DAX Triangle Test; Powell Fallout and Fed Turmoil

1. Market Overview

US Equities

• All major indices closed in the red, led by underperformance in the Russell 2000.
• The decline reversed Friday’s rally post-Powell.
• Defensive sectors (Consumer Staples, Health Care, Utilities) lagged.
• Outperformers: Communication, Tech, and Energy.
• No major fundamental driver, but momentum faded.

Rate Expectations

• Markets remain cautious: A 25bps September rate cut is still not fully priced.
• Current implied probability: ~80–83%.
• Key data still to come:
  • July PCE (Aug 29)
  • August NFP
  • August CPI (Sept 11)

2. Fed & Political Risk

Fed Leadership Disruption

• President Trump fired Fed Governor Lisa Cook citing mortgage and fraud issues.
• Her term runs through 2038; legal legitimacy unclear.
• Move triggered renewed concerns about Fed independence.

Market Reactions

• Global equities weakened.
• Gold hit a 2-week high.
• Longer-dated Treasuries sold off, short-end rose.
• USD weakened against the euro, citing credibility concerns.

3. Tariffs & Trade

US Policy Shifts

• Trump threatened new tariffs on countries imposing digital taxes or anti-US tech regulations.
• Considering tech/chip export restrictions.

US–South Korea

• Trump suggested deal close but warned “no guarantees”.
• Mentioned possible naval contracts with South Korea.

US–China

• Trump said:
  • Xi wants him to visit.
  • China must provide magnets or face 200% tariffs.
• Top Chinese negotiator Li Chenggang heading to the US to meet USTR and Treasury officials.
• US welcomes China’s effort to reduce trade surplus.

US–Canada

• Officials to meet after Canada removed tariffs.
• Brazil’s FM confirmed Canada–Mercosur FTA talks resuming, with a key meeting in October.

US–EU Tensions

• Visa sanctions reportedly under consideration for EU officials over the Digital Services Act.
• EUR/USD rebounded after holding 1.1600 support, though gains were capped by French political turmoil and Trump's tariff threats.

4. Macro Developments

Germany

• ifo Index (Aug): 89, highest since April 2024.
• Current conditions subdued, but expectations improved sharply.
• Optimism tied to progress in US trade talks and domestic stimulus plans.
• Still below long-term average (95.5).

Japan

• Nikkei fell 1% as yen strengthened after Trump’s Fed interference.
• Exporters like Toyota, Honda under pressure.
• 30Y bond yields reached record 3.22%; inflation at 3.1%, but no BoJ tightening yet.
• Policy rate remains at 0.5%, next hike probability ~50% (October).

5. AI & Tech Sector

Valuations & Sentiment

• Tech sector +50% since April lows, outpacing S&P 500 +29%.
• Sector P/E at 29, approaching Dotcom peak levels.
• Pullbacks seen last week amid valuation concerns.

Long-Term Outlook

• Analysts raised EPS growth forecasts to:
  • +21.1% (2025)
  • +21.1% (2026)
• AI investment trend seen as structurally intact.

6. Digital Euro & Stablecoins

• EU fast-tracks digital euro plans in response to the US GENIUS Act.
• Considering public blockchains like Ethereum or Solana for transparency.
• Goal: Maintain Euro dominance and limit capital flight into USD-based stablecoins.
• Privacy concerns and tech architecture still under review.

7. YouTube AI Controversy

• YouTube tested AI video editing on Shorts without user consent.
• Modifications included skin smoothing and shape distortions.
• Creators criticized the lack of transparency.
• YouTube defended it as a visual quality enhancement.

8. Stock Highlight

• $GOOG rose 3% to new ATH last Friday.
• Driven by Apple–Google Gemini AI partnership for Siri, despite both being in a legal battle with the US over search monopoly.

9. Crypto Market Update

• Bitcoin:
  • Fell below $113K, range-bound between $110K–$115K.
• Ethereum:
  • Hit ATH $4,940, now around $4,650.
• EU shows “FOMO”: Digital euro stablecoin project fast-tracked post-US legislation.

10. Economic Calendar – Tuesday

Event	Forecast	Previous
🇦🇺 RBA Meeting Minutes	—	—
🇺🇸 Durable Goods Orders	-2.5%	-9.3%

11. Germany 40 (DAX) 4H technical analysis

Based on the latest chart, the Germany 40 CFD (DAX) appears to be trading within a large symmetrical triangle formation, with price action respecting both ascending support and descending resistance lines. The current price hovers around 24,150, showing signs of hesitancy after a strong recovery from the 23,300 support area earlier this month.

While the broader uptrend from June remains structurally intact, the repeated failures to break above the 24,600 resistance area suggest that upward momentum may be fading. The RSI is currently near 38, pointing to waning strength but not yet oversold, while the Stochastic RSI is also turning lower. A break below the lower boundary of the triangle could trigger a deeper pullback toward the 23,500 region. However, as long as price holds above that ascending support, the broader bullish structure remains valid — and any consolidation above 24,000 could set the stage for another attempt toward 24,600 and beyond. Bulls may want to remain cautiously optimistic, keeping an eye on EMA support (especially the 200 EMA) and momentum divergences.