Why Powell May Have Just Hurt Q2 Growth

https://www.bfm.my/podcast/morning-run/market-watch/nvidia-adp-nfp-microsoft-3trillion-payrolls-ratecut-opec

https://peterlewismoneytalk.substack.com/p/peter-lewis-money-talk-thursday-6-1ab

ASEAN Girds For Growth

The full episode was posted at https://www.channelnewsasia.com. It may be removed after a few weeks. This video segment is owned by CNA.

US banking giants express optimism for the year ahead despite warning of potential risks to the economic recovery. Sachs reports a 51% increase in earnings, driven by strong performance in asset and wealth management. However, Morgan Stanley’s net income falls over 30% due to charges, reflecting a mixed performance in the banking sector. The market sell-off is attributed to concerns about the resilience of US markets, potential volatility in the coming months, and uncertainty surrounding the upcoming presidential election and US fiscal spending.

Additionally, Wall Street is affected by the mixed reports from Goldman Sachs and Morgan Stanley weighing on market sentiment.

The show also discusses the upcoming reports from middle regional banks to gauge the performance of commercial lending, consumer activity, and the overall tone for corporate finance and insurance in the next quarter. Overall, market sentiment remains cautious due to uncertainties surrounding economic indicators, the upcoming election, and fiscal spending in the US.

✅ Create and forecast your own investment portfolios.
✅ 94.7% market forecast accuracy.
✅ 1,600+ assets forecasted every week.

Subscribe to CI Markets free. Learn more.

Transcript

CNA

US banking giants are finally calling the bottom, signaling a deal making comeback in the coming months. Executives of two major lenders expressed optimism for the year ahead as they reported fourth quarter earnings. But they also warned of risks that could disrupt the economic recovery. And Goldman Sachs stuck the landing after tumultuous year for the bank. Its earnings jumped 51% in the fourth quarter from a year ago. A strong performance from its asset and wealth management business supported the profit boost, offsetting weaker investment banking, and its shares ended up about seven tenths of a percent. Meantime, Morgan Stanley also topped revenue estimates on an investment banking rebound. But the net income fell more than 30% due to one of charges, pushing its shares lower by more than 4% there. Now it is the first scorecard under new CEO Ted pick, who warned of two major downside risks, including concerns around geopolitics and the health of the US economy. Those bank earnings results posing one of the biggest drags on Wall street, pushing all three major indices lower overnight. Now the S&P 500 had been trading near its all time closing peak, reached in 2022 over the past several sessions, but it is now down about 1% from that record high.

CNA

Meantime, the tech heavy Nasdaq shed about two tenths of a percent. Boeing was the biggest loser in the Dow, shedding about 8%. The plane maker has yet to regain investor confidence after us aviation regulators extended the grounding of its seven three seven max nine jets indefinitely for new safety checks. Spirit Airlines, though, losing more altitude over a blocked acquisition deal. A federal judge ruled against JetBlue’s nearly $4 billion takeover proposal of spirit airlines over antitrust issues. And as equities tumbled, US treasury yields rose with the dollar amid easing rate cut expectations. Yields on benchmark tenure notes are back above 4%. Again on hawkish remarks from Fed governor Christopher Waller. Tony Nash, founder and CEO at Complete Intelligence, joins us for more now. Tony, we’re looking at Wall Street’s sell off accelerating. We’re hearing at the that, you know, markets may have gotten ahead of themselves regarding how deep and how fast those policy rate cuts could be. Your take on that and how we can expect markets to move?

Tony Nash

Sure, the problem with us markets right now is that they’re priced for perfection. So if anything goes wrong, if the Fed signals an overly hawkish message or an overly dovish message, or say, a government macroeconomic data print comes out that isn’t perfect, or if company earnings don’t come out that aren’t perfect, then we can really see some wobbles in us markets. So I’m not really sure about the resilience of markets here. I think what we’ve been telling our customers is you’re going to see some intramonth volatility for the next few months until investors become confident in the direction of the Fed.

CNA

At the same time, this year is a pretty big one. For the US. It is election year. How much of this of lack last step performance is actually due to this? S&P 500 historically performs well in an election year, but it typically sees a slower start first, or is this just part of what is usually happening?

