MACRO WEEK AHEAD

As we head into the final stretch before Labor Day, the markets are gearing up for the usual seasonal slump, with traders dialling back their participation and enthusiasm. This week's macro spotlight shines on US and European inflation data, but don't expect dramatic plot twists. The Fed's go-to inflation gauge, the core PCE, drops on Friday, and it's set to deliver a mild 0.2% increase for last month.

A tame print on the MoM core PCE won't shake the status quo. Powell laid it all out at Jackson Hole: rate cuts are on the horizon, and the only real suspense left is whether they'll start with 25 or 50 basis points and how much more easing we'll get before the ball drops on New Year’s Eve.

Unless Thursday’s second estimate of Q2 GDP delivers a shocking downward revision to spending or July’s personal consumption numbers throw a low-and-away curveball, the market will stick to its script—a 25bps cut in September. However, the real test of this assumption will be next week on September 6, when the August jobs report drops. Until then, expect the markets to drift, with any big moves likely stuck in the waiting room.

However, as the Federal Reserve's grip on global markets loosens, investors shift their focus to ASEAN markets. The weakening dollar provides a much-needed tailwind to the region's high-growth economies, making them an attractive destination for capital flows. As the Fed eases its stance, the door opens wider for ASEAN to shine globally.

NVIDIA

Risk assets have been partying like it’s 1999, but this week, the real headliner takes the stage. The most anticipated earnings report of 2024 drops when Nvidia reveals its numbers, and all eyes are on the AI juggernaut. Let’s put this in perspective: Nvidia's stock has skyrocketed 170% in the past year and an eye-popping 3,000% over the past five years. These gains are the stuff of legend.

Don’t be intimidated by the high-tech wizardry behind Nvidia’s empire—their story is as simple as it gets. In a rapidly reshaped world by artificial intelligence, Nvidia isn’t just playing the game—they’re running the show. They make the absolute best AI chips on the planet, no contest. While everyone else is trying to catch up, Nvidia’s lapping the competition. Their chips aren’t just in demand; they’re the driving force behind the AI revolution.

However, investors aren’t exactly lounging around, counting their profits just yet. There’s plenty of nail-biting as they wonder if the Fed’s rate-cutting spree will be enough to keep Nvidia’s sky-high valuations—and the broader Magnificent 7 complex—from crashing back down to Earth. The big question is whether the Fed’s dovish dance can keep the party going or if those lofty stock prices are about to face a harsh reality check.

OIL MARKETS

Another weekend, another flare-up in the Middle East. Israel, claiming to preempt an attack on its territory, has reignited fears of a wider regional war. For months now, oil traders have been waking up every Monday, wondering if this is the spark that will light the fuse to a full-blown escalation. It’s been like living in a geopolitical teeter-totter—one minute, tensions put a bid under the oil market, and the next, cooler heads manage to keep things from tipping over. But with the situation looking more acute than ever, the burning question remains: Will this be the event that turns the smouldering tinderbox into a raging inferno?

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