FUNDAMENTAL REVIEW FOR THE WEEK 26 - 31 August 2024

The week starts with geopolitics again. According to the latest information, Hamas rejects Israel's extreme offer of a ceasefire in the Gaza Strip. Hamas insists on observing the July 2 agreement, stating that Israel's new conditions are unacceptable, and the US discussions about an imminent ceasefire are just pre-election rhetoric. Meanwhile, Israel and Hezbollah continue to regularly exchange missile strikes, but so far the conflict has not reached a global level, with the direct involvement of Iran - there is a gradual return of "Big Money" from the protective dollar back to risks. But the situation is very precarious and here it is necessary to keep a finger "on the pulse" of the geopolitical news feed.

The arrest of Pavel Durov in France, although it does not globally affect financial markets, with the exception of the TON cryptocurrency and other digital projects based on this ecosystem, is still a significant event for the future transformation of legal and financial institutions. After Durov's arrest, many warned Musk (according to several media outlets) that he could be next. This question is crucial in light of the future of AI, digital currencies, digital debt restructuring, and cryptocurrency freedom.

The upcoming financial week will be relatively quiet before the key events of the week that begins on September 2, when a number of important reports will influence the Fed's decision to cut rates at its meeting on September 18.

The most significant event in the stock section will be Nvidia's report on Wednesday after the stock market closes. The main risks are delays in the release of new Blackwell products, especially the GB200 chip. Nvidia knows how to position itself favorably even with less than stellar reports, and the market reaction to the report will largely depend on this positioning and the desire to take profits after the report is published. Given the rapid growth of the Big Tech sector and Nvidia shares after the July slump in the stock market, it is likely that there will be quite active profit-taking with quotes going down during the report. However, a strong Nvidia report could lead to stock buybacks during corrections, until the release of key US data in the first week of September, which will provide a better understanding of the recession outlook.

The US data for the coming week is of little importance, as it will not have a significant impact on the Fed's decision in September. The US consumer price inflation data on Friday is of the greatest interest, but after the July CPI reports, the focus here will be on rounding to hundredths, which could lead to growth of either 2.6% y/y or 2.7% y/y. The first scenario is bearish, the second is more bullish, for the dollar to rise.

In the EU, the consumer price inflation report for August will be important, although it is unlikely to cancel the ECB rate cut in September, but it can affect the rhetoric on the regulator's future actions and, accordingly, the exchange rate of the single currency.