Stocks, Gold, and Crypto Experience Increase Due to Jensen, Jerome, & Jobs

Market Overview

The past week was filled with significant events such as the US CPI, US PPI, Presidential debate, ECB rate decision, and WSJ Fed whispers. These events led to an increase in the prices of stocks, bonds, gold, crypto, and crude, while the dollar took a hit.

Survey data, which is primarily based on hope, continues to rise, while hard data, especially labor market-related, has been falling behind expectations significantly.

Rate-Cut Expectations

Comments from The Wall Street Journal's Fed-Whisperer about the possibility of a 50bps cut next week have led to an increase in rate-cut expectations, despite the chop around the hotter-than-expected core CPI print. This has shifted the market's expectations for a 50bps cut next week above 50%.

Treasury yields were all lower on the week, led by the short-end. Despite bonds being bid, US stocks saw a sharp increase midweek after NVDA CEO Jensen Huang stated that "demand was incredible". This led to a sudden squeeze into Friday with Small Caps and Nasdaq leading. Nasdaq was up just under 6% this week - its best week since the Powell Pivot at the start of Nov 2023.

Stocks and Bonds

Small Caps soared 2.5% today, while "Most Shorted" stocks saw an increase all week. Mag7 stocks were up 5 days in a row, marking their best week since March 2023.

This week was not just about AI stocks but also the second-derivatives trades, like powering AI. Goldman's Power-Up-America basket had its best week in the last two years. Stocks notably decoupled from bonds this week.

Dollar, Gold, and Oil

The dollar was hit hard after the WSJ comments, marking its sixth down week in the last seven weeks. However, it remains in a relatively narrow band for the last four weeks. The dollar's weakness helped lift gold, which surged to a new record high with its best week in five months.

Oil prices also ended the week higher, despite a pullback today, but WTI remains below $70. This, along with the broad commodity space, is the only aspect of the markets that comes close to pricing in the 230bps of cuts priced into FF futures.

Bitcoin Surge

Finally, bitcoin surged to its best week in two months, testing back up to $60,000 today. Perhaps the lagged impact of the surge in global liquidity (money supply) is about to send it to the moon. Gold and stocks are already there.

Bottom Line

It's been an eventful week in the financial world with significant movements in stocks, gold, and crypto. The market's reaction to various events and announcements has led to some interesting shifts. What are your thoughts on these developments? Do you think these trends will continue? Share your thoughts and this article with your friends. Don't forget to sign up for the Daily Briefing, which is delivered every day at 6pm.