Markets are looking for direction, attack on carry traders, BlackRock report, Musk's war, fundamental reviews
Stock reviews
• The US stock market began to freeze yesterday and ended up dying - an increase of more than 1% turned into a decline of almost 1%. Semiconductors led the decline. The yield on 10-year US government bonds has almost returned to 4% per annum, which is now resistance. Bitcoin is hovering around $55 thousand. Let's see what weekly data on the US labor market will be released today at 15-30. Stocks received relief after the Bank of Japan statement. Stocks rose globally and bonds fell after the Bank of Japan moved to calm markets following historic volatility caused in part by the Asian crisis.
• Bond investors spooked by a poor 10-year Treasury auction on Wednesday sent yields soaring nearly 9 basis points to 3.977% overnight, but more than half of that gain was erased in early trading Thursday.
• Worries about a US hard landing, a massive wind-down of yen carry trading, fears of an AI bubble: there is a long and compelling list of reasons to hit the bailout button on rates that may have soared too high.
• Investors are still weighing Wednesday's statements by Bank of Japan Deputy Governor Shinichi Uchida that the central bank will not raise interest rates while financial markets are unstable and that recent market volatility "is a clear downside risk for the economy." That helped boost the Nikkei and send the yen tumbling, with the currency down 1.8% against the dollar in late US trading, its biggest daily fall in 18 months.
• Yen implied volatility eased slightly on Wednesday but remains elevated across the curve. The wild swings of the past few days may have passed, but traders are understandably remaining cautious and defensive. Weekly volatility is noticeably higher than monthly, indicating that investors still expect the yen to fall significantly in the coming days.
• Key from BlackRock's report after the August global market crash:
- BlackRock analysts view US unemployment data as a sign of a slowing economy, but not a recession.
- Despite the slowdown in consumer spending growth in the US, analysts consider this indicator to be “healthy”.
- They also noted higher expectations for US corporate profits in the second quarter - 13%.
- BlackRock did not reduce the volume of investments in shares of American companies that dominate its portfolio.
• The head of Nvidia sold a record $323 million worth of company shares in July. The sale was completed only a few days before the collapse in stock prices.
• “We held out for two years, but now it’s war”: X Elon Musk sued advertisers over the boycott. An alliance of companies previously agreed to "end all paid advertising" on the Twitter platform following its acquisition by Musk, according to a US Congressional report. X is getting closer to launching its payment service. The company is working on adding a Payments button to the navigation bar under the bookmarks tab.
• Chinese tech giants have started buying Samsung chips. The companies have increased their purchases of artificial intelligence (AI) semiconductors since the beginning of this year, with China accounting for about 30% of Samsung's chip revenue in the first half of 2024, one of the people said. The moves show how China is preparing to pursue its technology ambitions amid rising trade tensions with the US and other Western countries.
• Gas prices in Europe jumped due to reports from the Kursk region. European natural gas prices jumped after unverified reports appeared on social networks that Ukrainian troops had captured the Sudzha gas station.
• Airbnb shares fell 13%. After forecasting weak booking prospects. Maersk expects global demand for container shipping to grow more slowly over the next few quarters. Market risks remain, while the group's capital expenditure will rise faster.
• Google has confirmed plans to introduce web monetization in Chrome. This will allow site owners to receive micropayments for their content as an additional way to generate income. BleepingComputer writes about this. Google believes this will enable content creators and site owners to be compensated for their work without relying solely on advertising or subscriptions.
• Nike sees a gold rush with website traffic and sales during the Summer Olympics. The Summer Olympics turned out to be a rare win for Nike as the global sporting event helped boost demand for the sportswear giant's new products and jump ahead of rivals.
• Disney CFO on theme park slowdown: Consumers are watching their money more. Disney's theme parks were in the spotlight after the company reported better-than-expected quarterly results.
• Hewlett Packard Enterprise's $14 billion deal to buy Juniper Networks was approved by the UK antitrust authority. Which opens the way for the company to expand its business.
• House Republicans are asking Johnson not to cancel climate benefits. A group of U.S. House Republicans is asking Speaker Mike Johnson not to repeal the clean energy tax credits included in the Inflation Relief Act, warning that such a move could undermine private investment in the sector and harm ongoing projects.
• Hedge funds took a beating in tech stocks ahead of the latest sell-off. When the stock market crashed in mid-July, some of the world's largest hedge funds lost hundreds of millions of dollars in popular tech stocks.
• Rivian forecasts flat production this year but growth in 2025. Rivian Automotive is keeping its full-year vehicle production plan unchanged from last year, but its chief executive expects production to rise in 2025 even with the plant closing. RIVN shares fell 7%.
• Super Micro's weak earnings fuel concerns about AI server margins. Shares of Super Micro Computer fell 20% Wednesday after the company reported revenue and profit that fell short of analysts' forecasts, even with strong full-year sales forecast that was billions of dollars above Wall Street forecasts.
Stocks yesterday after reports: FTNT +25%, SHOP +18%, CVS -3%, DIS -4%, AMGN -5%, NVO -8%, EMR -8%, ABNB -13%.
Stocks today in premarket: OXY +1%, EQIX 0%, MCK -7%,
Key events that could affect the markets on Thursday:
- Allianz, Deutsche Telekom earnings.
- Weekly unemployment claims in the US.
— Richmond Federal Reserve Bank President Thomas Barkin speaks on a webinar.
Fundamental Reviews
• Trump announced a wide-ranging interview with Elon Musk on Monday. US Vice Presidential candidate Tim Walz criticized Trump. Kamala Harris made her first appearance at a campaign rally with Minnesota Governor Tim Walz, whom she has chosen as a potential vice president. In Philadelphia, Volz sharply criticized Republican candidate for the highest government office Donald Trump, saying that he is sowing “chaos and division” in the country.
• The United States threatened Turkey with sanctions due to the export of military products to the Russian Federation - FT. The United States is particularly concerned that Turkey has become a key hub through which Western electronics (processors, memory cards and amplifiers) find their way into Russian missiles and UAVs, violating export controls.
• US calls for restrictions on Chinese vehicle software over data security concerns. Biden administration officials plan to propose restrictions on the sale of Chinese auto software in the United States as early as this month. The move will include restrictions on the use and testing of Chinese autonomous vehicle technology.
• Iran decided to postpone the attack on Israel after the efforts of “shuttle diplomats” from many countries. According to the latest US data, the response may be delayed until Thursday or Friday evening.
• In Britain, protesters attacked an Israeli drone company's factory. The drones destroyed by the attackers were intended for the British army, the company says.
• Knight Frank named the country where the largest increase in rich people is expected. India is expected to have the fastest growing number of ultra-rich people in the world over the next few years. Last year alone, the number of India's ultra-rich population - people with a net worth of at least $30 million (UHNWI, Ultra high-net-worth individuals) - grew by 6.1%, to 13,263 people. This number is expected to grow by 50% by 2028, making India the fastest growing country in the world.
• China could become the largest producer of nuclear energy and overtake the United States and France. China is increasing the construction of its nuclear capacity - 30 new nuclear power plants are currently being built. At this rate, China could overtake France and the United States to become the world's largest nuclear energy producer by the next decade. Chinese export growth is slowing, although technology exports have risen to a record level. Weekend shipments were up in July compared to the same period last year, but the increase was larger in June.