Tony Nash

Yeah, a lot of this really depends on Janet Yellen, the treasury secretary. If she can sell enough bonds to have cash to spend money from the US government, then we can really see markets rally pretty hard. But if Yellen can’t get the authority and can’t sell the bonds necessary to do that, then the US fiscal spending will be problematic. We also have a budget that’s going through in the US and a tentative budget agreement. If the Republicans halt that agreement and make more fiscal spending cut demands, then that could weigh on the US economy as well. Yes, traditionally markets do well in a presidential year, but I think there’s a little bit uncertainty around the election. And people, I think people are a little bit hesitant to spend partly because they’re a little bit loaded up on debt or a lot loaded up on debt. And we’ve seen a really robust 22 and 23. And so really people are wondering how far can we push this in 2024?

CNA

Indeed, dampening sentiment there. Big bank earnings. We’ve got Goldman and Morgan did the latest two report appears to be quite a mixed bag, but mostly not so great this quarter. And that’s weighed on Wall street as well. How do you read the latest earnings report? Are we talking bad debt, the lingering effects of high for longer rates? And what does it tell you about the consumer?

Tony Nash

Yeah, I think that what we’re really waiting for is some of these middle regional banks to see how they report because we’ll know how, say, commercial lending is doing and how commercial real estate lending and how consumers are doing. It’ll be much more evident as we see these regional and mid sized banks report. The larger banks, they’ll be fine. They are fine. They know how to manage and trade off the different lines of business that they have. It really is the mid sized banks that we’re waiting on and that will set the tone for a lot of the corporate finance and banking and insurance for the next quarter.

CNA

All right, Tony, appreciate time this morning. Tony Nash, founder and CEO at Complete Intelligence.

The full episode was posted at https://www.channelnewsasia.com. It may be removed after a few weeks. This video segment is owned by CNA. 

The recent plunge in oil prices due to concerns over waning demand and the Israel-Hamas conflict. Weak trade data from China, a strengthening dollar, and higher interest rates are also contributing to the drop in oil prices. Additionally, it mentions the Wall Street stock market’s gains and the US adding Vietnam back to its foreign exchange monitoring list.

Tony Nash comments on the weakening US dollar and the trajectory of both the dollar and the Chinese Yuan. He also addresses the sentiment across major banks regarding the possibility of rate cuts and predicts that the US may not see any cuts until late Q2 of 2024.

Nash suggests that US equities could continue their rally, particularly if corporate earnings accelerate, and tech stocks remain strong. However, he notes that the market’s sustainability hinges on the breadth of the rally and the underlying strength in the markets.

In conclusion, the transcript provides insights into the factors influencing oil prices, currency trajectories, potential US rate cuts, and the sustainability of the US equities rally, as discussed by Tony Nash.

Predict the future of the stock market with CI Markets. Get 40% off your annual subscription with the code SAVE200. This offer ends on November 30th, so don’t miss out!

Transcript

CNA

Ultra prices have plunged more than 4% to their lowest in three months. Worries over waning demand have overshadowed concerns as the Israel Hamas war will stoke further instability in the oil rich Middle East. A WTI has fallen below a $78 a barrel, while Brent also down more than 4% there at 81 41 a barrel. Oil prices have now shed all the gains made since Hamas attacked Israel on October the 7th. Brent crude futures then had risen as much as $92 a barrel in the succeeding days as Israel’s subsequent declaration of war sparked fears of a broader regional conflict. Our traders, they will remain on alert for that risk. But for now, those fears seem to have subsided. Although a price drop overnight was triggered by weak trade data out of China, Chinese exports have fallen at a faster than expected rate of 6.4%, indicating slowing global demand for the commodity. And on top of that, the strengthening dollar and higher interest rates are also squeezing demand for oil. Meantime, stocks continue to gain ground on Wall street overnight as both the S&P 500 and the Nasdaq claimed their longest winning streaks in nearly two years.

CNA

Meantime, all three majors climbed higher, with tech stocks among the notable gainers as treasury yields fell. We are also tracking currency moves this morning after the US added Vietnam back to its foreign exchange monitoring list. Vietnam joins China, Germany, Malaysia, Singapore and Taiwan on that list, with both South Korea and Switzerland being removed from the group. We go now to Tony Nash, founder and CEO, complete intelligence for more. Tony, let’s talk. Following the US foreign exchange monitoring list, US also called for greater transparency in how China conducts its exchange rate policy. As of the yuan, that’s hit a 16 year low against the dollar. What is the trajectory you think for both currencies from this point? If you could also talk about the impact on exchange rates.

