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Mixed Economic Data Highlights Ongoing Uncertainty in US Economy

Published 06/19/2024, 02:34 AM

Nvidia (NASDAQ:NVDA) finally stole the title of the world’s most valuable company from Microsoft (NASDAQ:MSFT) and Apple (NASDAQ:AAPL) yesterday following a beautiful 3.5% rally that propelled the share price past $135 a share. The catalyst was just a bullish call from an analyst at Rosenblatt Securities who revised his PT up to $200 from $140 and said that its market cap will reach $5 trillion in the coming year - probably the Wall Street version of Roaring Kitty…

Beyond Tech…

According to Bloomberg, the Magnificent Seven have contributed to more than 60% of the S&P 500’s return so far this year. The rest is not doing as well. The S&P 500’s equal weight index is stagnating, the reflation trade is weakening along with cautious Federal Reserve (Fed) talk and mixed economic data, there is still a chance that we see a sharp economic slowdown in the US as a result of a painful tightening cycle.

Data yesterday showed that retail sales in the US barely increased in May, last two month figures were revised to the downside and core retail sales even fell 0.1% from the month earlier. Industrial production on the other hand jumped more than expected. The data was supportive of the Fed doves and sent the US 2-year yield down below the 4.70% shortly, the 10-year yield fell to 4.20%. A strong sale of US 20-year paper also boosted appetite before US markets went on a short one-day break.

European and British stocks rebounded yesterday on the back of encouraging data from the US and a jump in oil prices for the FTSE 100. Crude oil jumped past its 50, 100 and 200-DMA since Monday and is consolidating gains above the $81pb level on the back of geopolitical tensions in the Middle East, increased fuel demand in summer and tight supply policy from OPEC. Interestingly, the 2.3-mio barrel rise in US oil inventories last week (according to the latest API data) didn’t discourage oil bulls from carrying the rally above the $80pb psychological level.

On the data front, inflation in the Eurozone ticked slightly higher in May, as expected, while sentiment in Germany remained quite weak. The EUR/USD recovered a part of last week’s losses but the main catalyzer of the gains was a broadly softer US dollar. The euro remains subject to political risks.


Inflation in the UK hit the Bank of England’s (BoE) 2% inflation goal and fueled speculation that the BoE could announce a surprise rate cut when it meets tomorrow. Sterling’s kneejerk reaction was surprisingly positive, however. There is little chance that tomorrow will bring a rate cut in the UK (as inflation is expected to head back to 2.5% in H2) but the thought of it could keep sterling bulls under control until tomorrow’s MPC decision.

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