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Peter speaks with Bloomberg anchors Bryan Curtis in Hong Kong and Doug Kirzner in New York.
Visit our page for more: http://www.xm.com the international Forex broker.
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Global Market Insights - Forex, Futures, Stocks
Peter McGuire speaks with Bloomberg Radio - Daybreak Asia - 03/07/2024
Please consider our Risk Disclosure: https://www.xm.com/goto/risk/enPeter speaks with Bloomberg anchors Bryan Curtis in Hong Kong and Doug Kirzner in New York.Visit our page for more: http://www.xm.com the international Forex broker.#Bloomberg Radio #PeterMcguire #XM
- Duration:
- 8m
- Broadcast on:
- 03 Jul 2024
- Audio Format:
- mp3
Well, Doug, joining us now for some discussion of markets is Peter Maguire, CEO of XM Australia. Peter, I know you look at the U.S. markets and we have some time. We can talk about Asia and the Asia Pacific as well. You have strategists in the United States that are sort of grudgingly raising their targets, but they're almost apologetic about it. I was listening to Lori Calvin Cena earlier. She works over at RBC Capital Markets. And she said she's doing so. She raised her target, but she says the market has gotten a bit ahead of itself. I guess that's climbing a wall of worry, right? Well, good morning, gentlemen. Yeah, I think so. I mean, you know, it's very hard to argue when you look at the screen now and you've got 5,500 for the S&P and you've got the Nasdaq, you know, crunch through 18,000. That's fear of missing out. Rally is just continuing. And I feel as though that there's probably the opportunity over the rest of summer to maintain that grind up. And how can you argue against it? Because it just keeps on surprising week on week. And that's what I think every trade is mindful of. And, you know, the Dow's approaching again, you know, 39 and a half. So it's, it's hard to argue against. So one of the narratives that we were kind of teasing out in terms of the move higher today and records for the Nasdaq comp and the S&P, by the way, is this fled the Fed story on rate cuts Powell today in central Portugal at the ECB summit saying, Hey, the U.S. is back on a disinflationary path. That sounds good. Are you expecting the Fed to move, let's say twice for a total of 50 basis points in easing this year? Well, I think first off, there's a 75% probability of, you know, September with a rate cut then. Let's see how that rolls. And then naturally, you've got the election early November and do we see another one sometime in that year in the rest of the year? So it's a wait and see approach. But, you know, I'm in the camp that you will see something happen in September. You had May inflation up, as you mentioned, only 0.1%. You know, right. So it's moving in the right direction. There seems to be momentum to, you know, what Fed Chair Powell saying as far as rate cuts and all the inflation story and, you know, the possibility. So you sit here as a trader realizing that I think it's pretty much baked in at the moment. The trickiness in this is that you have growth slowing and, you know, you're you have a segment wanting there to be some spreading out in the market away from, you know, the the magnificent seven because they've gained so much. But it's hard to actually deploy capital into those industrials and other cyclical names when you think the economy is slowing. So how do we resolve that? Well, that's the issue. I think, you know, you've got that NFP coming out on Friday expecting about one 95,000. It's certainly a significant slowdown from the month before 272,000. Yeah, and you're looking at, you know, I'm looking at the PMIs for June and everything seems to be a little bit softer in that regard. And I think it's just a wait and see approach how the rest of summer material level rolls out. There is some softness certainly in the economy and you can't take your eyes off that, you know, many downsizing and certainly, you know, businesses closing up. But the magnificent seven have taken everyone on the big ride of their life and it's hard to stay away from them. So you've been playing this game a while. Can you imagine or recall a time when things have deteriorated so rapidly, almost like a pivot that would cause the Fed to be maybe a little bit more reactive in terms of easing than what the market is dictating up right now? I don't think the market's expecting anything near a recession. Slow growth. Yeah, we know about the soft landing scenario. But is there potential for something that is abrupt in terms of deterioration? Well, you know, I'll put my mind back to Waito 9. I'll put my mind back to, you know, 99. And you know, these, these inflection points do play a part as far as from a historical look back in time. You know, I think here at the moment, it's just it's on what an upward will be a point in time that the market will come off and it'll be sold off. And you've just got to be mindful of it, you know, and take the necessary action. But you know, there's very little opportunity in FX markets. At the moment, the commodity sectors pretty quiet. And you know, the all the big boys are still piling into from a retail perspective, you know, US equities and a lot of global equities. Yeah, I suppose a lot of people would just be hoping for a kind of mid cycle adjustment from the Fed, a handful of cuts just to fine tune, not go into some, you know, broad based cutting abrupt cutting cycle, because that was signal, you know, signify trouble. So that's that's one thing. You've got kind of a parallel picture to a certain degree in Australia, although you don't have the the big AI winners there. But how are you playing the Australian market? Well, I mean, when you're looking at it, I think, you know, from an inflation story, things are certainly not under control. So there's a very big chance you're going to see possibility of a rate rise in over the next couple of months, we wouldn't be surprised. The Aussie dollar is still sitting at that 6667 handle. US dollar seems to be creeping up the stock market. It's choppy. There's no real great breakouts. And I think one's going to be very mindful of the of the overall economy. There's some softness across it. And I think you've just got to be very mindful that there's other markets other than the Aussie stock market at the moment. So you're in Cyprus, if I've got this right, correct? Yeah. So you're very close. Maybe to what's happening on the European continent with the elections in France final round in the coming week, we've got the elections in the UK. We saw what happened here in the States last week with that presidential debate. And a lot of the conversation right now is around whether there is a return of Donald Trump to the presidency. Let's talk about the potential for higher tariffs from the US on Chinese goods and what this may do to the global economy. Is that something that you're discounting at this point? Well, I think there's from the performance last week, one's going to be very mindful. He seems to have a huge momentum to the upside. And you can't take your eye off the ball with Donald Trump. So he's got the support. Let's see how that again rolls over the next three to four months leading into the election. The next part is from a tariff perspective. Yes, he wants to reengage those or certainly increase them and return America to an economic powerhouse from a manufacturing side. So that seems to be very much his mantra. And we won't be surprised to see something like that play out. I think he's going to be far more robust in a second term than he was in the first term. And let's see how it goes as far as employment and naturally the equity markets, how they appreciate it or discount it. Yeah, I suppose if you look at the levels of debt and the deficit, it's an issue at some point. Maybe the level of debt is not necessarily a problem, but the path that it's on right now is unsustainable. At what point do you think that needs to be dealt with? Well, I mean, he's a sort of guy will deal with it in some deal with it in some fashion or form. Yes, you can't continue this sort of spending. I'll make it worse if he continues with the tax cuts, right? Well, that's well, it does make it worse. And there's the point, the first point, but the second point is he's got to appease the, I think the electorate in a lot of ways. Inflation is really biting into the American families and global families. Everyone's feeling it. So, I'm not sure how he's going to play that. Yeah, one of the good, one of the good points at the moment is certainly with cheap energy prices in the sense it's not that cheap, but at 80 bucks, what better than 120? All right, Peter, you got a seat here in the studio. If you're ever in Hong Kong, thank you for joining us here by Zoom. Peter McGuire, CEO of XM Australia.