Latest news with #ThierryWizman
NBC News
01-08-2025
- Business
- NBC News
Dow closes 500 points lower Friday as weak jobs data and new tariffs incite sell-off
Stocks tumbled on Friday to kick off August trading as investors weighed stark signs of a weakening economy and President Donald Trump's modified tariff rates. The Dow Jones Industrial Average dropped 542.40 points, or 1.23%, closing at 43,588.58. The S&P 500 shed 1.60% to end at 6,238.01, while the Nasdaq Composite dipped 2.24% and settled at 20,650.13. The July jobs report showed nonfarm payrolls expanded by 73,000 last month, well beneath the consensus estimate from economists polled by Dow Jones that called for a 100,000 increase to payrolls. Prior months were significantly revised down. June job growth totaled just 14,000, down from 147,000. The May count came down to 19,000 from 125,000, signaling the labor market has been weakening for a while now. Bank stocks were sharply lower on fears that a slowing economy could hit loan growth. Shares of JPMorgan Chase pulled back more than 2%, while Bank of America and Wells Fargo fell more than 3% each. GE Aerospace and Caterpillar dipped nearly 1% and 2%, respectively. 'What we're seeing is concern about growth that comes at a time when market multiples have become quite elevated,' said Thierry Wizman, global FX and rates strategist at Macquarie Group. 'It's also indicative of a late summer growth scare, but you can layer that a little bit with that the idea that the doves on the FOMC ended up being correct, which lends to the idea that the Fed is late.' The numbers increased the odds that the Fed could act sooner than expected to cut rates and prop up the economy, a notion that helped stem stock losses. Traders place the likelihood of a September rate cut at roughly 86% after the jobs figures, according to CME fed futures trading. That's a reversal from Wednesday, when the odds plummeted after Fed Chair Jerome Powell signaled the central bank needs to wait and evaluate the impact of tariffs on inflation before cutting. Trump's overnight rollout of updated duties that ranged from 10% to 41% also weighed on sentiment. Goods that have been transshipped in a bid to avoid the tariffs will face another 40% levy, according to the White House. Canada, one of the U.S.'s biggest trading partners, will now have a 35% levy. That's up from 25%. 'Traders are locking in gains as tech earnings fade, macro risks grow, and seasonality turns negative. Breadth is narrowing, valuations are stretched, and defensive positioning is quietly building,' said Joseph Cusick, portfolio specialist at Calamos Investments. A sell-off in tech giants also weighed on stocks Friday. Shares of Amazon tumbled more than 8% after the e-commerce giant provided light operating income guidance for the current quarter. Apple stock slipped 2.5%. The major averages also suffered a losing week, with the S&P 500 dropping 2.4% for its worst weekly performance since May 23, and the Dow tumbling 2.9% to post its worst week since April 4. The Nasdaq lost 2.2% in the period.
Yahoo
09-07-2025
- Business
- Yahoo
The Dollar Is Not King, Says Macquarie's Wizman
President Donald Trump says the dollar is still king and we're going to keep it that way. Thierry Wizman, Macquarie global FX and interest rate strategist, disagrees. He is on "Bloomberg Surveillance." Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Yahoo
07-07-2025
- Business
- Yahoo
What US dollar weakness says about American exceptionalism
The dollar (DX=F, has had a 13-year run, but that era may be ending. Thierry Wizman, Macquarie Global FX and interest rates strategist, joins Market Catalysts to explain why the currency could be entering a period of weakness tied to rich valuations, policy uncertainty, and shifting global demand. To watch more expert insights and analysis on the latest market action, check out more Market Catalysts here. I mean, of course it's natural for most assets to go up and down. Um, but I I don't know if we have yet seen this kind of a move in the dollar that implies what this perhaps implies about American exceptionalism. I'm curious your take on whether American exceptionalism has indeed really taken a hit or are there other aspects going on here? Thanks for having me, Julie. Look, I you know, it's interesting because the dollar, uh, the dollar strength, the US dollar strength was not really something that prevailed only in the back half of 2024. Uh, the dollar has been a strong currency for the past 13 years. It's been generally increasing or rallying or appreciating against other currencies both in nominal terms and real terms since 2001. So if you're going to talk about American exceptionalism as being somewhat equivalent to, uh, the appreciation of the US dollar, the strength of the US dollar, effectively we've had American exceptionalism for 13 years. And and if you point to the headlines of course in the history of these last 13 years, it it certainly does seem to support the idea that American exceptionalism has been around that long. We've had a lot of economic, small economic revolutions in this country that have, uh, produced productivity, uh, uh, produced growth, um, and it's been superlative effectively, uh, at least the way the market has interpreted relative to what has been going on in other countries over this 13-year period. So American exceptionalism has been going on for 13 years. Now the question is, are we at a point where after 13 years of this, uh, we are going to start to go in reverse. I think to some extent we are. One reason is that these periods of American exceptionalism that are matched by dollar strength don't usually last more than about a decade. So we're kind of overdue for a return. Uh, the other issue of course is that we've gone in these 13 years to a point in which US asset values and the value of the dollar has gotten very rich, objectively speaking, if you just look at these long-term charts. That's another reason. And of course with the a change of the administration and with the policy uncertainty that has come with it in the last, uh, few weeks and months, there now is a, you know, a compelling reason for asset allocators abroad to start, uh, winding down or dialing back their dollar exposure, both their US asset exposure and the attached dollar exposure. And I think those three things, you know, working together are what's going to, uh, cause the dollar at least to go into, I wouldn't call it a tail spin, but certainly a period of weakness here. So I don't think that we are going to get back to these highs that you alluded to earlier that prevailed in the very beginning of this year, uh, before this this down move. I think that's a thing of the past and I think that is the dollar is going to be weighed down by a few factors going forward, and it could last a few years. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Mint
25-05-2025
- Business
- Mint
Interest rates are rising globally. That spells trouble for stocks.
