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Last night, the revised non-farm payrolls data whetted the market's appetite, but it was just hype by a certain investment bank. A certain US investment bank said that this data may trigger recession concerns and so on, and everyone was very worried. Now we know that these investment banks got the report in advance. The question you have to ask yourself is: if this is profitable for them, if this information can really make money, why don't they keep it secret? They won't share it. And the fact that they choose to share it means that they want others to trade it, because they don't think it is profitable. After the data was released, the employment number was indeed revised down, indicating that employment is weak, but this is just a known fact. Almost every time this year, the non-farm payrolls have been revised down. This investment bank did this just to attract more business for itself. More people trading means more profits. The market reaction to this data was also very small. The stock market basically did not move and only rose slightly. The US dollar fell slightly but not much, and US bonds rose slightly, which is no different from the market performance in the past few days. So what I want to say is to be careful about the information shared by these investment banks. Don't trust them to share profitable information with you. If they share it for free, the information is likely to be worthless.

The Asian session was a Black Monday, a bloodbath, a bloodbath, whatever you want to call it, you can also call it a crash. Currently, the Nikkei and Tosho indexes are down nearly 9%, and the Korean stock market fell 8%. The decline is very large, continuing the panic in the US market last Friday. But this is not only about the US recession, but also about the Bank of Japan and the yen. The strong appreciation of the yen has caused the stock market to fall sharply. Just like the Nikkei crash in 1990, you need to pay close attention to the yen now. Once the yen starts to rise strongly, you will see a larger-scale stock sell-off, and other markets will follow suit. The yen is the key. I do expect that the Bank of Japan and other central banks will intervene in the yen at some point. The speed and magnitude of the yen appreciation are currently unbearable by the market, so some intervention is needed. This is also the only risk of shorting (longing the yen) at this time. My initial target for the US dollar and the yen was 150, which was later lowered to 146, and then lowered to 144 on Friday. Now it is close, and the current target is 141.5, but there have been small profit-taking along the way. In short, when you are long the yen (short others), you must be wary of intervention and reduce the size of transactions during market turmoil.

The unexpected non-farm payrolls and poor earnings reports from Intel and other companies led to another sharp drop in U.S. stocks yesterday, putting the Federal Reserve in a difficult position. Let’s break it down.

I said in my previous article that I expected a correction in the US stock market in September. It is a little earlier than I expected, but this week's data forced traders to run ahead and price the Fed behind the curve. From some indicators, the US economy has already fallen into recession, but the Fed will not echo this information. Even yesterday, Chicago Fed President Goolsbee said that the economy is not close to recession, and he also said that he would not look at only one month's data. Now the market and the Fed are at odds with each other. Some investment banks even think that the Fed needs to cut interest rates by 50 basis points in September and November, but the Fed is still not letting up, so there is a disagreement here, and the stock market does not like disagreements. They don't like the Fed to lose control, and now it is the market that is in power, so the stock market is sold off. Any small bad news is magnified. For example, Arm's financial report on Wednesday was okay, but the market decided to sell the stock as long as it was a little dissatisfied. Intel also suffered a bloodbath yesterday. It is still some time before September. If the market still has not changed its mind by then, a 25 basis point interest rate cut is not enough, which will be regarded as the hawkish interest rate cut I mentioned earlier. The market is bound to protest, so the current situation is very bad. The market is giving orders to the Fed, and the Fed is losing control. This is not good news for US stocks, the US dollar, or even the US market. Gold also plummeted after rushing to a historical high.

Following the previous two articles, Powell delivered to the market as he wished. The market has already priced in a September rate cut, and Powell also confirmed this. Although the initial policy statement was a bit hawkish, Powell confirmed at the press conference after the meeting that a September rate cut is coming. So we saw a big rise in US stocks, but it is worth noting that the leading stocks were not interest rate sensitive small-cap stocks, which is not what we expected to see, but AI companies and technology stocks, which is a bit worrying. The reason why small-cap stocks performed generally is that investors who had rotated out of technology stocks before are now back again.

