The weekend was not fantastic. Jerome Powell’s words from last Thursday still resonate in the minds of the speakers and, while less than 14% thought that the FED could “do nothing” on rates in December, now the probability has increased to 40% chance to see inaction on the part of the FED. It must be said that the CPI and PPI figures published last week did not help to have complete confidence on the subject of inflation which would be “under control”. Not to mention that since the head of the FED spoke, the entire financial community seems to have realized that Trump and his policies ARE inflationary.
The Audio of November 18, 2024
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Doubt
So we start the week with doubts. Since the election of Donald Trump, there was a kind of euphoria in which everyone said that with his coming to power, everything would be easier and that he was going to do magic by relaunching the economy. , creating jobs and stopping wars all over the world in one fell swoop. And then, all of a sudden, after a big week of euphoria and heightened enthusiasm, we begin to realize that it won’t be so simple, not to mention the Trump government which is slowly taking shape before our eyes , is starting to not please everyone – the best example is perhaps (for the moment) the arrival of RFK in health which caused the vaccine manufacturers to panic.
But overall a good part of the speakers began to doubt the ultra-liberal policy of the American billionaire, since by creating jobs and relaunching consumption as he wants to do, he will inevitably raise the inflation – this seems almost too logical – Powell’s words last Thursday even turned the knife in the wound of this inevitable logic. In the middle of all this, there is still Goldman Sachs which thinks that the market underestimates the number of rate cuts that we will have in the next 12 months, since according to the American investment bank, by the end of 2025 , the key rates could well be around 3-3.25% because, according to them, the customs tariffs which will be put in place by the new President will significantly slow down the economy – which will justify the reduction in rates. We must therefore understand that the recovery efforts will not be sufficient to compensate for the slowdown induced by tariffs and that – as a result – lowering rates will be implacably obvious for the FED.
We pay to see
We don’t know – of course – if Goldman Sachs will be right, even if their theory holds up. But in doubt, last Friday we experienced a nice sell-off on the American market, a sell-off that we had not experienced for a long time. A sell-off that covered the market with a veil of doubt and a sell-off that made us think: “What if it wasn’t so simple? “. So of course, we are not in “PANIC Mode”, because the technical supports are still holding on the American indices and this morning, the futures are already trending upwards, but we must nevertheless recognize that in this Monday we are no longer as comfortable as the day after the elections when everyone suddenly thought that Trump was the reincarnation of the Messiah and that it was only a matter of time before he walked on the ‘water.
That was for the weekend. Then there was the weekend and we quickly realized that everything was going very quickly and that things were moving in all directions at very high speeds. It was especially at the end of Sunday that it was interesting. Already there was Macron who was leaving for Argentina to (according to his words) bring the Argentine President to his senses. The guy is hated more than ever in his own country, he constantly walks with his grandmother and he presents himself as “the one who can reason with the great people of this world who deviate from the right path”. Is anyone ever going to realize that this guy is completely crazy? But hey, beyond the Presi-King’s statements, there were also two announcements that were interesting for the new Trump administration, whether political or economic.
Biden treats himself before leaving
The first news that we will have to remember to start the week off right by telling ourselves that the big people of this world are completely stupid, is the official announcement of the American government (or what is left of it) which from now on authorizes the Ukraine to use “long range” missiles against Russia. Something that the USA did not want to hear until then. But this weekend Russia sent its planes to Ukraine and as a result, Biden, who is traveling in the Amazon forest, authorized Zelensky to shoot directly at Moscow. In any case, that’s what it half-heartedly suggests. Military experts have already more or less suggested that this would not change much in the current war, since Ukraine does not have the necessary missiles anyway. On the other hand, it shows all the perversity of a government which is dying and which wants to leave Trump with a hot potato a little hotter than it already was before. Biden is screwed and his presidency is in tatters and in history he will only be remembered as a pathetic puppet, but by allowing Ukraine to send its long range missiles at Russia he is directly implicating NATO in the war. In any case, this is what Putin could interpret. We are waiting for the Kremlin’s response, but Biden might do well to stay in the jungle.
In other big news this weekend, the future Trump administration declared that they wanted to establish a federal framework for fully autonomous vehicles and make it a top priority for the Department of Transportation. This announcement is considered a boon for Tesla – this is what we saw coming as big as a house (but perhaps not so soon). This is yet another masterstroke on the part of Elon Musk who finds himself on the front line to benefit from the new largess of the Trump government while he himself IS in the Trump government. The fabulous mix of capitalism and politics is about to blow up in our faces, just like the price of Tesla which is already up 3% to start the week. If we summarize the current situation; the weekend will have been shit because we realized that we could not: lower rates, create millions of jobs, increase wages, make access to credit EVEN easier, lower taxes and subsidize at all costs without there being any impact on inflation. And we attack the week with simulations of nuclear attacks on kyiv which are circulating all over the internet because Biden is getting involved in the war in Ukraine and Tesla is already receiving THE news that Musk was looking for since the start of the electoral campaign. But above all, above all, the week will be mainly focused on one and only thing: NVIDIA’S FIGURES which will represent the end of the quarterly results season and which should give us the answer that we are all waiting for: Is growth still with us?
In Asia
On the Asian side, we have Japan which is down 1% while the head of the central bank estimates that inflation could come from rising wages and meanwhile, China and Hong Kong are in decline. increase of more or less 0.7%. Note that Samsung is up 7% after announcing an unplanned share buyback. Bitcoin is at $90,600, oil is trading at $67 and gold is at $2,590.
As for the “topic of the day”, and I would even say the topic of the week, we will therefore have to talk about Nvidia, artificial intelligence and a little more about Nvidia, since Wednesday evening after the closing we will know what the largest capitalization in the world has to offer us. We are not going to go into the details of what we expect this morning, we will come back to it throughout the week, but for the moment, all eyes are on this, wondering if growth is still as monstrous or if things calm down a little more than expected. This week, Barron’s is publishing a “special artificial intelligence” report and the second most used word in the financial press is: Nvidia. The first being “Trump” and the third: MUSK.
Numbers
We are therefore going to start the week gently with futures being slightly up and economic news being more or less absent on this Monday morning, absent if we put aside the European Trade Balance which no one cares about and the speech of Madame Lagarde, we wonder how she always has so much to say, when we know that she soon speaks three times a week.
Very good Monday everyone and we’ll see you again tomorrow to start the week in earnest with the figures from the Retail sector, just to see where the American consumer is at the dawn of the Black Friday and Thanksgiving festivities.
See you tomorrow, if you like.
Thomas Veillet
Investir.ch
« Wall Street is the only place that people ride to in a Rolls Royce to get advice from those who take the subway. » – Warren Buffett
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