BentinPartner Weekly
Last week ended a memorable month of August with additional minor equity markets gains while bonds yields rose in response to stronger than expected US economic data.
US consumer spending rose solidly (by 0.5% MoM vs. 0.3% the previous month) in July, while jobless claims declined slightly, and the US GDP rose at an upwardly revised 3% (from 2.8% previously estimated) annual pace last quarter, possibly arguing against a 50bps rate cut this month while other reports showed inflation moderated last month. US consumer confidence rose at 6 months high, although consumers reportedly also became more worried about job prospects.
Nvidia failed to live up to “blow out” expectations and reported some production issues for its latest chips which caused a minor setback for its share price without impacting the tape too much.
Elsewhere in Europe, inflation dropped to it slowest level in three years, setting the stage for a further rate cut in September. French President Macron rejected to name a Prime Minister from the left coalition that won the most seats in last month’s elections which led to anger and calls for destitution.
BoJ reiterated last week that it would continue to raise rates if inflation stayed on course but that it will monitor financial markets conditions with “utmost vigilance”. At the same time the government revised its monthly economic outlook for the first time in 15 months, citing a recovery in consumption. Inflation ex food ex energy in Japan reportedly increased 2.4% in August (from 2.2% in July).
Last week saw elevated tension in the South China Sea where China was blamed by the Philippines to conduct unsafe manoeuvres. At the same time Japan spokesman said that a Chinese military plane had entered its airspace calling the incident totally unacceptable and a threat to national security.
In China, the Central Bank purchased long dated securities while China’s growth target was revised down by UBS to 4.6% (from 4.9% previously expected) due to weak earnings reports from some large consumer companies this month.
I do not like to write about politics which has become very divisive but with the November election approaching, we need to be aware of what is at stake even if markets do not seem to care too much at the moment.
Amidst the “raging” US presidential election campaign, a key and determining development occurred last week with RFK J., the son of Robert Kennedy and nephew of former US President JFK, both emblematic figures of the Democratic party, endorsing D. Trump.
I missed the announcement by a couple days but it seems to have caused an inflection in the polls in what was so far a “neck to neck” race. I listened to the whole endorsement speech of Kennedy Junior. By all standards, it was impressive by the substance, the eloquence and the composure of a speaker, shedding a ray of light and hope on US politics besides likely being a matter of pride for the late father and uncle…
On his reasons to leave the Democratic party in October last year to run as an independent…
“When attending my first democratic convention when I was 6, the Democratic party stood true to its name defending the Constitution, Civil Rights, standing against totalitarism, censorship, colonialism, imperialism and unjust use of force…I left the party in October after joining the race as a democrat in April…because the party departed so much from the core values I grew up with. It has become the party of war, censorship, corruption, big pharma, big tech, big money…”
The Democratic party cancelled debates and fair primaries to conceal the cognitive decline of the sitting President.
Democracy for Democrats became a little more than a slogan when at the foundation, DNC denied debates, fair primaries…and in the name of democracy set itself to dismantle it, using legal force against Trump and myself to send Trump in jail and myself out of the ballot.
Democrats appointed without election a candidate which was so unpopular that she could not win one single delegate in the 2020 race before dropping out.
She did not appear in a single interview, nor did she have an unscripted encounter with voters for 35 days which is profoundly undemocratic. How are people going to choose when they do not know who they are choosing?
Instead of showing her substance and character, DNC and its media organs engineered a surge in popularity of Vice President Harris based upon nothing, no policies, no interviews, no debates, only smoke and mirrors.
But who needs a policy when you have Trump to hate…
I do ten interviews a day. How did they do without a single interview?
By weaponizing Government agencies, by suing the opposition and disenfranchising American voters…
Asking media companies to censor a political speech is an attack on the most sacred right of free expression upon which all other Constitutional rights rest.
When I held 20% of the voting intentions, DNC and allied mainstream media-maintained a near perfect embargo on interviews with me… Back then, Ross Perot got 32 interviews in 16 months when I got only 2 over the same period.
Asking social media to censor me preceding my interventions on Utube and Facebook with a display “This content violates community standards” was an exercise of pure executive power.