The Bank of Japan announced an interest rate hike. What does this mean for the market? How will the yen move next?
After years of waiting, the Bank of Japan finally raised rates by 15 basis points and announced an expansion of quantitative tightening, tapering bond purchases until 2026. Also worth noting is that they lowered their inflation forecasts for the end of this year, which is the exact opposite of the European Central Bank, which cut rates but raised inflation expectations, while the Bank of Japan raised rates but lowered inflation expectations, which is an interesting difference. Some analysts call this a dovish rate hike, I think because of the lower inflation expectations. And with two members voting against it, I think the Bank of Japan basically delivered this time. After the decision was released, the yen initially fluctuated sharply, with the USD/JPY falling to around 152.5 at one point, and then rebounding to around 153.7. I still have the same view on the yen, the yen will gradually appreciate and will reach 150 in the next week or two. Of course, this also depends on the Fed tonight. If the Fed unexpectedly becomes hawkish, it will naturally affect the yen. Otherwise, the yen will continue to appreciate, and traders will continue to close carry trades in the coming weeks and months, which will continue to push the yen higher. Now that the dust has settled on the Bank of Japan, the market is focusing on the Fed tonight. If you don’t understand why you should pay attention to these two, you can check out yesterday’s analysis.

This week is an important central bank week, and the market is already on high alert because the market has high expectations. If the results are not as expected, volatility will surge. The protagonists this week are the Federal Reserve and the Bank of Japan, which may be the two most important central banks in the world.

The market's current expectation for the Fed is not a rate cut. Only very few people expect a rate cut this time. The market hopes to hear from Powell that they will cut interest rates in September, because the September rate cut has been reflected in the price, and the market needs confirmation from Powell.
The market also expects the Bank of Japan to take action, which may be to adjust its bond-buying plan or to raise interest rates slightly. In any case, the market wants to see action, so the Bank of Japan cannot disappoint the market.

Big market! US stocks fell sharply last night, and cryptocurrencies fell sharply this morning. Let's break down the whole story.

The trigger for the sell-off was some company earnings reports. First, Tesla was the easiest to understand. This company always talks a lot but doesn't do well, so it's not surprising that the earnings report was below expectations, and the stock price naturally fell sharply. But what really drove the sell-off was Google. Although Google's earnings report was okay, the problem was the old saying, "buy the rumor, sell the fact." Stocks like Google have been strong all year, and investors think this is a good opportunity, so why not take some profits? Last night, there was another thing that scared investors. Former Federal Reserve Governor Dudley and Goldman Sachs both said that interest rates needed to be cut in July, and the market was scared because of this. What happened? Is the economy so bad? Is it going to slow down faster? So they also took the opportunity to flee the stock market. Blackstone Group also had bad news. Its real estate investment trust cut its dividend, which made people feel that the economy was getting worse at an accelerated rate. Of course, there was also the closing of the yen carry trade we talked about yesterday. All of the above things add up to a sell-off across the board in the U.S. stock market. Technology giants have been hit hard, growth stocks have been hit hard, and small-cap stocks have also fallen. The VIX index has jumped to more than 18. I think there is still room for growth. 18 means that the implied volatility of the S&P 500 is only about 1% within a day. The Nasdaq may still have room for a correction in the next few months, so I will continue to pay attention.

You may not have noticed the yen event brewing, but it is important from many perspectives. The yen has been appreciating in recent days, while the USD/JPY has been falling. The Bank of Japan has intervened, but there is more to it than that. I will explain and give trading advice below.

