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Trump and Boris

Leaders Under Fire

Trump indicted on many fronts, Boris roundly hounded out and discredited by a kangaroo court, the entire SNP leadership arrested...are we banana republics? Using the power of the state to go after former leaders and prevent them from ever running again is kind of what marks out a banana republic … no? I mean how is Mar-a-Lago different to Biden’s garage? Just as well our central banks are independent!!

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Fed Day

After yesterday’s in-line CPI data the market roundly rejected the idea that the Fed could hike rates today. Stocks pumped and the dollar dumped as short-term yields pullback sharply. The Fed does not normally surprise the market. But it could. And markets still bet the Fed does go in July. Hawkish hold? I just don’t see why you’d wait a month with core CPI where it is. It does not make sense and makes communication trickier – does the Fed really pause with $300bn in new Treasury issuance coming and stock markets on the up? And, ignoring all the noise, core inflation is steady at 5% for 6 months – does the Fed say look you have to accept 5% inflation now peasants? Higher for longer rates + higher for longer inflation. Interesting to look at the new dot plot – higher for longer, more dispersion…? Remember the market tends to bottom 6 months after the first rate cut.

Oiled Up

Elsewhere, oil firmer again as IEA says peak oil demand in sight but 2023 to see all-time high demand first. Shell ex-growth...dividend significantly raised, will trim capex … where the green investment? UK economy returned to growth in April…no impact on indices – FTSE 250 and FTSE 100 flat. European shares were a bit firmer in the wake of the rally on Wall Street.

Company Focus: Tesla's Market Streak

Tesla’s run continued with another 3% rally, now 140% YTD. Adam Jonas from MS: “Tesla’s current (and ongoing) streak is the longest in its history as a public company (13 days and counting) ... We think the market wants to believe TSLA is an AI name first, an auto company second.” PT still $200. Trend resistance off the ‘22 swing highs (yellow line) is around $285, RSI very overbought but ... MOMO FOMO.


Elsewhere in the Markets...

Cable – BoE now seen raising rates to 5.75% just as the Fed stops...sterling breaking above the long-term trend.


Gold – looking very exhausted...couldn’t really make a move on lower nominal rates


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