In the parable of the blind men attempting to describe an elephant, one likens it to a snake after touching its trunk, while another describes it as a tree after feeling its leg. A third, touching its tusk, says it's like a spear. Given their limited perception, none can understand the entirety of the great animal. So it is with much of the analysis of the rise in long-term interest rates—both the cause and implications. Most analysis focuses on a single aspect, notably the effects of the parlous fiscal situation of the U.S. But there are others, including the fiscal situation in Japan, with a debt burden twice that of America, that also should concern investors. That's because the rise in long-term interest rates globally threatens asset valuations, in particular stocks. The headlines have centered on Moody's stripping the U.S. of its last triple-A credit rating. But based on the credit-default swaps market, where investors buy insurance against negative events, the costs to hedge U.S. government debt against default are consistent with ratings of Baa1/BBB+, near the lower end of investment-grade credits, according to Macquarie analysts Thierry Wizman and Gareth Berry. As Doug Kass of Seabreeze Partners points out, U.S. CDS spreads are approaching those of Greece, with its barely investment-grade credit rating and history of defaults. What's different is that the U.S. issues debt in its own currency, unlike Greece, which lashed itself to the euro. Japan, the government deepest in debt, also borrows in its own currency, the yen. That didn't stop its prime minister, Shigeru Ishiba, from saying his nation's financial condition was worse than Greece's, with debt equal to 2.5 times its gross domestic product. It is no coincidence that Japan's fiscal problems are extending beyond its shores—just as the U.S. debt situation erupts in the bond market. Yields on long-term Japanese government bonds have surged recently, along with those of U.S. Treasuries, as the chart here shows. The two are related. Japan has continuously run massive deficits, financed by the Bank of Japan buying up the bonds issued to cover the budget gaps. Japanese investors have bought JGBs at ultralow yields, as well. Even so, Japan had excess savings, which it invested in higher-yielding foreign securities, especially U.S. Treasury securities; that included both the Bank of Japan and the giant Japanese life insurers. Now, things are reversing. Long-term JGB yields have soared to more than 3% from 2% in 2024 and about 1% in 2021. More to the point, that is more than a Japanese investor would earn in 30-year U.S. bonds, whose yields have ticked up over 5%, after deducting the cost of hedging for exchange-rate risks. So, the Japanese probably will repatriate funds that previously had pumped up other markets, especially the U.S., via the so-called yen-carry trade (borrowing at ultralow Japanese rates to buy higher-returning assets elsewhere, including Nasdaq stocks). 'If sharply higher JGB yields entice Japanese investors to return home, the unwinding of the carry trade could cause a loud sucking sound in U.S. financial assets," writes Société Générale global strategist Albert Edwards. This could happen at a most inopportune time, after the passage of the Big Beautiful Bill, which would put the U.S. on a continued path of budget deficits in excess of 6% of gross domestic product, while the nation's overall debt would exceed the size of the U.S. economy. The burden of financing that debt at increasing interest rates is pushing up long-term U.S. bond yields, even after the Federal Reserve lowered its short-term rate target by a full percentage point last year. President Donald Trump's favorite word—tariffs—will partially offset the impact of new tax cuts in the BBB, raising $1.5 trillion to $2.5 trillion over 10 years, based on the widely varying estimates of how much the import levies will bring in. The measure was passed by the House of Representatives and now heads to the Senate, where it could get slimmed down. Fiscally speaking, the dessert from the tax goodies may kick in before the vegetables from tariffs fully hit. That may sound like good news for the economy, according to Paul Ashworth, chief North America economist at Capital Economics, but the budget deficit already is close to 6% of GDP while the economy is at full employment, and government debt is close to 100% of GDP and headed to nearly 120% in a decade's time. BCA Research's chief geopolitical strategist, Matt Gertken, says Trump's fiscal doctrine to deal with this mess is 'Don't F___ With Medicaid." The better answer for the U.S. budget, both domestically and for the global economy, would be to cut spending and raise taxes. But that would be political suicide for Republicans. Even the administration's historic spending cuts—some $1.6 trillion from the Department of Government Efficiency and things like the repeal of green-energy tax credits—will be swallowed up by the huge tax cuts, writes Gertken in a client note. The GOP already is courting voter backlash with cuts to Medicaid and the Supplemental Nutrition Assistance Program, which will hit many of their constituents in Red states. 