The target for long yen within a week is 154, which now looks like it will be reached in a day or two, at which time the target will be reassessed. So what is happening now? Partly it is because of the Bank of Japan, which has been intervening and thus pushing up the yen, but this is more about the carry trade. I have said in previous articles that the yen carry trade is one of the largest trades in the world, and now this trade is a bit confused. Traders consider that the Bank of Japan may intervene, which is not only a possibility but a reality, and there is also the risk of the US election approaching, with Trump becoming the biggest favorite, and his policies are potentially bearish for US bonds. The carry trade refers to traders borrowing money in Japan at low interest rates and then investing in high-yield markets such as US bonds. Now it seems that Trump's coming to power in a few months may cause US bonds to fall sharply. Traders naturally want to close their positions, and many people are doing this trade. No one wants to be the last to close their positions, so it is easy to understand that some funds and institutions have already closed their positions. I expect this to continue, so the appreciation of the yen is not necessarily short-term, but may last longer. So we should be long yen, and I will reassess after reaching the target, and maybe hold the position for longer, but in any case this will evolve into a bigger event in the coming weeks and months.

Ethereum prices rose 12.5% ​​between July 12 and July 15, but the upward momentum stalled at a strong resistance level of $3,500. Despite the approval of two additional spot Ethereum exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission (SEC), Ethereum prices pulled back to $3,400 on July 18. Despite this positive development, Ethereum’s derivatives market showed little signs of excitement.
Analysts predict Ethereum price will reach $5,000, but is it realistic?
The SEC has given preliminary approval to at least three issuers to begin trading spot Ethereum ETFs starting July 23. A total of eight spot Ethereum ETFs are awaiting final regulatory approval after the fund's S-1 filing is revised. Bitwise Chief Investment Officer Matt Hougan expects the price of Ethereum to reach $5,000 by the end of 2024, citing its low equivalent inflation rate, low cost for validators, and 28% of the supply locked in staking as reasons.

The volatility of the U.S. stock market has intensified. The Nasdaq fell more than 2% last night, and even the small-cap Russell fell 1%. This is no longer the rotation that occurred last week.

Interestingly, the VIX jumped more than 1 point on Tuesday when the stock market was quiet, which is actually quite a move, and traders seemed to be expecting more volatility. That is exactly what we saw later, with the VIX rising further today. Volatility was actually very low over the past year until the assassination of Trump last weekend, as traders were struggling to understand what this meant because his chances of winning increased significantly.

We thought we knew the impact on the stock market. Most people thought Trump was bullish for the U.S. stock market, but now he is talking about tariffs on chips. The technology industry is confused and uneasy, causing technology and chip stocks to fall. These potential tariffs may not be conducive to inflation, so bond yields are higher. The market is trying to piece together the full picture of Trump's deal, but the more he talks, the more confused the market becomes. Recalling his first term, it was the same. Every day, it was hard to keep up with the new plot. In the past few days, he and the vice presidential candidate have been making remarks, and the noise has confused the market. The correlation between various markets has almost broken down. People are doing different things in different markets.

The Trump trade is back in the spotlight. What is the Trump trade and why should traders pay attention?

First, the market had time to digest the assassination of Trump, which calmed down the whole thing a little. Now the market is thinking that in addition to Trump winning the election and defeating Biden, he may also win the House of Representatives and the Senate, which means he will control the entire Congress, which means he can do whatever he wants, and this is the origin of the Trump deal.

I encountered a few weeks ago that if Trump expands his lead in the polls, the market will focus more on Trump risk, which is exactly what is happening now. Some of Trump's policies will lead to high inflation, such as increasing tariffs on goods by 10%, and stripping the independence of the Federal Reserve, which is not good for the United States. So if he controls Congress, the market will be more confident that he can implement these policies, and even introduce more radical policies. Trump trading focuses on these aspects. Imposing tariffs will cause inflation, which is bad for US bonds; stripping the independence of the Federal Reserve is also bad for US bonds, and may even cause high interest rates in the short term until Trump takes down the Federal Reserve, but who will want to buy US bonds at that time?

Trump’s assassination is making the news, and in this article I will unpack the impact this has on financial markets and what it means for us traders.

