Global inflation rate, US and Chinese indicators, background markets and corporate news
Fundamental Reviews
• U.S. consumer prices fell in June for the first time in four years, according to data last week, and Canadian prices followed suit on a monthly basis. Earlier in Asia, New Zealand inflation slowed more than expected, but was contained by some domestic pressures that could be a cautionary tale. Unstable UK service price inflation stood at 5.7% year on year in May and is expected to reach a dismal 5.6% in June. Sterling held steady at $1.2978, just short of a one-year high, and rates markets have priced in the likelihood that the Bank of England will start cutting interest rates in August. The New Zealand dollar rose 0.5% and two-year swaps reflected global gains, rising three basis points as domestic inflation faltered with rising rents and construction costs.
• Vice presidential candidate J.D., 39, has been called a “rising star” in the Republican Party. A former Marine, Vance rose to fame eight years ago with his book “Hillbilly Elegy,” about poverty in the American outback.
The politician criticized Donald Trump before the 2016 elections, but two years later he changed his mind and supported the 45th President of the United States in 2020 (changes his shoes quickly). In 2022, with the support of Trump, he was elected to the Senate for the first time from Ohio.
If he wins the election, Vance will become the youngest vice president of the United States since Richard Nixon. The move will allow the 78-year-old presidential candidate to balance out his age.
• Gold hit record highs in Asia on rising expectations of interest rate cuts, while Taiwanese shares were shaken by Donald Trump's equivocal remarks about the United States' commitment to the island in comments to Bloomberg Businessweek. “Taiwan took our chip business away from us,” Trump said. “They're incredibly rich... I don't think we're any different from an insurance policy. For what? Why are we doing this? Shares of Taiwanese chipmaker TSMC fell 1.4%. Dutch semiconductor equipment supplier ASML's earnings report later on Wednesday is expected to show a boom in new orders.
• Roberta Metzola was re-elected President of the European Parliament. This was reported today by the press service of the European Parliament.
63 MEPs demand that Hungary's voting rights in the EU be taken away after Orban's trips. Politico reported this. MPs claim that Orban has “already caused significant damage by exploiting and abusing the role of the EU Council Presidency” and has also “made several diplomatic visits, in particular to Putin and Chinese leader Xi, during which he deliberately misrepresented his powers.”
• China's leaders face dismal economic growth - The Economist. They gather for a “third plenum” to discuss long-term reforms. Reality intervened.
• Macron accepted the resignation of Prime Minister Attal after the defeat of the presidential party in the elections, but the Cabinet will continue to work with the same composition for now, AFP reports.
• Saudi Arabia gets biggest IMF growth cut among major economies - Bloomberg. The IMF has cut its growth forecasts for Saudi Arabia more than any other major economy it tracks, reflecting the kingdom's decision to cut oil supplies.
• The IMF has downgraded its forecast for US GDP growth in 2024 to 2.6%.
• One Fed rate cut is still expected later this year. Given the strength in the labor market, the Fed may wait a little longer to cut rates to see if CPI data continues to soften.
Summer pause:
- US small business sales growth slowed in June as consumers took a spending break - AP
- US retail sales came out better than expected in June. A decrease of 0.3% m/m was expected, but it turned out to be 0%.
- The core retail sales index increased by 0.4% m/m (+0.1% m/m was expected).
- The US economy remains strong.
• In South Korea, sales of dog strollers exceeded sales of strollers for children - Gmarket. In 2023, 57% of all strollers sold were for pets, and only 43% for infants. Last year, South Korea's fertility rate was 0.72, the lowest in the world. The decline in the birth rate is accompanied by an increase in the number of pets.
Stock reviews
• Crypto exchange MT GOX transferred $2.84 billion worth of bitcoins to wallets. The Kraken exchange announced that it had received funds for distribution to Mt.Gox clients. She will need one to two weeks to pay the compensation.
• Taboola makes an advertising deal with Apple, shares rise. The deal strengthens Taboola's reseller portfolio with one of the world's best-known brands and gives Apple the opportunity to expand its advertising business. The New York-based company will manage native advertising on both platforms globally and has achieved advertising reseller status.
• Charles Schwab shares fell 10% after promising to make the bank smaller over time - Bloomberg. To protect profits.
