MARKET REPORT
Antwerp Bourse 1858
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Day in Review:
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Today:
DATA:
– US PPI Surges at fastest pace in 15mths Exp +0.1% Act +0.2% (BUT categories used to calculate the Fed’s preferred inflation measure, the personal consumption expenditures price index, were not so bad.)
– May revised higher
– YoY +2.6% vs Exp +2.3%
– Driven by resurgence in Services costs, energy remains deflationary
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– Uni Mich Sentiment Slumps on record low home buying conditions
– Lowest since Dec 2022
– Upside, year-ahead inflation expectations fell for the second consecutive month, hitting 2.9%. These expectations ranged between 2.3 to 3.0% in the two years prior to the pandemic.
– Long-run inflation expectations came in at 2.9% vs 3.0% last month (elevated relative to the 2.2-2.6% range seen in the two years pre-pandemic)
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– Swap contracts whose settlement value is determined by the Fed’s policy decisions fully price in a quarter-point rate cut in September and a combined 60 basis points of easing by year-end — implying two quarter-point cuts and 40% odds of a third.
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COMPANIES:
– JPM records record quarterly income after surge in one-time items, unexpectedly boosts Loan Loss Reserves
– Adjusted Revenue $50.99BN, up $8.6BN from a year ago
– EPS $6.12, up $1.37 from a year ago and includes significant one-time items
– EPS excluding significant items was $4.40
– Net Interest Income (NII – difference between what a bank earns on loans and pays out for
deposits) FELL
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– Wells Fago falls (-6.7%) after NII fell 9% to $11.92B vs Exp $12.12B
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– Citigroup (-2.75%) EPS $1.52 vs Exp $1.39 boosted by 60% jump in Investment Banking
– Rev Q2 $20.1B, +4%
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– AT&T suffered massive data hack which included records of texts and calls for all customers in a 2022 6-month period.
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– Amazon.com Inc.’s artificially intelligent shopping assistant, Rufus, is now available to all US customers following five months of testing with a subset of consumers
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– Taiwan Semiconductor Manufacturing Co.’s $420 billion equity rally this year will get a valuation test next week when it reports earnings, with analysts expecting the chipmaker to raise full-year sales forecasts.
– The world’s biggest contract chipmaker will probably report a 29% increase in second-quarter net income on Thursday, according to the median estimate of analysts surveyed
– JPMorgan Chase & Co. to Morgan Stanley expect it to also raise its full-year sales guidance, justifying another round of valuation expansion.
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GENERAL:
– TSX (Canada) hits all-time high, 22615. Over the past 4 weeks, Canada Stock Market Index (TSX) gained 2.78%, and in the last 12 months, it increased 12.46%.
– Russell 2000 hits 29-month high, 2149. Over the past 4 weeks, United States Stock Market Index (US2000) gained 5.4%, and in the last 12 months, it increased 10.16%.
– ES500 & DOW hit records
– CAC closes week on 3-day win streak (optimism in the upcoming earnings season)
– ALL Euro Bourses finish higher
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– Next week US Earnings Season kicks into high gear
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– Biden appointed ‘.’ as VP in another embarrassing gaffe at Post-NATO Presser
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– A second-stage engine on SpaceX’s Falcon 9 rocket suffered a malfunction in space Thursday night that imperiled its payload of Starlink satellites, the first failure in more than 7 years of a rocket the global space industry relies on
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Rice -16.61%!
Wheat -3.55% Nat Gas +3.22%, Copper +2.01% Silver -1.54%
OJ -2.59%
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– DOLLAR/CRUDE DOWN, EQUITIES UP, CRYPTO FLAT
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DOLLAR DX down: 103.76 -0.75% (104.22 – 103.74) LOWS
– AUD up: 67.83 +0.38% (67.61 – 67.94) Off HIGHS
– EUR down: 91.67 -0.31% (92.04 – 91.64) Off LOWS
– GBP UP: 1.2985 +0.57% (129.05 – 129.91) HIGHS
– JPY DOWN 157.83 +1.04% (159.28 – 157.38) Off LOWS
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GOLD down: $2417 -0.17% (2996 – 2422) Off HIGHS
DOW/ES/ND up/up/up: 40330 +0.6%, 5667 +0.47%, 20538 +0.46%
CRYPTO: BTC/ETH up smalls: 57602 +0.2%, 3119 +0.2%
CRUDE down: $82.18 -0.4% (83.17 – 82.11) LOWS
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Coming up:
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– US: Retail Sales, Industrial Production, Export and Import prices, Building Permits and Housing Starts
– CH: CCP’s Third Plenum, GDP Growth Rate, Industrial Production, Retail Sales, Unemployment Rate and Fixed Asset Investments
– CA, UK, New Zealand and Japan: Inflation data
– AU & UK: UNEMPLOYMENT
– GE: ZEW
– UK: Retail Sales, Consumer Confidence
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Speakers:
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POWELL
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EARNINGS:
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GS, BlackRock, UnitedHealth, BoA, Morgan Stanley, Charles Schwab, J&J, Netflix, and Amex
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MAJORS:
DX:
Dollar back to June Payrolls levels. Smoked for the 2nd week in a row off weak CPI and ‘acceptable’ PPI IE Sept Cut now FIRM bet.