Tony Nash

Sure, yeah. Thanks, Elizabeth. So the dollar has seen some weakness over the past week or so, partly because of the dovish comments that Fed Chair Powell made last week in the monthly Fed meeting. We do expect him to come with some more hawkish comments in his speeches on Wednesday and Thursday. That’s why we’ve seen the dollar strengthen today, and we expect it to strengthen going into the end of the, you know, the dollar is in a zone where it’s likely to weaken as expectations for future Fed easing become more kind of status quo. So what the Fed is fighting against is a feeling that they’re going to start easing, meaning lowering interest rates sooner rather than later. Now, with the Chinese Yuan, I think the concern is how are those decisions made at the PBOC in terms of the value of CNY. And how does that translate to kind of the more open market currency, the CNH, which is traded out of Hong Kong? So I guess what the US is really looking for is what’s called a non tariff barrier. So it’s how is China weakening their currency too much to really help their international trade?

Tony Nash

And as we saw with the Chinese trade data, their exports are declining, their imports are rising. So even if China is manipulating down, it’s not really working for their export demand.

CNA

Tony, back on the USD, you’re talking about some weakening there. If we see moves by the Fed to hold, that is also a sentiment that we see across other major banks. We’ve seen them pose on their rate hike cycle. And big question now from investors is when the cuts could happen. In your assessment, when could that be?

Tony Nash

Look, I don’t really see any cuts until at least maybe late Q two of 2024. The US is not really in a fabulous position, and it’s not in a terrible position. We’re in one of those places where the next Fed meeting could go. Any way they could hold. We could potentially even see a rise. It’s doubtful, but we could see the Fed raise another 25 basis points. We’ve seen some Fed voters out this week with comments saying, look, we really want to get inflation back to 2%, so until we’re there, we need to keep things pretty tight. And so tight money means higher interest rates, potentially. It definitely means holding interest rates for a period of time. So I would say at least for the next three or four meetings, we shouldn’t really expect much in terms of rates. We’ve also seen the Fed continue to sell things off of its balance sheet, which means when the Fed sells things off of the balance sheet, they’re taking currency out of circulation. And that also puts upward pressure on the value of the US dollar. So if there are less dollars in circulation, the ones that remain in circulation are more valuable.

Tony Nash

So as the Fed undertakes QT to reduce its balance sheet, it pushes up the value of that dollar.

CNA

But markets, well, they still seem to be fueled by optimism that even if there are no cuts, at least a hold looks likely for some time. US equities, they continue their run. Can they build on November’s rally? Is this rally sustainable? You think.

Tony Nash

It’s possible? I think it’s really possible. If we see corporate earnings accelerate, we’ve seen tech over the last few days really continue to be strong. Is it possible that tech, say, earnings continue to rise? Yeah, absolutely possible. And so we could continue to see those tech stocks rise? I don’t know how much they can rise, at least in the immediate term. From here, it’s possible that we continue to see upward pressure, but I’m not quite sure how much further they can rise. And a lot of what we’re seeing is really seven stocks pushing Us indices higher. And so as those seven stocks continue to be almost a reinforcement mechanism for markets to rise higher, they become more and more fragile as they’re pushed up. So we really have to look for breadth in markets. If we see the rally can kind of widen, then that would mean that there’s underlying strength in these markets, and we could continue to see them rise on a broad basis.

CNA

Well, Tony, appreciate your time this morning. Tony Nash there, founder and CEO of Complete Intelligence.

This video is first and originally published by TalkTV on Youtube.

In a recent interview, Tony Nash, the founder of Complete Intelligence, discussed the impact of artificial intelligence (AI) on jobs and society.

He highlighted that while AI and automation may lead to the loss of certain jobs, it also presents an opportunity for individuals to engage in more interesting and problem-solving tasks.

Nash emphasized that white-collar professionals will need to learn new skills and adapt to the changing workforce.

He also expressed concerns about the data collected by AI tools and how it may be used, noting that the profiling capabilities of AI can be unsettling.

Overall, Nash believes that AI is transforming the workforce by automating mundane tasks and allowing individuals to focus on more meaningful and engaging work.

