After tumbling last night as headlines hit that the SEC rejected another nine Bitcoin ETF applications, cryptocurrencies have stabilized (for now). Additionally, a broad crackdown on crypto in China has not triggered wholesale selling.
One day after the the S&P500 bull market set a new duration record, at exactly 0.01 Washington Time on Thursday, the U.S. imposed tariffs of 25% on $16 billion worth of imports from China, sending the US dollar sharply higher across the board.
"It is with great sadness and a heavy heart that we went to see the PM yesterday afternoon to advise him that in our judgement, he no longer enjoyed the majority of support of Liberal members."
There is one loophole Trump could exploit to get around the fund’s constraints and bypass Congress altogether: by declaring FX intervention a "national emergency."
"Our new projections are lower across the board for this year, although the direction of travel is still towards higher yields. We now forecast that US 10y yields will be around 3.10% (vs. 3.25% previously) by year-end 2018."
A basket of the 50 Russell 3000 stocks the largest outstanding short interest as a share of float has outperformed the S&P 500 by 14 percentage points YTD (+21% vs. +7%).
"With the current fed funds rate at 1.75 to 2 percent, it would take approximately three or four more federal funds rate increases of a quarter of a percent to get into the range of this estimated neutral level."
"As of today, the Fed’s independence is guaranteed, but Trump has the ability to make his own appointments to the Fed board. If Fed independence does get threatened, you’re going to see a bond market reaction."
It's relatively quiet week where the highlights will be the latest global PMIs, the Aug 23 US-China tariff deadline, the minutes from the last FOMC and ECB meetings and, of course, Jackson Hole looms at the end of the week.
"This whole issue of how they’re going to change the language of their guidance on the path of rates, and what "for now" means is really what they need to get on to."
The information technology sector accounts for 60% of the increase in S&P 500 profit margins over the past 20 years. Meanwhile firms ex tech, healthcare and consumer discretionary, have seen zero margin expansion this century.
As we continue our trek through the summer doldrums of August - which have been anything but boring - here is what Bank of America believes are the key charts to watch "in a frantic August."
The current pace of rate hikes is almost on par with the pre-Lehman period - a time where policy makers were trying to slow a global economy that felt too good to be true.
In just 4 trading days, the S&P 500 "bull market" which has purchased by central banks with trillions in liquidity and by companies with even more trillions in buybacks, will become longest of all-time. What happens then?
