Markets awaiting inflation data and how much the Fed will raise rates, company and world news
Market Reviews
• The stock market was calm yesterday - investors are waiting for a package of macroeconomic news. Only NVDA stood out yesterday with growth of 4%. Small cap and Value stocks traded weakly. Oil prices rose 3% yesterday on rumors of an imminent Iranian attack on Israel. In the morning everything is calm.
• US producer price data is due later today and is likely to shake markets before attention turns to July CPI data scheduled for Wednesday. Thursday's retail sales report will complete the reset for this week. Investors will analyze the data set to assess whether the Federal Reserve will cut by 50 basis points or 25 basis points at its September meeting. Traders are currently evenly split between the two options, CME's FedWatch tool showed. Last week they at one point fully priced in a 50 basis point cut during the sell-off triggered by fears of a US recession. That kept traders hesitant to make big bets ahead of the data, although Japan's Nikkei index was the focus of a subdued Asian session as a stable yen reassured investors after last week's wild swings.
• US consumers' medium-term three-year inflation expectations dropped to 2.3% from 2.9% in June. Which is the lowest reading since the New York Fed began its monthly survey of consumer sentiment.
The US budget deficit rose 10% in July as the government spends more on interest than on Medicare and the military.
The gap between federal spending and the amount the government collects in taxes widened to $244 billion in July, up from $221 billion in the same month. a year earlier.
In July, spending was $574 billion versus $330 billion in tax revenue.
The deficit will likely be $1.9 trillion in 2024, up from $1.7 trillion the previous year.
In the first 10 months of the fiscal year, the United States spent $763 billion on interest payments, more than the federal government spent on Medicare or the military.
• Japanese stocks' rise of more than 2% means they are back to levels last seen on August 2. The yen, another epicenter of last week's sharp sell-off, eased slightly to 147.435 per dollar, well below the seven-month high of 141.675 hit on Monday last week. Much of the yen's movements over the past few trading days have been subdued, allowing the market to return to some semblance of calm and leaving investors wondering whether the winding down of speculative trading is now over.
• OPEC lowered its forecast for oil demand growth in 2024. Analysts said demand will grow by 2.11 million bpd, down from 2.25 million bpd. U.S. energy companies are poised to ride a second-half wave of demand for data centers that are fueling the artificial intelligence boom, after securing several supply deals in the second quarter that strengthened their position in the market.
• Berkshire Hathaway could pay $15 billion in taxes next year for selling Apple shares. Berkshire Hathaway amassed its Apple stake primarily from 2016 to 2018 at an average price of about $34 per share, with a selling price of about $186. Buffett typically holds shares as long as possible to defer paying income taxes on realized gains. But apparently this time investment arguments outweighed taxes.
• The US federal budget deficit is expected to be $2 trillion next year.
• A Bitcoin miner wants to buy more Bitcoins. Marathon Digital Holdings said it will sell $250 million in convertible senior notes and use the proceeds to buy more cryptocurrency.
• Meta and Universal Music Group are considering AI music in a new licensing agreement. Which allows users to share songs from the UMG music library on Meta platforms (Facebook, Instagram, Horizon, Threads and WhatsApp) without infringing copyright.
• Small-Cap ETFs Lose Billions - Bloomberg. What was touted as a big rotation from Wall Street into smaller companies fizzled out as quickly as it began.
• Copper rebound continues as market eyes Chinese arbitrage - Bloomberg. Copper extended its rebound from its lowest close in five months as orders to take the metal out of London Metal Exchange warehouses signaled demand from China.
• Goldman's trading desk sees a short window to buy dips in stocks. Investors will have a short window to buy dips in U.S. stocks later this month as selling pressure from systemic funds eases while companies increase exposure to equities.
• Bankrupt lender Celsius sued Tether for $2.4 billion in what Tether called a “baseless fraud.” The cryptocurrency lender also sued a protocol belonging to relatives of Israeli Prime Minister Netanyahu.
• Chevron produces an industry first in an ultra-high-pressure field. Chevron has achieved a technological breakthrough by producing the first oil from a field in the US Gulf of Mexico under extreme subsea pressure, the energy company said on Monday. Chevron and its partner TotalEnergies expect the Anchor field to produce oil within 30 years.
• The HD report will be released today before the US market opens. Analysts expect Home Depot's earnings to face serious challenges. Demand for home improvement products remains frozen.
• Piper Sandler analyst Patrick Moley sees a buying opportunity in HOOD stock. HOOD shares rose 3.5% yesterday. About 10% of American adults have Robinhood-funded accounts, and those accounts collectively hold less than 0.3% of the country's roughly $65 trillion in retail investment assets. “Over the next 20 years, a significant portion of these assets are expected to change hands between baby boomers and their children.” And Robinhood looks set to benefit from "this transfer of wealth to younger generations who have a greater preference for 'do-it-yourself' investing."
Key events that could impact markets on Tuesday:
- US Producer Price Index (PPI).
- UK payroll data for June, ILO UK unemployment rate for June, ZEW Germany economic survey and current conditions for August.
International reviews
• New Hamas leader Yahya Sinwar told Israel that he wants a truce - CNN. The new leader of the Palestinian group Hamas, Yahya Sinwar, elected after the assassination of the previous head of the movement's Politburo, Ismail Haniyeh, conveyed a message to Israel that he wants a truce in the Gaza Strip. His message to Jerusalem was conveyed by Egyptian and Qatari mediators. On the other hand, the media report that Iran is preparing for a large-scale war. An updated Israeli intelligence assessment suggests Iran is prepared to directly attack Israel. This will probably happen within the next few days. The United States sent a nuclear submarine to the Middle East: what prompted it. US Defense Secretary Lloyd Austin has ordered the deployment of the USS Abraham Lincoln aircraft carrier to the Middle East accelerated. The Georgia nuclear submarine, armed with cruise missiles, will also be sent there.
• Foreign investors pulled a record $15 billion out of China in the second quarter of 2024. If the decline continues through the end of the year, it would be the first annual net capital outflow since at least 1990, analysts say.
• China admitted responsibility for damaging the Balticconnector gas pipeline in October 2023. The accident allegedly occurred due to a strong storm in the Baltic Sea.
• India's richest family owns 10% of the country's GDP - Barclays. Ambani's business empire, Reliance Industries, is the largest in the country. It covered the energy, telecommunications and retail sectors. As of March 20, the Ambani family wealth was estimated at 25.7 trillion rupees, or $386 billion - more than Musk and Bezos combined. And the assets of India's three largest family businesses are estimated at $460 billion, which is comparable to Singapore's GDP.
• Sweden could borrow 300 billion Swedish kronor ($28.5 billion) to help finance a new fleet of nuclear reactors in the coming decades.
• Elon Musk spoke with Trump for more than two hours during a big conversation Monday night on his social media platform X
At one point, the number of listeners exceeded 1 million. Trump praised Tesla, but worries about how much power the AI consumes.
"This shocks me, but AI requires twice the energy the country already produces for everything," Trump said. "You're going to need a lot of power, you're going to need a huge amount of power, almost double what we're producing now for the entire country, if you can believe it."
• The Paris Olympics cost approximately $8.2 billion to host, making it the sixth most expensive Olympics of all time, both summer and winter. The 2014 Winter Olympics in Sochi were the most expensive in history, costing nearly $25 billion.
• Kamala Harris will unveil her economic platform this week.