The irony is to justify this censorship by saying it is aimed at combatting disinformation. They do not censor lies, nor fear lies. They fear the truth and that is what they censor.
This is not a personal complaint but are we still a model of Democracy?...”
On the war in Ukraine…
“…Ukraine is a proxy in a geopolitical struggle initiated by the ambitions of the US neocons on America’s goal of global hegemony.
I am not excusing Putin for invading Ukraine as he had other options but war was the predictable response to the reckless neocon project of extending Nato to encircle Russia which was a hostile act.
We rarely explained to Americans that we unilaterally walked away from two intermediate nuclear weapons treaty with Russia to put nuclear missile systems in Romania and Poland which were hostile acts.
The war began in 2014 when the US overthrew the democratically elected government of Ukraine, installing a pro-western hand-picked government that launched a deadly civil war against Ethnic Russians in Ukraine.
In 2019, the US walked away from the Minsk Peace Treaty negotiated between Russia and Ukraine by EU nations.
In 2022, we wanted the war to continue with President Biden asking B. Johnson to force Zelinsky to tear up a peace agreement already signed with Russia.
President Biden said at the time that the big objective was regime change in Russia with Defense Minister Austin simultaneously saying that America’s purpose was to exhaust the Russian Army and degrade its capacity to fight anywhere in the world. This had nothing to do with telling Americans about protecting Ukraine’s sovereignty.
Ukraine (and its 600’000 deaths) is a victim and also a victim of the West.
The sabotage of the Nordstream pipeline and sanctions have destroyed European industrial base which formed the bull work of US national security. A strong Germany is a stronger deterrent to Russia than a Germany that is deindustrializing and turned into an extension of the US military base.
We pushed Russia into a disastrous alliance with China and Iran setting us closer to the brink of a nuclear exchange than at any time since 1962…and neocons do not seem to care…
Our moral authority is in shambles and the war gave rise to the emergence of BRICS which now threaten to replace the dollar as the global reserve currency.
This is a first-class calamity for our country.”
Over the past week, the S&P500 gained 0,3% (18,6% YTD) while the Nasdaq100 dropped -0,8% (16,3% YTD). The US small cap index dropped -0,1% (9,7% YTD). AAPL gained 1,0% (18,9%).
The Equally Weighed SP500 gained 0,9% (11,5% YTD), outperforming the S&P500 by 0,6%. The median SP500 YTD return closed the week at 10,9%.
Cboe Volatility Index sold off by -5,4% (20,5% YTD) to 15.
The Eurostoxx50 gained 0,9% (12,5%), outperforming the S&P500 by 0,7%.
Diversified EM equities (VWO) dropped -0,8% (8,8%), underperforming the S&P500 by-1,1%.
The Dollar DXY Index (UUP) measuring the USD performance vs. other G7 currencies gained 1,1% (4,4%) while the MSCI EM currency index (measuring the performance of EM currencies vs. the USD) gained 0,1% (1,3%).
10Y US Treasuries underperformed with yields rising 10bps (2bps) to 3,90%. 10Y Bunds climbed 7bps (28bps) to 2,30%. 10Y Italian BTPs underperformed rising 13bps (0bps) to 3,70%, underperforming Bunds by 6bps.
US High Yield (HY) Average Spread over Treasuries dropped -7bps (-18bps) to 3,05%. US Investment Grade Average OAS dropped -1bps (-4bps) to 1,01%.
In European credit markets, EUR 5Y Senior Financial Spread was unchanged (-7bps) to 0,60%.
Gold dropped -0,4% (21,3%) while Silver sold off by -3,2% (21,3%). Major Gold Mines (GDX) dropped -1,8% (24,5%).
Goldman Sachs Commodity Index dropped -0,7% (0,3%). WTI Crude dropped -1,7% (2,7%).
Overnight in Asia…
S&P500 -9 points; Nikkei -0.1%; CSI300 -1.2%
China’s factory activity (PMI) contracted for a fourth straight month in August.
With Germany’s economy stagnating and migration topping voters’ concerns, Chancellor Olaf Scholz’s ruling coalition was crushed in two regional elections in eastern Germany on Sunday, with populist parties on the extreme right and left winning about half the votes in both Thuringia and Saxony.
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