Tai Wong: WSJ article boosts markets, big industrial strike, new highs in gold | Sep.13, 2024

welcome to Global money talk brought to you by SRO TV greetings to all of our viewers from the US Korea and around the world we're coming to you live from the floor of the New York Stock Exchange I'm your host Remy Blair and we are coming to you live from the financial capital in the US in New York City we'll start the hour with the market briefing and live coverage of us markets for today's market briefing we have Tai Wong independent proprietary Trader and in the second half we'll be joined by Zach Pendle head of research at race scale Ty happy Friday thank you so much for joining me what a week it has been it's good to be here it has been a really active week I think next week's going a bit of a barn burner as well but always glad to be here well I think we should check in on the markets right now on this Friday morning we're seeing the Dow NASDAQ S&P 500 all Higher by at least half a percent the Dow Jones industrial average of triple digits nearly 300 points or 7% and looking at the NASDAQ composite index it is higher as well this morning up by 6% seeing a gain of over 100 points and last but not least looking at the S&P 500 it is higher as well up by half a per. so first and foremost Tai let's start out with the Fed rate meeting coming up next week from September 17th to the 18th now initially on the heels of this week's economic data their expectations of a 25 basis point weight cut but coming into this morning we've been hearing different yeah I mean what what a c chain so yesterday during the show I I was checking the odds and the CM fed watch tool had 10 or 15% chance of a 50 basis point cut and then this morning you look at the uh you look at the bond market like why is the bond market up so much it turns out that in the afternoon yesterday Nick timas of the Wall Street Journal who's Now sort of the considered by the market the favored Source the market thinks he's the FED Whisperer in that somebody very high in the Whispers to Nick that we want to send this message we want to set certain expectations so whether that's true or not it may well be uh there have been folks like Nick in in the you know in previous years who were considered sort of like the guru when they wrote something people really paid attention but Nick's that guy now and his piece yesterday is a relatively long piece and it quoted a lot of former fed uh former fed Governors because they're in a blackout period the FED can't say anything but if they want to tweet this is how I guess they would tweaking this what the Market's thinking and it was a very very sort of doish piece almost everybody quoted in it um said that you know there's room for 50 basis points it should be 50 basis points and the one that really struck me was that he quoted former Kansas City fed president Esther George and if you're sort of a Fed geek like me and you pay attention to all these folks she was the most hawkish or otherwise always lwi inflation High interest rate uh member of the the entire Federal Reserve she was the most hawkish she retired last year and here's the here's the quote from the uh from the let's take a look Artic says for those reasons George said she would find it hard to oppose a larger cut right now you can make a very good case for 50 to say just as we went quickly to raise rate above a neutral setting we're not we're now well above it so we can take a couple bites at this apple and that's that's a wow that's from Esther George it's not from somebody who was known to be a dog so I think that the market is now as a practical matter almost 5050 for a 50 basis point rate cut and you know that and I think that's part of the reason why the stock market is up you know substantially the bond markets are up it's made the markets that were really pretty comfortable saying whoa whoa whoa could we really could we see 50 and it's got to make you think because uh you know the source of this material so let's wait for the end of the day and then I think the market will recalibrate perhap on Monday but it became it went from what we call a 10 or 15 Delta to I think maybe a 30 35 Delta now I still think that the FED ought to start with 25 because the message they send they send with 50 is to say we were late and you know why didn't we cut in July and I don't think that's a message they s they want to send do 25 give a doish directive and you know move on I think it'll be just as good because I think 50 gives there are some sorts of risks in it well Ty you brought up a lot of key points there and usually here in the US ahead of the Fed rate decision Fed rate meeting the officials go through a blackout period where they're not supposed to comment or do any media interviews so it's very interesting that we're having forber fed officials Dudley as well as Esther George as you mentioned Ty commenting and their comments have been affecting uh markets as you mentioned because waking up this morning and seeing this uh price action in terms of Futures the FX markets as well as yields it made you wonder what happened what changed because we didn't have any economic data releases overnight so that's exactly right and you're bringing up a good point Bill Dudley who was the former uh New York fed Governor New York fed Governor is very important New York fed governor in U uh the sorry the New York fed president so the governors always vote there you up to seven of them and there's a rotating four Governors who vote but the the governor of the new New York fed because they're so en tied up to the financial markets always votes he's always a voter and Bill Dudley is there's a lot of respect for Bill Dudley and Bill Dudley has been saying for a while that a they should have cut in July but it should be 50 basis points so I think Nick did a really good job in terms of getting you know really ke to key people to speak so it remains to be