suit us, since each bad economic news has become good because it will allow the FED to lower rates. And the drop in rates is our trick, the one that keeps us going and makes us believe that we can still go higher.
Election year performance
The question I ask myself and will always ask myself is whether ONCE RATES REALLY GO TO FALL, won’t the market say to itself that prices are everything and sell everything?? ? Because as soon as the rate cut cycle begins, I’m not sure that the market will continue to use the “BAD NEWS IS GOOD NEWS” technique… In any case, if you delve into the media literature -financial of the weekend, you will see that the job market is starting to send alarm signals and that inflation, even if it seems to be gradually coming to its senses, seems to have done so much damage over the last three years that recovering will take longer than two or three rate cuts here and there.
In any case, for the moment even if there are a few “BEARS” who are heavy-handed and insistent and who are starting to rear their heads outside of their hibernation, the market remains solid on its supports and has not seems to want to surrender so easily. However, we will still remember that we must not forget that we have a goldfish memory and our ability to turn the jacket at the speed of light has been quite exceptional in recent years. For the moment, the American stock markets are experiencing their best election year and nothing seems to be able to derail them, unless the chemical preparation which will be injected into Biden during the debate on Thursday is underdosed and he freezes in the middle of the discussion… And then, since we’re talking politics, let’s not forget that France is still in the middle of the MUPPET SHOW and that they’re doing it again with the “Debate between the good, the bad and the ugly » who will have him Tuesday evening. There too we will be able to witness the biggest unpacking of lies live on TV at prime time. In short, the week will be very interesting, but it won’t necessarily start this Monday… Monday is warm-up day.
In Asia
This morning in Asia the market is rather divided. Japan is up 0.43%, while Hong Kong and China are in the red. The reason for this morning’s drop is fears of seeing a new “trade war” emerge between China and the European Union. Since the announcements of new customs taxes on Chinese electric cars, tensions have continued to increase between the belligerents. And it hasn’t stopped spinning.
On the oil side, black gold is at $80.67, gold is at $2,337 and Bitcoin is at $63,000, plunging. We should also note that raw materials are very volatile at the moment and that this has or will inevitably have consequences on our consumption. We have already seen a drop in demand for meat, suggesting that consumers are paying more attention to what they buy because it is not easy for anyone.
News of the day
For today’s news, according to a survey this weekend which was carried out by the Financial Times, “the French” give their confidence to the far right when it comes to the economy. It is clear that when we see Mélenchon excitedly talking about the economy, I am not sure that it will score points for the left. But hey, the suspense continues in France and we haven’t stopped laughing. It should also be noted that there is almost no talk about the tensions between Israel and Lebanon. Israel threatens to attack the Hamas bases entrenched there if the Lebanese authorities do not push Hamas towards the border. An American general declared this weekend that in the event of a frontal attack, the Iranians could respond and that could lead to a much more complex war in the region. We already know the story, but it comes up again.
Otherwise, amidst the voices saying that things are going to get bad, Ed Yardeni has just announced that the S&P500 will go to 8,000 before the end of the decade and that the bull market is here to stay. And then, we note that the companies which make donations to political parties in the USA are clearly in favor of the Republicans, Biden is increasingly in trouble. The good news is that he doesn’t realize it. And then Apple continues to be “upgraded” in every direction, the last upgrade of the weekend sets a target of $240, because “the company is becoming a leader in artificial intelligence”.
For the moment, futures are down 0.12% and the week is starting slowly, but trust me: it won’t last. Have a great Monday everyone and we’ll see you tomorrow with a lot more to say!
Be strong !
Thomas Veillet
Investir.ch
“If you’re prepared to invest in a company, then you ought to be able to explain why in simple language that a fifth grader could understand, and quickly enough so the fifth grader won’t get bored.” Peter Lynch