First, Trump was only slightly injured and can continue to participate in campaign activities. After the shooting, some heavyweights officially expressed their support for him, such as hedge fund manager Bill Ackman and Tesla CEO Musk. We may see a surge of support afterwards, which is both sympathetic support for Trump and highlights the contrast between Trump and Biden. One is a man who is almost immortal, and the other is like a half-dead old man. The contrast between the two will only become stronger and stronger.

Last night, US technology stocks plunged, and cryptocurrencies have continued to fall. I think many people are wondering what is going on, and will this continue?

After the release of CPI data last night, some large technology stocks were gradually sold off. They are the main force behind the stock market's rise this year, including Apple, Tesla and Apple. In the end, the Nasdaq closed down 2%, the biggest drop in a long time. What happened?

I think what we are seeing is a rotation. Long tech stocks have always been a crowded trade, and so have cryptocurrencies. Everyone on Wall Street has bought these companies, and they have basically been pushing up the Nasdaq all year long, and everyone is holding these stocks. And yesterday's CPI miss almost guarantees a rate cut this year, and the probability of September has increased, so some people are starting to move to the most interest rate sensitive sectors, small cap stocks such as the Russell 2000 index. The big companies where everyone is making money are taking profits and rotating into the Russell, which has previously performed poorly. Because the market is so confident about the rate cut, the interest rate sensitive sectors benefited, so the Russell 200 index closed up more than 3%. So basically this rotation trend. Because the previous trade was too crowded, once one or two large investment funds start rotating, others see it and join in.

The CPI data is out, what should we do? What does it mean for interest rate cuts?

Looking at the data itself, both the basic and core CPI were slightly below expectations, which is exactly what the Fed wants to see. Inflation is on a downward trajectory, and over the next two to three months, the CPI should fall back to the 2% range, so this is very good news, getting closer and closer to the Fed's 2% target.

So what does this mean for interest rates? First of all, I think it is impossible to cut interest rates in July. The Fed will not panic and there is no need to cut interest rates in July. The market expects a 70% chance of a rate cut in September, which I personally think is a bit high. Powell said he wants to see more monthly data, so this includes August's CPI and possibly September's non-farm payroll report. It is not impossible to cut interest rates in September, but the probability is not as high as 70%. The probability of a rate cut this year is higher than ever before. The US economy is gradually slowing down from overheating, accompanied by a decline in inflation, which is good news for all markets.

Powell has been the focus of the market these two days. Following last night's Senate hearing, he will testify again in the House of Representatives tonight. But in addition to this, the market may have missed something.

Let's review Powell first. He didn't make any new statements last night. He still emphasized that the Fed is paying attention to CPI and employment. Last week, a weak non-farm report was released, and there will be CPI tomorrow. These are basically known to the market, so Powell did not reveal any new information.

In addition to focusing on what Powell said or didn't say, we can't ignore the overnight French market dynamics. The aftermath of the French election is not over yet. The left-wing coalition may split because it is composed of many small parties, some of which may join the centrists, which means that after all these farces, Macron's centrists may have a majority again, so France is full of uncertainty now. This has been reflected in the French market yesterday, with French stocks falling about 1.5% and French bonds also falling sharply. We need to pay close attention to developments because we saw a few weeks ago when the first polls came out, the euro was affected by the situation in France, which affected the US dollar, and then affected other commodities such as gold and cryptocurrencies, so this risk event is worth paying attention to.

The US non-farm payrolls report is out, and it looks strong, but there is hidden information. The increase of 206,000 people did exceed expectations, and you might think this number is strong, but there is other more important information.

First, the unemployment rate rose to 4.1%. The Fed's expectation for the unemployment rate at the end of the year was 4.1%, which has now been achieved. The average hourly wage is in line with expectations. But the real hidden information is that the data for April and May were revised down by 50,000 respectively, with a total of more than 100,000 jobs being revised down. This is exactly the information that caught the market's attention, so we saw the dollar fall, while U.S. Treasury yields fell, and expectations of a rate cut in September rose, which supported the recent gains in crude oil and other industrial commodities, as well as the gains in metals such as gold and silver and the rebound in the crypto market, which will continue to be supported in the short term.