Markets continued to fall, company reviews, yen and dollar growth, Kamala Harris statement

Market Reviews

• U.S. stock markets tried to stabilize after an epic one-day crash, but gave in by the end of the day as fears about potential AI gains devalued the mega-cap and thus the entire market on Wednesday. The S&P 500 and Nasdaq rose during the session but closed down 0.5% and 0.9%, respectively. The Dow Jones Industrial Average held firm to close 0.2% higher, and small-cap stocks also rose as investors sought value away from megacaps.

• Tesla <TSLA.O> was the only one of the so-called Magnificent 7 stocks to climb out of the hole, finishing up 1.7% after losing more than 12% on Wednesday. Alphabet <GOOGL.O>, Apple <AAPL.O>, Amazon <AMZN.O>, Meta <META.O> and Microsoft <MSFT.O> fell, with earnings due next week, as did AI leader Nvidia , which will report later in August. Volatility increased across all markets, as measured by the CBOE Market Volatility Index <.VIX>, the ICE BofA Merrill Lynch Bond Market MOVE Index <.MOVE> and the Deutschebank FX Dollar Volatility Index <.DBCVIX>.

• The US stock market failed to correct itself after the collapse on Wednesday. The bears were stronger again. Although the fall was no longer on such a wide front. Small cap stocks (IWM) did well and Value stocks did well. And this is evidence of the continuation of the bull market and describes the current situation in the market simply as a rotation of capital. In the morning, stock index futures are rising slightly again. And Bitcoin returned above $67 thousand.

• Corporate insiders have dramatically changed their minds and began selling shares of their companies at the fastest pace in at least a decade. Only three S&P 500 sectors—consumer staples, materials and utilities—are showing underlying optimism.

• Losses from computer failures due to the CrowdStrike program exceeded $5 billion. This is less than 10% of the company's capitalization, which fell by 35% after the incident. CrowdStrike CEO George Kurtz was summoned to appear before the Homeland Security Committee of the US House of Representatives.

• Revolut has received a provisional banking license in the UK. This paves the way for the company's next stage of growth - Bloomberg. The full license will soon allow Revolut, co-founded by Ukrainian Vlad Yatsenko, to provide overdrafts, loans and savings products to its more than 9 million UK customers.

• Nestle has downgraded its sales forecasts. In addition, the company has had to slow the rate of price increases as consumers become more frugal. “There is a desire among consumers to seek benefits. There is pressure, especially in the low-income segment,” Nestle CEO Mark Schneider was quoted as saying by Reuters. He cited North America, Europe and China as regions where Nestlé and some other consumer products companies are seeing this trend. Last year the situation was different. In the first quarter of 2023, Nestle increased prices by an average of 10%. Such rates have not been observed for more than 30 years. However, this had almost no effect on sales volume - consumers were willing to pay more.

• Handbag maker Hermes reported Thursday second-quarter sales rose 13%. Showcasing wealthy shoppers' continued appetite for their luxury Birkin bags.

• Universal Music Group (UMG:AEX) shares fell 24%. Subscription revenue disappointed amid investor concerns about streaming growth.

• Amazon is trying to develop artificial intelligence chips cheaper and faster than Nvidia's At Amazon.com's lab in Austin, Texas, a half-dozen engineers began developing a new server Friday afternoon that has been kept under wraps, Amazon executives say .

• Musk to discuss $5 billion investment in xAI with Tesla's board of directors. Earlier this week, during Tesla's earnings conference call, Musk said xAI would be "useful for advancing full self-driving and building Tesla's new data center." / Skeptics will say that Musk is trying to finance his xAI at the expense of Tesla.

• Nvidia Credit ETFs (NVDL, NVDU, NVDX) increase investor exposure amid tech turbulence in markets - Reuters
Leveraged bets on Nvidia are likely to become much riskier if the sell-off in tech stocks on Wall Street continues.

• Shares of Jeep maker Stellantis (STLA) fell 8% after disappointing results. Like competitors from the “Big Three” GM and Ford. The company suggested the possibility of abandoning one or more of the auto giant's 14 brands if they are unable to remain profitable. Ford (F) shares fell 18% yesterday
on their worst day since the 2008-09 financial crisis.

The automaker's second-quarter adjusted profit fell far short of Wall Street expectations as it spent more money on fixes.

• A rising yen causes “widespread liquidation” in markets. The yen's stunning resurgence is upending global markets, sending the yuan higher and shifting assets from Japanese stocks to gold and bitcoin as investors reassess their leveraged bets. Investors frantically unloaded long-standing bearish bets on the yen and/or sought the safe haven of the Japanese currency, spurred by a flood of weak US economic data, a global sell-off in stocks and growing speculation about a Bank of Japan interest rate hike next week, not to mention a bailout in the form of a nimble currency intervention by Tokyo. IG analyst Tony Sycamore said there was a "brick wall of demand" for dollars around 152 yen, which he expected to remain in place until Wednesday next week, when both the Bank of Japan and the Fed will set policy. “After this, all bets are off.”

• Harley-Davidson (HOG) shares rose 7%. The company beat analysts' forecasts thanks to higher shipments and better sales of its higher-end motorcycles in North America. The company also announced a $1 billion share repurchase.

• Amazon's growing cash pile sets the stage for dividend payout With a cash pile expected to top $100 billion this year, conditions have never been more favorable for Amazon.com to join its fellow megacaps in launching a dividend. .

