Let's get to the big story.
Breakdown ahead of the market open here on Wall Street.
We are looking at US stock futures higher chip makers are rebounding as well, and Wall Street kicking off a critical week on a cautious note ahead of a high stakes earnings report from the video and at the same time oil prices are retreating author highs as Treasury Secretary Scott Besson outlined in economic D-Day pressure campaign against Iran and with the.
That preparing for Kevin's debut keynote at Jackson Hole on Friday as well as a fresh PC inflation reading on the horizon.
Traders are balancing tech volatility with geopolitical as well as monetary policy uncertainty while joining us to break down trading flows on the floor here at the New York Stock Exchange is Michael Ranking, senior market strategist at the NYSC.
Michael, good morning.
Thank you so much for joining me. morning.
Thanks for having me back.
Well, we've.
Seen a lot move the markets, especially the bond markets, since you were last on on Tuesday.
So given what we've heard from the Treasury Department, what is your assessment of where we stand right now?
Yes, so the big news of last week obviously was the buyback announcement by the Treasury announcing that they would buy back longer duration bonds, you know, doubling the size of the current buyback program.
Um, you know, we, we saw sort of a modest response to that in terms of, um, bond yields and kind of equity markets where we really saw kind of the biggest move, uh, you know, kind of came, you know, kind of in the US dollar and kind of really that debasement trade where you saw kind of a flow into hard assets, you know, kind of, you know, gold.
Other precious metals and then it really kind of kick started a very significant rally in the crypto complex right where you've, you know, kind of been in the throes of this bear market for, you know, kind of almost 6 months at this point.
Uh, you saw some kind of record, record kind of, uh, you know, short liquidation positions, you know, with reports, you know, being, uh, you know, over $3 billion of kind of short positions were liquidated and that also kind of came as you had the.
The administration highlighting kind of the push to get clarity across the finish line while the SEC was also kind of working with a parallel path to move forward should that not should that not pass, so you saw some pretty significant moves. equity markets though kind of really continue to kind of trade in a pretty tight range, you're kind of just below all time highs.
Yes, and there are a lot of undercurrents here because you mentioned.
What we're seeing in the crypto market, given the fact that Bitcoin soared and briefly topped that 80,000 level, but you mentioned the debasement trade, so obviously we're continuing to monitor what's happening with gold prices as well.
But we're also looking at oil prices pulling back this morning.
So give us your take on what Besant said yesterday.
Yes, so I mean we we're seeing kind of oil prices pulling back this morning on headlines from.
Pakistan suggesting that there were some some positive developments in talks overnight.
You know, yesterday, Treasury Secretary Besson kind of laid out Operation Outcast, you know, where you basically saying that any kind of countries that are doing business with, you know, there will be sanctions on any countries that are doing business with Iran, that is clearly the most important counter.
Part is China right in that in that relationship and we've already seen officials from China pushing back on that saying there would be kind of a significant retaliation if there were any moves made by the US on that front.
The Treasury Secretary Besson suggested that we would hear sanctions on a major financial institution by the end of this week, right?
So you've already very quickly seen.
China pushback, you know, and we're starting to see, I think, you know, some positioning ahead of President Xi's kind of trip here in a couple of weeks with both sides, you know, kind of now starting to kind of position themselves, you can afford those, you know, negotiations and maybe it's a situation where it's an escalate to de-escalate, you kind of set up where, you know, when he does come, we see some potentially positive developments from the relationship.
Yes, and as you highlighted, there's a lot of anticipation for what's coming down the pike, especially for the final full trading week of August, because we still have that Jackson Hole symposium coming out at the end of the week.
We get PCE as well as another reading of GDP tomorrow, and of course all eyes on Nvidia after the ball and this does come after Nvidia shares saw quite the sell-off, and we are seeing a slight rebound in chip stocks today.
But what's the most important.
Thing that you're going to pay attention to, I mean I think you know just given the kind of the heavy weighting of technology within US markets, right, I mean you know the tech earnings that we're going to get after the close tomorrow, you know, not only do we have Nvidia, we have CrowdStrike, you know, HP, right, so there's a couple of other kind of major kind of tech earnings after the close tomorrow as well.
You know, over the weekend we had some negative headlines, you know, kind of talking.
About kind of pricing for discounting in frontier model pricing, you know, some of the uptake on some of the most recent model releases being a little bit weaker and then the Nvidia price increases which really kind of weighed you know kind of caused a little bit of rotation within kind of the tech trade as the hyper scales that have been kind of working on building their own alternatives to wean off of some of the Nvidia products kind of actually out.
Formed while you saw the neo clouds which are very, very reliant on kind of that Nvidia ecosystem coming under some pressure, um, you know what we've seen from a market perspective is really been this compression of volatility as we're kind of awaiting, uh, you know, as we're awaiting these key catalysts, right?
So on Friday we had options exploration, you know, there was a question as to whether or not you would with those positions rolling off, whether you would start to see kind of volatility begin to increase.
And that was kind of a release valve, you know that hasn't happened yet, but I think that's partially because we're waiting on these catalysts, right, and it's not only equity markets, right, if you look at kind of treasury markets, we're in a pretty tight range as well.
It's kind of 20 basis point range for both you know for the 10 year and the 30 year, you know, so 46, 48 for the 10 year, 535, 515 for the 30 year, right?
And if you start to break either one of those ranges, I think that'll be kind of pretty telling.
In terms of how equity markets are going to respond, yes, and Michael, finally, of course, speaking of Catalysts, we'll be paying attention to what comes out of Jackson Hole, Wyoming on Friday morning.
So this is going to be an interesting event before the weekend, and I'm sure that all of us will be paying attention to what happens to the yield curve as well as all asset classes.
But what should we be expecting?
Yes, I mean, it's it's that's the big question, right?
You know.
Fed Chair Warsh is kind of really relied upon kind of not providing, you know, kind of forward guidance and not necessarily, you know, kind of being all that talkative, right, and so it would be sort of odd to expect him to really kind of change, you know, kind of change, you know, uh, with, with Friday's speech, um, you know, markets have been really focused on kind of, uh, you know, last night where we had an op ed out of Stanley Drucken Miller who was a former boss, former. of both Treasury Secretary Besson and Kevin Warsh, you know, kind of really pushing back against, you know, the actions that were taken by Secretary Besson, you know, last week.
So you know there's been a little bit of focus there, you know, look, that, you know, kind of the Treasury twist as he liked to call it, that does kind of put, you know, makes makes the Fed's job a little bit more difficult, right, in that there are some inflationary impacts of that, right, as well, you know, kind of as you know, kind of just.
Increasing, you know, kind of the inflation impacts and just you know not.
Making taking the role away from kind of the Federal Reserve that we've like historically seen, so we're going to have to see if he kind of acknowledges kind of the fiscal and monetary policy side, you're kind of working more closely together.
It is something that he's hinted at in the past.
A lot to keep our eyes on as we head into the final trading days of the month.
So thank you so much for joining us, Michael.
Appreciate your time.
Thanks for having me.