seen if if he's right and if he is I think you know his stock will you know will roof because you know everybody will people be following him around to see who he's talking to yeah and it's so interesting because Dudley was in Singapore speaking at the Breton Woods Forum as he mentioned this and for a blackout period you wouldn't expect uh to hear anything but here we have former fed officials speaking uh at conferences and speaking uh on records so this is very very interesting he couldn't get anybody on he couldn't get anybody on on the on the FED right now but he sure got you know a lot of folks who were recently on the vet mhm and you know earlier this week we were talking about Boe right and here we are on Friday morning and we're seeing uh shares of Boeing lower but not down significantly Boeing Shares are off uh and have actually turned flat after opening on a lower note so were you surprised but what by what you woke up to in terms of their strike so I was actually watching this late last night cuz I knew The Machinist Union was Voting I think there was a chance that they were going to strike but I was stunned by the fact that 95% of the Union voted to reject the offer and the same amount of people basically voted to strike that is an overwhelming majority I mean we're talking about 95% that's like North Korean presidential you know voting numbers right don't get 95% voting for anything which is which is kind of a little bit of a shock uh in that this is something that the union bosses the union heads sort of agreed to I mean four you know four years 25% um uh you wage increase that's pretty substantial but I guess the the the undercurrent of this was they were been shaping under their previous uh agreement since 2014 where I think some people lost pensions so they were looking for looking for sort of I I hate to say payback but they're looking for sort of compensation and what they had started with is they wanted four years and a 40% wage increase which is like sort of unheard of um I would love I I would love a 40% 40% uh pay increase over the next four years I would be quite lovely actually thank you um but this this and it puts Boeing in a a bit of a tough spot I mean the company is in as rough a situation as it has been in know in a long time um with your sort of Scandal after Scandal the new CEO would love to say let's you know let's us put this behind us refocus on quality let's get the brand name back now you have to deal with this and in terms of you if you have the previous the previous strike was on was 50 days and the market figures that the hit to revenue per day of a strike is a $100 million so if you have a 50 day strike you're you're getting into $5 billion of a hit to revenue now that is a hit to current years's Revenue because you're not building anything and you're not making deliveries I'm not an accountant and I you know I don't know exactly how Boeing recognizes Revenue whe whether it is you know when they actually deliver a plane but it that Revenue I gu doesn't disappear but it gets pushed into perhaps fiscal 2025 and I don't know what their fiscal calendar years but it gets pushed later and this year's Financial results are going to be worse which means borrowing cost based just on that will may go up for Boeing you know you know whatever they need to borrow so it's not good news for Boeing and I think the only reason that they aren't down more they were down 2 and a half% earlier on the open the reason they've come back is actually Nick tamaras in the Wall Street Journal story on 50 basis points of that gu and before we move away from Boeing the timing of this is very interesting as well because we have to keep in mind that we're heading into the final weeks of the US presidential election so depending on how long long this bone strike goes on it could Edge closer to that key November 58 as well yeah there are there I think a a couple more thoughts here and you you bring up a good uh a good point in terms of you know in terms of the calendar when you know an possible externality of this if this Union gets a lot closer to what they want is you see other unions well those folks got four years and 35% wherever it is but we want something similar to that and now you're going to get you know per you a wage sort of spiral like well they got it well we want it too and next thing do we get government workers who want you know that they're probably not going to get that kind of raise but nevertheless their unions are going to be rested and what and what J Paulo has said over and over again is inflation expectations remain stable and stable and low and fixed if you start to move those inflation expectations and we had consumer confidence today right they their in you know confidence was up and inflation expectations were down just a little bit right that's good but if you get a wage spiral and those expectations of inflation for businesses become unored then now you're walking into a little bit of dangerous territory now I don't think it's I don't think it's going to matter for uh for you know the meeting next week but you could start you be starting starting to see the beginnings of something that could be Troublesome in terms of uh you know inflation and wages and you just mentioned next week and we're here on Friday morning and we're seeing the major US Stock averages higher after this week's volatility we saw not just in the Dow but s&p500 NASDAQ we are on track for gains so far so keeping that in mind when we look ahead to next week as we mentioned we have that fed Reserve rate decision two-day meeting starting on Tuesday ending on W Wednesday we get pal speaking and of course we'll be paying attention to the economic projections but in terms of economic data we get retail sales next week we get housing figures and we have quadruple witching at the end of the week so do you think we're heading into week of more volatility I think it's pretty likely