• The Bank of Japan and the Fed will meet almost simultaneously next week. China's economy is slowing faster than economists and Beijing expected, and that is being reflected in commodity markets across Asia.

• The dollar also received some macroeconomic support from faster-than-expected US GDP growth in data released yesterday, allaying fears that economic growth could come to a sudden halt. However, easing price pressures are keeping bets on a Fed rate cut in September, with the dollar weakening against currencies such as the euro and pound sterling ahead of morning trade in Europe. There's little to shake markets during European hours of economic data or earnings reports, but U.S. personal consumption expenditure deflators (the Fed's favorite inflation gauge) could add further volatility ahead of the weekend.

• Chinese stocks fell and iron ore and oil prices faltered after the country's central bank unexpectedly cut long-term interest rates, adding to concerns about the world's second-largest economy and Asian markets overall. The Shanghai Composite Index <.SSEC> closed at its lowest level since February 19. The broadest index of Asia-Pacific shares outside Japan, MSCI <.MIAPJ0000PUS>, closed 1.00% lower, while Japan's Nikkei <.N225> recovered from a 3.28% fall. "In China, it's not really a function of the cost of capital, it's a function of the demand (for) capital, which is causing economic weakness there, so you've had a really lackluster reaction from Chinese equities," said Jeff Schulze, head of economics and markets ClearBridge Investments strategies.

 • Stocks yesterday after reports
NOW +13%
RTX +8%
LUV +6%
AAL +4%
IBM +4%
ABBV +3%
HON -5%
F -18%
EW -31%

• Deckers Outdoor (DECK) +10%
Norfolk Southern (NSC) +7%
Skechers (SKX) +2%
DexCom (DXCM) shares plunged 37% in premarket trading after earnings.

 Key events that could impact markets on Friday:

- ZM Reports, Bristol Myers Squibb, Colgate Palmolive.
- Opening ceremony of the Paris Olympics.
- Basic report on the US PCE price index for June - an increase of 2.6% y/y is expected.

Fundamental Reviews

• Germany Ifo Business Climate Index fell from 88.6 to 87.0. Growth to 88.9 was expected.

• The US economy is weakening but continues to grow.

- US GDP grew in the 2nd quarter by 2.8% y/y (growth by 2.0-2.1% y/y was expected). The improvement is largely due to a decrease in the deflator to 2.3%.

- Orders for value-added goods fell by 6.6% y/y (an increase of 0.3% was expected)

- The number of initial applications for unemployment benefits fell slightly.

• The People's Bank of China unexpectedly cut the annual interest rate from 2.5% to 2.3%. This is the first cut in this rate since August last year and the largest decline since April 2020. The PBOC also injected 200 billion yuan ($27.54 billion) of liquidity into the market through this mechanism.

In another sign of increased fiscal support, China's planner and finance ministry pledged Thursday to provide more subsidies for a government program aimed at boosting consumption by encouraging consumers and companies to upgrade goods and equipment.

• “I decided that the best way forward is to pass the torch to a new generation. This is the best way to unite the nation,” US President Joe Biden explained the decision not to run and addressed the nation.

Obama doesn't believe Kamala Harris can beat Trump, so he didn't endorse her - NY Post. Later, information appeared that Obama would support Harris.

Vice President Kamala Harris on Thursday said she urges Israeli Prime Minister Benjamin Netanyahu to reach a ceasefire with Hamas soon
so that dozens of hostages held by militants in the Gaza Strip since October 7 can return home.
“What has happened in Gaza over the past nine months is devastating. Images of dead children and desperate, hungry people running for safety, sometimes displaced a second, third or fourth time,” Harris said. “We cannot look away from these tragedies. Images of dead children and desperate, hungry people running for safety, sometimes displaced a second, third or fourth time,” Harris said.
We cannot allow ourselves to become indifferent to suffering. And I will not remain silent."
She also condemned Hamas: “Pro-Hamas graffiti and rhetoric are disgusting and we should not tolerate them in our country.”

• China plans to issue $41 billion in bonds to encourage consumer spending. About half of the planned bond issue will be used to support the return of consumer goods - Reuters.

• The Slovak authorities want their own law on “foreign agents”: the EU has warned of the consequences. This law would require non-governmental organizations that receive funding from abroad to identify themselves as “foreign-supported organizations.”

• The EU did not support Hungary and Slovakia in the fight for Russian oil - FT. Attempts by Hungary and Slovakia to involve the European Union in a dispute with Ukraine over Russian oil have failed. The European Commission slowed down their request to put pressure on the Ukrainian government with a call to lift sanctions against the Russian company Lukoil.

• Italian Prime Minister Giorgia Meloni will make an official visit on July 27-30 - Chinese Foreign Ministry.

• US rejects G-20 talk of a global tax on billionaires. Brazil is leading the fight to have the super-rich pay 2% of their wealth annually in income taxes. “Tax policy is very difficult to coordinate globally, and we do not see the need or believe it would be practical to attempt to negotiate a global agreement on this issue,” Yellen said.
The richest 1% of people have amassed $42 trillion in new wealth over the past decade, nearly 36 times more than the entire bottom 50% of the world's population, according to an Oxfam analysis released on Thursday ahead of a meeting of finance ministers.
Billionaires now pay the equivalent of 0.3% of their wealth in taxes, according to a report by French economist Gabriel Zucman commissioned by Brazil. The report estimates that a 2% tax would raise $200 billion to $250 billion a year worldwide from about 3,000 people, money that could fund public services such as education and health care, as well as the fight against climate change. .