Stock markets reached spectacular new highs just yesterday, heavily profiting from relentless artificial intelligence trends and a massive wave of record corporate earnings.
The S&P 500 aggressively breached the monumental 7,500 milestone, while the Dow Jones Industrial Average temporarily reclaimed the historic 50,000 mark as global risk appetite peaks.
Adding to this initial bullish momentum, the highly anticipated summit between President Trump and Chinese President Xi Jinping delivers a highly constructive geopolitical tone.
The two leaders establish aligning views regarding the ongoing Middle East conflict and the general World order with the two superpowers needing to collaborate.
Investors are now looking ahead to the next encounter between the two leaders, with an official invitation extended for President Xi to visit Trump in the United States in mid-September.
However, while these diplomatic developments generate better hopes for a sustainable peace process, financial markets are already rapidly turning the page on this theme.
Despite the midweek ecstasy, a much more dominant macroeconomic theme is now aggressively gripping the markets and causing widespread bloodshed ahead of the weekend.
Following the official Senate confirmation of Kevin Warsh as the next Federal Reserve Chairman, risk assets are subject to a brutal, significant repricing.
Ruthless bearish flows wipe out recent equity, metals and Crypto gains as the US Dollar explodes higher at the direct expense of virtually all other asset classes.
Markets are hyper-focusing on the severe, long-term implications of a Warsh-led Federal Reserve. Institutional capital is actively preparing for a massive, systematic emptying of the central bank’s balance sheet, which remains one of the new Chair’s dearest ambitions.
You can see this in the shocking action in bond markets which swears to trigger cascading effects into the broader Market regime
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