uh retail sales always always important to you get the sort of the pulse of the economy that I guess that's a you know a coincident indicator whereas employment just kind of a lagging indicator if something goes bad you know employers won't necessarily let go of folks until perhaps months later because it's expensive to let people go and then eventually potentially to hire people but you have retail sales which shows you sort of you know what what it was last month uh housing starts have been sort of up and down but you can bet that if the FED is really sort of fighting between 50 and 25 that they're wa they're going to be watching these indicators uh in the beginning of the week uh probably probably not Wednesday morning but you could you can never rule it out so I think it's going to be a very very active week because not only do we see whether it's 25 or 50 basis points we see the on the dot pot the projections of what the FED members think is going to is going to be an unemployment for the end of year and how many Cuts they have priced in for the rest of 2024 I think that'll be really important so expect a a very active week perhaps more active than this week mhm and of course as we headed into 2024 there had been expectations of rate Cuts but we're here beginning of September heading into that rate decision next week and we might finally see some action from the Federal Reserve so also as we wrap up this week I want to take a look at other uh markets as well I want to look at precious metals Commodities and uh the FX market so we've been seeing a weaker dollar here and that is as uh we're seeing rate expectations being Amplified ahead of next week's Fed rate decision but gold is also at new record highs as well so what a we going on here what a week for precious medals gold really didn't have a trigger it rallied to Historic highs by itself and it's rallying even further today uh now now people are starting to Bandy around after we've been in a range without a new historic high for know a few weeks people are like okay maybe we we've topped out a little bit and now people banding around it it's going to be 3,000 we're going back to 3,000 now we probably get a little ahead of our ahead of ourselves uh this this was uh Platinum week this week soot uh and then also the gold dinner uh I think was this week or was it is it next week but there's a fair amount of focus on gold and you there are strategists who are looking Bank strategist who looking for 20 2750 by next year which you could it seems like you could easily see after what we saw this year uh depending on how the rest of the economy go goes a great week for silver and uh as well as for p and then padium actually had a great week it's back over a th000 and I hate to put the word renaissance and padium together because Palladium was traded 3,000 on the day that Russia in invaded Ukraine at been trading above 2,000 and then dropped down to 850 uh in a in a you know a big big reversal so you know because it's used in carbon you know um ice engines for for normal gasoline cars which you know will slowly decline in production the Outlook is clouded but right now uh it had an amazing week partly because one of the one of the big North American Palladium mines is cutting about half its production because they are losing $300 or $400 an ounce right now for what it cost them to take it out of the ground to where they can sell it in the market so they really just had to cut back on losses so a great week for precious metals the dollar is near sort of the bottom of their bottom of its range does I don't think it will collapse but uh we'll have to see how we we settle out the rest of the day and then early next week ahead with that and of course uh now that we've covered what we're seeing in Commodities I do want to uh briefly touch on Treasury so interesting price action this week and of course we're keeping an eye on the yield curve as well so what do you expect heading into next week so the we had a 10-year auction on Wednesday that actually went pretty well in 10 years The Benchmark that's become The Benchmark treasury over the past probably decade decade and a half or so uh but then we had a 30-year auction yesterday and that tailed 1.4 basis points what that means is it the the um the bond the the auction went off 1.4 basis points worse than where the the On The Run 30-year Bond was trading at the time for a 30-year Bond that's that's fairly not and the non sort of the nonbank biders were a little bit soft so what this suggests is at the long end of the curve as you we mentioned we' talked about the Cur curve dis inverting uh in recent days the long end of the curve people are saying well you know what maybe we are you know we we have some concerns the front end is dropping and we're a little bit worried more worried about the long end now uh and you know we need to a little more risk premium to buy a 30-year Bond so well you know we'll watch the auctions they came out but that was suggestive kind of a weak 30-year auction uh yesterday for sure well we'll keep an eye on what happens as we head into the weekend tie but very quickly I do want to take a look at what's moving the markets and of course the major stock averages so I think it's a good time to talk about the latest earnings reports as well as price action that we're seeing across the board and especially in terms of leaders as well as laggards right now so why don't we start out with Nvidia so that had a volatile week this week as well on the heels of their latest earnings recently so what do you make of what we're seeing when it comes to the mag 7 names and in particular Nvidia so Nvidia and let's bring up graphic one because I I wanted to just take a look at some of the things that we talked about so that's Nvidia on the the Nvidia chart on the left they're both one-ear charts and then broadcom which we we looked at last week and we talked about earlier this