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DOLLAR DX down: 103.76 -0.75% (104.22 – 103.74) LOWS
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EUR:
The Euro saw decent gains against the Dollar amid a session that’s had a lack of data behind the moves in the cross. German Wholesale Price for June printed negative on both the M/M and Y/Y at -0.3% (prev. 0.1%) and -0.6% (prev. -0.7%), respectively.
Elsewhere, French CPI (EU norm) Final M/M was hotter than thought at 0.2% (exp.0.1%), while Spanish CPI was hotter on all prints, except the Final NSA Y/Y, which was in line. EUR/USD broke the 1.09 barrier, heading for its third straight week of gains, nearing the highs seen in early June at 1.0916.
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As a reminder, attention is on next week, for the ECB rate decision, with the Central Bank expected to hold rates at 3.75%; Money markets forecast the next full 25bps rate cut in October and 46 bps by year-end.
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EUR down: 91.67 -0.31% (92.04 – 91.64) Off LOWS
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GBP
The pound is trading at its strongest level in a year versus the dollar and the highest in almost two years against the euro.
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GBP UP: 1.2985 +0.57% (129.05 – 129.91) HIGHS
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AUD:
Aussie Unemployment Rate (Thur)!!!
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AUD up: 67.83 +0.38% (67.61 – 67.94) Off HIGHS
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YEN:
Intervention?
– Estimated the BoJ dumped $22B overnight post CPI to force the Yen down according to a Bloomberg analysis of central bank accounts, did they intervene post PPI?
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JPY DOWN 157.83 +1.04% (159.28 – 157.38) Off LOWS
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BONDS
– The yield on 10-year Treasuries was little changed at 4.21%
– The yield on the US 10-year Treasury note edged higher to above the 4.2% mark on Friday, rebounding from the four-month low of 4.17% in the prior session after hotter-than-expected producer inflation challenged hopes of broad-based disinflation from this week’s soft CPI release.
The data contrasted with an unexpected drop in the CPI from the previous month, trimming the rally for Treasuries as signs of slowing inflation and a softening labor market supported the case for the Federal Reserve to cut its funds rate this quarter.
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Despite the hotter PPI, over 90% of the market continued to expect a cut by September, compared to 70% at the start of the week, while investors were loosely split between two or three 25bps cuts this year.
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Yields smoked this week (UST)
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– Germany’s 10-year yield advanced four basis points to 2.50%
– Britain’s 10-year yield advanced five basis points to 4.12%
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GOLD/SILVER
Gold held close to the $2,400 mark, slightly trimming the sharp gains from the prior session but remaining relatively close to record-high levels from late May as markets continued to expect imminent rate cuts by the Federal Reserve.
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Fresh data showed that US producer prices rose more than expected in June, but funds futures suggested that investors’ hopes of disinflation were undeterred following the softer-than-expected CPI print for the period.
The release of moderating consumer inflation, in addition to the sharp downward revisions in non-farm payroll counts, aligned with the economic backdrop required by FOMC members to deliver a rate cut, driving investors to fully price in a rate cut by September.
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This coincides with bets of incoming cuts by the ECB, the BoE, and the PBoC, reducing the opportunity cost of holding bullion assets.
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GOLD down: $2417 -0.17% (2996 – 2422) Off HIGHS
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EQUITIES:
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US:
– SPX +0.55% 5,615
– NDX +0.59% 20,331
– DJI +0.62% 40,001
– RUT +1.09% at 2,148
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EUROPE:
– DAX +1.27% 18,769
– FTSE +0.36% 8,253
– CAC +1.27% 7,724
– ES50+1.38% 5,045
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Sectors (W to S): Communication Services -0.75%, Energy +0.22%, Financials +0.22%, Consumer Staples +0.42%, Industrials +0.53%, Health +0.59%, Real Estate +0.69%, Utilities +0.73%, Technology +0.92%, Materials +0.93%, Consumer Discretionary +0.96%
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STOCKS:
– Bank of New York Mellon Corp (+5.24%) – Surpassed top and bottom line expectations
– Tesla (+2.99%) – Downgraded at Citi, noting it’s increasingly difficult to justify the valuation. Also unveiled its Model 3 Long-Range RWD (rear-wheel-drive) in the US, priced at USD 42k
– Teck Resources (+2.57%) – Rio Tinto (RIO) is said to have held talks with bankers to ‘wargame’ a potential USD 32bln offer for the Co., via Sky News
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OIL:
Crude Rejected the $83.50 mark this week closing net lower.
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CRUDE down: $82.18 -0.4% (83.17 – 82.11) LOWS
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BOND YIELDS:
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US 1-MO 5.36 +0.027
US 6-MO 5.185 -0.026
US 1-YR 4.861 -0.039
US 5-YR 4.105 -0.017
US 10-YR 4.184 -0.008
US 30-YR 4.397 -0.007
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2YR/10YR -0.27
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CRYPTO
Bitcoin managed gains on the week as ETF inflows dominated the German govt’s heavy selling
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ETF inflow saved the day again:
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CRYPTO: BTC/ETH up smalls: 57602 +0.2%, 3119 +0.2%
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KEEP DOING WHATS WORKING
STOP WHAT ISNT.
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Best of luck out there. Let the market come to you
Joke of the Day:
Sometimes when I’m in my hotel room and I think of a funny joke but I cant find a pen, I have to convince myself that what I thought of, wasn’t funny.
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(Seize all assets of Duke and Duke enterprises)
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I can be contacted should anyone have any questions, input at [email protected] during US hours of EST 9am until 5pm
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