Transcript

Rosanna Lockwood

Well, this morning, Rishi Sunak sought to reassure us, the public, about the risks posed by artificial intelligence. His speech came with the release of a government paper into the capabilities and risks from AI, with increased unemployment and poverty being highlighted as possible consequences by 2030.

Rosanna Lockwood

Ahead of next week’s AI Safety Summit at Bletchley Park, you’re going to hear a lot about that. Trust me, Sunak said, quote, AI will bring a transformation as far reaching as the Industrial Revolution, the coming of electricity, or the birth of the Internet. But with more than 10,000 jobs to be replaced by new tech, including AI, what could this new world look like? That’s what we’re asking this evening.

Rosanna Lockwood

Joining me to discuss this found of Complete Intelligence, Tony Nash. Tony, thanks for making time. Look, starting with Sunak’s speech this morning, if the aim was to reassure the public about the risk being posed by AI, this is our British Prime Minister saying, Look, you just got to work with it and it will be okay. Do you think we should feel reassured?

Tony Nash

I don’t know if it’s a matter of feeling reassured or just becoming more educated about what AI is. Ai is really just processing more information and completing tasks. It’s synthesizing the information you’re putting in, and it’s completing tasks on your behalf. I think the bigger issue… your report said that we’d be losing 10,000 jobs or the UK would be losing 10,000 jobs by 2030. The UK lost 11,000 jobs just in the month of September. In context, that 10,000 jobs really isn’t that much.

Tony Nash

We’ve seen a lot of technology change over the last 150 years or something, and we don’t have things like typing pools in companies anymore. Some of the low-level analytical work that say AI would be doing, or maybe some of the low-level creative work that AI would be doing. I think that stuff is going to be changed by automation, regardless whether this technology is called AI or something else.

Rosanna Lockwood

Remind us… Our view is what Complete Intelligence does, because you’re working with AI already. We are. Yeah. Tell us about what it is you do.

Tony Nash

Yes. We work with corporate finance, and we take the annual budgeting process and the monthly re-budgeting process that people do in finance, in supply chain, and other things, and we forecast that.

We take over that automation. So everyone hates the annual budget process. We take that off of people’s hands and we automate it. We are in some cases, nine times more accurate than companies can do it themselves. Companies have hundreds of people involved in these processes, and it takes months. We take it down to less than a day with zero people involved.

Tony Nash

And then the experts within those companies can validate what we do. I think that’s the key part about AI that really helps people is the mundane work is taken off of them, and then people can use their expertise to validate what the AI does.

Rosanna Lockwood

A lot of people can get on board the efficiency of that and the accuracy. It’s sometimes called the new Industrial Revolution, and we hear these claims that we need to be working with AI to get forward. But in terms of the jobs that have been taken out by those processes, and this isn’t I’m not levying this at you and your company because this is what it’s all about. What do you think society is going to be like without those jobs? You mentioned there it’s a low rate of loss, but ultimately people are going to not have that work.

Tony Nash

I think what’s interesting about the AI discussion is when we talk about, say, automation of, say, warehouse jobs or something, it’s seen as a technological marvel. But when we talk about AI and it’s the automation of white-collar jobs or professional jobs, then it’s a tragedy. I think AI and automation is hitting across the workforce. And like those warehouse workers have had to learn new skills, white-collar professionals are going to have to learn new skills as well. And it’s not a learn to code, lame response. You actually get to do the things that are more interesting. So when we work with companies, their staff love us because they get to do more interesting things to solve company problems. Rather than sitting in data, rather than sitting in Excel, these sorts of things, sitting in budget meetings, they actually get to engage and solve company problems, which is a lot more interesting. Again, I think at this phase of AI, what’s really happening is those lower-level boring jobs are being taken away.

Tony Nash

So with this consumer AI that people are seeing on their social media or with, say, ChatGPT, the worry that I would have about that manifestation of AI is what data are those tools collecting and how are they using it?

Tony Nash

So this goes back to internet stuff, where how much data is your social media taking from you? With AI, they’ll actually profile you more specifically and more precisely. And that itself, to be honest, is a little bit scarier than, say, the job loss we’ll see from AI.

Rosanna Lockwood

Yeah, those questions about the data being used and how it can be manipulated as well by humans, it must be said, are all going to be addressed next week. There’s AI Summit here in the UK. Tony Nash, founder of Complete Intelligence. Thank you.

Tony Nash

Thank you.