week as well so they both had a great week uh Nvidia arguably led the led the rally uh led the rally uh at the back end of this week and it's been up it look looks terrible when it's when it's on the lows but looks really awesome on the highs so good week for both of them and broadcom is a great company um you know as JD mentioned last week it had sort of earnings that were just you know on on expectations and the market freaked out and you you saw the gap lower but it's been up every day ever since so we look at there look at the charts there it's been good week for both of them but the range seems to be narrowing and I think whether it breaks it stays in a range or breaks out on either side may depend on what we see next week uh from the fed the shortterm Outlook I think is going to be sideways I don't think we're ready quite ready to break out but you can see that uh that the range is has been narrowing for both of these names and I do want to focus on JP Morgan now and a new morning trade we're seeing shares of uh JPM down by half a percentage point so we looked at bangs uh graphic 2 when we have a chance we we looked at uh Bank of America and uh and JP Morgan uh and you know here we are um JP Morgan had that big fall uh early in the week because they said net interest net interest um uh income is going to be down well if we get a 50 basis point cut and people look like they're going to accelerate cuts that nii those that income from uh net in uh interest expense is going to drop perhaps even a little bit more um and then uh you know if I look at um uh if I look at uh on the right I actually have have Boeing and Boeing we've been looking at and it's really quite remarkable where you know how well it's doing so far today let's see if it lasts but I'm a little concerned right now at sort of 160 I'd like it closer down to the that double bottom that you see on 120 on the right now know this is a 5year chart the other charts have been a one-year chart but I wanted to you know take a step back to see the scale I mean I don't think it'll get to 120 but if we get a strike down or a little route in that stock there might be some value there because I think it does as the primary airplane maker for the United States you know it's not going to collapse so the short-term outlook for both of them for the next week I think JP Morgan will hold the trend line that upward sloping trend line that we see uh and I think that Boeing could have some exciting days ahead of it and it's probably not going to be on the upside and very quickly Ty before we get to the half hour mark here I do want to take a look at Bitcoin and eth so we're here right before the 11:30 hour in New York morning trade we are seeing Bitcoin as well as eth both higher on the session up by over 1% of Bitcoin up uh right around the 58,4 180 level while eth Is straddling the 2370 level so what's going on here especially after the recent selloff so let's look at graphic number three the Bitcoin chart is actually an interesting one and uh our our next guest Zach pandle will probably have much more interesting things to say and go much further in depth in Iowa but on the left is uh is the Bitcoin chart and what troubles me and again this is a one-year chart from sort of the middle of the year or maybe you know sort of the July is area no a little little bit early maybe maybe May June you're seeing on on a chart lower highs and lower lows so that's why you see that that somewhat downward sloping Channel and sort of at least you know sort of Traders short-term Traders certainly get a little concerned about a pattern like this because lower highs and lower lows suggest that we we've seen the highs and this trend you know this downward trend is going to continue so I expect that to continue unless we get a big big asset value really a couple of days ago we looked at the the Bitcoin chart as next to the S&P 500 and essentially Bitcoin trades like a risk asset so this is a downward sloping Trend we may get a rally in it but in a downward Trend sometimes you want to sell the rallies and then buy them back sell the rallies first and then buy them back in a dip so that chart's a little Troublesome and then uh no need to bring it back up but ethereum which had a grand uh early Grand move rally earlier this year because of the ETFs it's really giv back a lot of those gains and it looks a little soft doesn't have a lot of energy so I think we're not going to see as much action in ethereum it's still going to be bitco and we're coming off the uh presidential debate here between the candidates Harris and Trump and we did not get any mention of crypto and this is something that we briefly touched upon on the day right after the debate that there was no mention of crypto and of course uh crypto Community they had been expecting some sort of comment or at least hoping for that so it's been very interesting to track the price action and the thing is you touched on this as well it is a 24-hour market for crypto so that is something that we can keep our eyes on as we head into the weekend you can always if you're a market junkie you can always watch that 247 and sometimes I do just to see when you sometimes if you get a big move and you know that sort of the end of the at odd times it may be liquidity driven but it may tip you off that something important is happening mhm and we have seen instances where there are Market moving events on the weekend so that is a very interesting sector to keep our eyes on and our next guest of course will be joining us so Ty it was such a pleasure having you on every day this week and to be able to talk to you as the market opened and unfolded so have a a great weekend thank you so much you too thank you Ty that was taiwang proprietary Trader for an extensive look at the markets and coming up joining us on global money talk is Zach Pendle head of research at grayscale we'll be right back don't go away [Music]