'The saving grace for the U.S. is that its low-tax regime implies it can raise taxes in the future and improve its sustainability," he writes. The bottom line is the Big Beautiful Bill is an 'abomination," writes Michael Darda, chief economist and strategist at MKM Partners, and an alum of Polyconomics, the advisory started by Jude Wanniski, the early supply-side-economics evangelist. 'New tax cuts in the bill are low bang-for-the-buck gimmicks that will not materially alter incentives for working, saving, or investment," he writes in a client note. Better that the whole measure fail and let the Tax Cut and Jobs Act expire at the end of the year, which would mean a tax hike, he writes. 'This is the perfect time for austerity given, 1) the fiscal deficit is high and unsustainable, 2) the unemployment rate is low, and 3) the Fed's policy rate is over [4%.]" Both Republicans and Democrats have promised economic programs that the current tax system can't support. The ability to borrow to pay for them is being constrained by rising bond yields, which further exacerbates the budget strains. As the rates on supposedly risk-free government securities have climbed, the risk premia on investment-grade and high-yield corporate debt, and equities, have shrunk. The U.S. fiscal situation poses a 'ticking time bomb" for global markets, Soc Gen's Edwards concludes. That's the proverbial elephant in the room. Write to Randall W. Forsyth at
CNBC
22-05-2025
- Business
- CNBC
Stock futures tick higher as investors try to look past economic worries, deficit fears: Live updates
Traders work on the floor of the New York Stock Exchange on March 13, 2025. NYSE Stock futures rose modestly on Thursday night, as investors continue to evaluate the effect of higher U.S. Treasury yields on the economy. Futures tied to the Dow Jones Industrial Average 58 points, or 0.1%. Nasdaq 100 futures gained 0.1%, while S&P 500 futures ticked up nearly 0.2%. In regular trading, the S&P 500 closed just below the flatline, as did the 30-stock Dow . Both posted their third consecutive losing day. The Nasdaq Composite was the outlier, rising about 0.3%. Early Thursday, members of the House of Representatives cleared President Donald Trump's sweeping tax bill. It now goes to the Senate. However, worries about the cost of the measure – and its impact on the nation's debt and deficit – sent long-term Treasury yields higher. The 30-year Treasury bond yield touched a high of 5.161%, its highest level since October 2023. The rate on the 10-year Treasury note at one point breached 4.6%. Rates on both Treasurys ended the session off their highs. "Even if the inability to reduce the deficit in the U.S. doesn't lead to default, a large deficit still implies greater bond supply, and perhaps eventual inflation as the debt is monetized to avoid default," said Thierry Wizman, global rates and currencies strategist at Macquarie. "Either way, it makes nominal fixed-income instruments less attractive as long-term investments." The revived fears over the economy follow Moody's downgrade of the United States' credit rating nearly a week ago. The rating agency cut the nation's sovereign credit rating down one notch to Aa1 from Aaa, pointing to the government's ballooning deficit and the cost of rolling over its existing debt. The major averages are heading for losses on the week, with the S&P 500 down nearly 2% through Thursday's close. The Dow is on pace for a decline of about 1.9%, while the Nasdaq is tracking for 1.5% slide week to date. On the economic front, investors will be watching for building permits and new home sales data out Friday. Investors are also heading into a holiday weekend that will see the stock market closed for Memorial Day on Monday. Stock futures were higher on Thursday, as investors try to shake of rising Treasury yields. Futures tied to the Dow Jones Industrial Average added 59 points, or 0.1%. Nasdaq 100 futures, alongside S&P 500 futures. — Brian Evans