• Markets are betting 100% that the Fed will cut rates in September. Retail sales were flat but better than expected in June, according to data released Tuesday, adding to easing price pressures that bolstered belief in a rate cut in September - a prospect that has already fueled broader bullish demand for stocks. only in the high technology sector. Traders were pricing in a 100% chance the Fed would cut borrowing costs this month, according to CME FedWatch data.
• BlackRock says active ETFs are poised to reach $4 trillion by 2030 - Bloomberg. BlackRock is bullish on the growth of actively managed ETFs after investors worldwide poured more than $160 billion into such strategies this year.
• The new Ray-Ban Meta glasses are superior to the previous version, Essilux CEO said. Meta platforms and the new generation of EssilorLuxottica smart glasses sold more in a few months than the old glasses sold in two years,
• Microsoft faces antitrust investigation over hiring of artificial intelligence startup founder and key employees
British regulators on Tuesday opened a preliminary investigation into Microsoft's hiring of key artificial intelligence startup employees over concerns it could hinder competition in the artificial intelligence market.
• Stock traders at Wall Street's biggest banks posted better-than-expected quarterly profits by an impressive margin - Bloomberg.
Goldman Sachs joins bank bond issuance after earnings - Bloomberg.
Goldman Sachs Group Inc. and Wells Fargo & Co. are joining rival JPMorgan Chase in tapping into the U.S. investment-grade bond market after reporting second-quarter earnings.
• Gold jumped to record levels.
• Traders increased their bets on the Fed rate change - Bloomberg.
• Digital platform Qifa is betting on increasing Russian-Chinese trade and payments. Digital platform Qifa has expanded its activities to facilitate bilateral trade between Russia and China, aiming to solve payment problems that are currently hindering the flow of goods and services.
• European autos and clean energy are under pressure from Trump 2.0 bets. A sell-off in shares of some European automakers and renewable energy companies entered a second day on Tuesday amid growing concerns about potential political risks in the United States.
• EU may cut import tariffs on Chinese electric vehicles for Volkswagen and BMW - Reuters. The European Commission has signaled to Volkswagen and BMW that it may consider lowering import tariffs on Chinese-made electric vehicles.
• Bond Kings Raise Record $44 Billion in Active ETFs Ahead of Fed Rate Cut - Bloomberg. The moment bond market leaders have been waiting for is approaching, and the payoff is record amounts of client money flowing into actively managed ETFs.
• Microsoft (MSFT) cut its Diversity, Equity and Inclusion department. By laying off everyone on the team because it was “no longer critical to the business.”
• Elon Musk moved the headquarters of SpaceX and X from California to Texas. Musk, in a post on X on Tuesday, called a new state law banning schools from telling parents that their children are gay or transgender "the last straw."
He previously moved Tesla's headquarters from California to Texas.
Musk has plenty of business reasons for making these moves. He sees California as too expensive, too litigious and too friendly to workers and their rights. He wants to pay less taxes and lower labor costs.
Stocks yesterday after reports
- UNH up 6.5%
- BAC +5.4%
- PNC +4.7%
- MS +0.9%
- PGR down 3.3%
- SHOP stock up 9% yesterday. An analyst at BofA Securities raised the stock's rating and price target from $78 to $82 (it closed at $70 yesterday).
- RDDT shares fell 3.5% yesterday. Loop Capital downgraded the stock.
- FIVE shares fall 10% in premarket trading. The teen-focused discount retailer said it has fired its CEO and forecast sales will decline further in the second quarter as shoppers continue to grapple with the effects of inflation.
- BE shares are up 14% in premarket trading. The company has partnered with a cloud infrastructure platform to generate power in an AI-enabled data center.
• The flow of capital from Growth to Value continued. This is a good sign for a bullish stock market.
• Bitcoin consolidated above $65 thousand.
Key events that may affect markets on Wednesday:
- Economy: UK CPI, final Eurozone CPI, US housing starts
- June futures for WTI are ending. Oil price volatility is possible.
- JPMorgan CEO Jamie Dimon will share his views on the economy, interest rates, global politics and other topics at an event for wealth management clients/
- The Fed will publish the Beige Book report.
Reports
Premarket
ASML - Asml Holdings
JNJ - Johnson & Johnson
ALLY - Ally Financial
USB - US Bancorp
After market close
UAL - United Airlines Holdings
AA - Alcoa
STLD - Steel Dynamics