Bank of Japan added optimism to markets, corporate and macroeconomic news
Stock reviews
• Bank of Japan accepting role as market savior from Fed? After falling 3% to start the day, the Nikkei index rose 2.8% and was almost back to its original level before falling 13% on Monday. Bank of Japan Deputy Governor Shinichi Uchida saved the day, and perhaps the fate of speculative yen trading, by saying the central bank would not raise interest rates when markets are so volatile. The dollar rose 2% against the yen, Japanese bond yields fell and markets cut the odds of the Bank of Japan raising interest rates in October to one in four. That marked a marked change from last week, when the Bank of Japan raised rates by 15 basis points and signaled further policy tightening, sending the yen higher and disrupting speculative yen trading, where investors borrow the currency at low rates to buy high-yielding assets.
• The US stock market made a sluggish attempt at growth yesterday. On average, indices rose by 1%. Investors are very scared and expect continued sales. But in the morning, index futures are up another 1%. Thanks to the 2% devaluation of the yen. Japan became a trigger for sales and may have stopped being weird. US government bonds, as expected, sank in price. Raw materials are languishing at the bottom due to fears of recession.
• Global investors reacted positively to new guidance from the Bank of Japan. European stock markets are expected to rise sharply after the open, with EUROSTOXX 50 STXEc1 futures firming 1.3% and FTSE futures up 1.2%. Nasdaq futures rose 1.1% after falling slightly earlier in the day as artificial intelligence leader Super Micro Computer (SMCI.O) fell 12% after earnings missed forecasts. . Almost everything has grown.
• Concerns about a looming US recession also eased further as the Atlanta Federal Reserve Bank's GDPNow forecast for third-quarter GDP growth was raised to 2.9% from 2.6%. Unsurprisingly, US bond yields and the dollar have risen. It's a dual dynamic that's rarely positive for emerging markets, but if it's part of a broader market recovery and a cooling in volatility, then investors may be more forgiving.
• Trade data from China provided a pleasant surprise on the strength of domestic demand as imports beat expectations. Export growth fell short of forecasts but was still strong.
• OpenAI co-founder John Shulman is leaving the company for competitor Anthropic. Shulman's departure follows that of Ilya Sutskever, another of the company's 11 founders and its former chief scientist, as well as other members of his team.
• The sharp sell-off in technology stocks has created opportunities to buy profitable companies at lower prices. Said the chief investment officer of private bank HSBC.
• JPMorgan believes that the liquidation of the yen carry trade is only half complete. "We're not done yet. The liquidation of carry trade positions, at least among speculators, is somewhere between 50-60% complete."
• The outflow of debt capital (deleveraging) will be the largest since the banking crisis of 2023. Funds that invest in such loans could see the biggest weekly outflows since the March 2023 regional banking crisis, according to JPMorgan Chase & Co.
• Since the beginning of 2023, the Saudi Arabian Public Investment Fund has invested $750 million in Magic Leap Inc. The 14-year-old augmented reality company, which is still searching for a business model that works, says it needs more.
• The court recognized Google as a monopolist in the search market. Judge Amit Mehta in Washington said payments from Alphabet Inc. $26 billion to make its search engine the default option on smartphones and web browsers, prevented other competitors from succeeding in the market. Prosecutor Merrick Garland said the victory over Google is “historic for the American people.” At the same time, the company itself stated that it plans to appeal the relevant decision.
• The thesis of Bitcoin as “digital gold” is undermined by the sell-off of cryptocurrencies - Bloomberg. The crypto asset sell-off tests the industry axiom that Bitcoin is the equivalent of “digital gold” and should therefore be included in a portfolio as a hedge against equities.
• Solar company SunPower's failures ended in bankruptcy. After a lengthy saga involving restructuring and leadership changes, one of the most prominent companies in the US solar energy industry, SunPower Corp. filed for bankruptcy.
• Palantir shares jumped on earnings guidance, signaling demand for AI. The company raised its full-year forecast, citing continued demand for its artificial intelligence.
