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- Year 2024 is turning out to be the year of political activism and one after the other it’s the political events that are overshadowing the markets. Starting with Russia as major nation, the political activity shifted to India and just before the focus could shift to the United States, in came France as a surprise, but more of US now
- JP Morgan report states that Trump’s return is more or less certain and this gets further boost as the score gets even at one all. Hunter Biden has also been convicted by court for arms matter thus becoming the first President’s child to have been convicted. Now this is for Americans to decide if conviction of a former POTUS is a bigger crime or a POTUS son
- Nonetheless coming back to JP Morgan report, their assessment is that the Trump 2.0 will redefine the American equation with Europe and in a way bad news for Ukraine as Trump may not only pull American backing, he may also nudge the other European nations to follow the suite
- More importantly this will be a severe blow to China as Trump’s son of soil approach and discomfort with China is a known fact. Not that China may not be preparing for such an eventuality but it’s important for America to hold certain things with executive order that’s somewhere missing for now and this is the general feeling Americans have
- I don’t think there is something new that the JP report talks about but going by the news report it seems the facts have been presented in a very structured manner and let’s accept the fact that it’s not the Chinese and the Eurozone only that are preparing for it, even Australia and a few lesser known nations are also keeping their plans ready
- Markets continue to remain muted as FOMC outcome is scheduled tonight and as I’ve been saying for last few days, there is a general consensus that there will not be a rate cut but market will look towards the policy language as to what is it that is indicated. My sense is that Powell may water down the veiled threat that they can raise the rates with a slightly dovish tone giving an indication of at least one rate cut
- Wall street is mixed as Dow ended down 120 points and Nasdaq was up 150 pts. Dollar index at around 105 is at a four week high and the future course will be determined by what the FOMC does tonight. Bitcoins continue to swing far and wide witnessing a 5% movement either side more frequently. Down 5% they traded at close to USD 66500
- In commodities space, Gold at USD 2325 and one needs to see for how long will the yellow metal languish under the made in China bomb and how will silver recover. The white gold slipped another 65 cents to USD 29.20 overnight. Even crude is trying to recover from the recent lows and traded at USD 78 per barrel. Treasury yields are muted for the time being
- Coming to India the government bonds continued to trade in range with 10y benchmark g-sec closing at 7.01%. The volumes in market scaled above INR 510.00 bn, well above the previous day volumes of less than INR 350.00 bn. As I said earlier in the absence of a trigger the g-sec market will continue to trade in a rangebound manner
- Equities is where the play currently is and everyday market is trying to touch a new high, however the rally has a high level of brittleness that pulls it back sharply. On Monday also after the record high markets slipped to close in red and even y’day the markets were up almost 150 pts but towards the close ended absolutely flat
- I keep getting obscene targets on market like 19k, 18k and so on; sometimes I also flow with the tide but not this time simply because market has momentum that it hasn’t lost even in adverse of times so a deep cut is ruled out
- The coin however has another side as well – it had pre discounted a major event that unfortunately failed to play out to market expectation. As such there is equal reason for market to restrict its upmove and find a range for itself to trade in but somewhere there is a foreign hand that is keeping it elevated and not even letting the market correct. Some bit of correction towards 22k or at least 22500 is a must at this time
- Closing remarks – off the cuff – being in market it’s pertinent that one flows with the tide but real test of character is patience and perseverance. This gets tested in such kind of scenarios where the market continues to swing either side. Ups and downs are going to be there for next few months. It is for you to decide how to play it around with a longer time horizon
Stay safe, stay healthy, God bless you all, have a great day !!
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Vikas Miglani writes 