ANDIKA BULLETin 6 AUG 2024

On this day in 1945 the US detonated an atomic bomb over the Japanese city of Hiroshima so it seems fitting that the day before the BOJ's massive Yen Strength carry trade unwind accelerated which weighed on stocks and crypto everywhere!

The Japanese TOPIX (Tokyo Stock Price Index) had it's worst session since the 1987 collapse tanking 12.23% yesterday.

In the US, the narrative transition from 'soft landing' to 'hard landing' stoked the flames of the sell-off.

At their worst, Small Caps and Nasdaq were down 6% today, before dip-buyers stepped in and lipstick'd this pig of a day. By the close, all the majors were down around 3-3.5% on the overnight session.

Here in Australia it was a brutal day across markets, the worst since 2020, with the ASX200 whacked 3.7% with economic condition sensitive Small Caps hit 4.5%

The Mag7 is now down USD$3 trillion in mkt cap!!! That's nearly AUD$4.5 trillion!!!

And this often used chart is starting to take shape.

All the while the A.I trade is rapidly unwinding, breaking below its 200 moving average.

The VIX surged to 65 intraday - its highest since COVID lockdown chaos - before vol-sellers stepped in (but it ended up around 35 still!)...

Crypto markets were clubbed like a baby seal overnight amid reports that Jump Trading was liquidating its holdings. Bitcoin crashed below $50,000 for the first time since February (basically erasing all the post-ETF gains), then bounced notably off those lows.

RBA meet today and I expect rate to remain unchanged.

Finally, the market appears to be testing The Fed - demanding almost 140bps of cuts in 2024 at the peak today (as 2025 cuts are brought forward)...

Now, don't forget that this is the third time the market has gone to the limit on Fed rate cuts in the last year. Will Powell fold and unleash the Put?

Happy Tuesday!

This information contains unsolicited general information only, without regard to any individual’s investment objectives, financial situation or needs. It is not specific advice for any particular investor or trader. Investment in the stock market involves risk.

This information may not take into account your investment objectives or financial situation, and you should obtain advice based on your own individual circumstances before making an investment decision.

This information is made available to you by ANDIKA Pty Ltd ABN 41 117 403 326, a licensed securities and derivatives dealer (AFSL # 297069).