• Companies return to bonds after volatile trades - Bloomberg. Corporate borrowers are returning to the high-quality debt market after the global sell-off.
• Caterpillar says 2024 earnings will be higher than expected. Second-quarter earnings showed resilience despite growing concerns about the global economy.
• Lucid Group Inc. will receive a $1.5 billion cash injection from an affiliate of Saudi Arabia's Public Investment Fund,
sending shares of the electric car maker higher as it prepares its first sports wagon.
• SMCI falls by 13% after the report. Although the first reaction was an increase of 12%. The company reported well, but investors are starting to worry about low margins. SMCI will conduct a 10-1 stock split.
• CrowdStrike (CRWD) shares rose 4.3% to $232. Analysts at Piper Sandler upgraded the cybersecurity company's stock to Overweight from Neutral. The target price was lowered to $290 from $310.
• LUMN shares rose 93% yesterday. The telecommunications company said it received $5 billion in new business "thanks to strong communications demand fueled" by artificial intelligence and was "in active discussions with customers to secure another $7 billion in sales opportunities to meet increased customer demand."
• Stocks pre-market post-reports: LUMN +35%, FTNT +16%, CART +7%, DVN +1%, RDDT -5%, RIVN -7%, TRIP -11%, ABNB -16%.
• Stocks yesterday after reports: KVUE +15%, UBER +11%, PLTR +10%, CEG +7%, ZTS +6%, MPC +5%, CAT +3%, DUK +2%, TDG +2% , ZI -18%.
Key events that may affect the markets on Wednesday:
- Revenues from Glencore, Coca Cola, Puma, Nova Nordisk.
- Trade data in Germany, house prices in the UK for July.
- ECB board member Elisabeth McCall takes part in a panel discussion; ECB's Olli Rehn gives an opening speech at a Bank of Finland seminar.
Fundamental Reviews
• US household debt levels rose in the second quarter, according to a Fed survey.
- Total debt levels rose $109 billion, or 0.6%, in the second quarter to $17.80 trillion.
- The U.S. trade deficit narrowed to $73.1 billion in June as exports rose
- The deficit narrowed for the first time in three months as the value of exports of goods and services rose the most since the beginning of this year.
• The UN admitted that its employees may have participated in the Hamas attack on Israel. They are promised to be released. Hezbollah and Israel exchange blows - friction intensifies. In the event of a full-scale war between Iran and Israel, Pakistan is ready to supply Tehran with Shahid-3 ballistic missiles with a range of up to 2,750 km - The Jerusalem Post./ Is World War 3 growing?
• Iran wants its retaliation against Israel to cause pain, but not to start a wider war. Iran faces a dilemma on how to deal a significant blow to Israel without triggering a war that could engulf the Middle East.
• China is rapidly increasing the number of nuclear warheads, and the uranium for their production is provided by the Russian Federation - the US Department of Defense. The Pentagon believes that by 2030 China could double the number of warheads from the current 500.
• German customs allows lubricants subject to sanctions into the Russian Federation - The Insider. Since the beginning of the year, more than 60 tons of lubricants have arrived in the Russian Federation through the German city of Lubeck, including those that can be used in the Russian military-industrial complex. The supplier was VIP Resource Limited, registered in Hong Kong, and the recipient was Amertend LLC in Yekaterinburg, which sells solid, liquid and gaseous fuels and lubricants, writes The Insider.
• Kamala Harris has chosen Minnesota Governor Tim Volz as her US vice-presidential candidate. He is 60 years old, a former member of the US National Guard, and a former teacher. Volz has repeatedly criticized Trump and Vance, calling them "weirdos." Perhaps he will help Harris win over white voters from rural areas, who are key to the Republicans, according to Reuters.
• The popular all-inclusive system is going to be abandoned in Turkey. Leading players in the Turkish tourism industry proposed revising the format. It is proposed to switch to an option where tourists choose only the options they need; for example, a vacation in the “alcohol-free” format.
• China has begun creating an analogue of the American Starlink system. Launched the first 18 satellites into orbit.