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Breakfast Bites - Election Surprise

Rise and shine everyone.

We have a big week of earnings in the US ahead of us, with 5 of the Mag 7 reporting this week. In fact, we have about 40% of the S&P 500 (by market cap) reporting this week. So, it should be a wild ride.

But, we start of this week with some macro news - Japan’s election surprise. This is the first time since 2009, that the ruling LDP has lost the election. PM Ishiba moved the election forward in the hopes of winning by default, and being able to form a cabinet early. That gamble seems to have failed. Nevertheless, he intends remain as prime minister and proceed with forming the cabinet.

The immediate reaction was a decline in the Japanese Yen, and a rise in the Nikkei. There will be some political instability for a while there, but a weaker Yen means more discussion on likely intervention. We also have the BoJ’s rate decision on Wednesday, and this election surprise could potentially weigh on that decision, i.e., a discussion of the next rate hike.

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