MARKET REPORT

Old Dublin Stock Exchange, 1985

Day in Review:
Today:
DATA:
– ECB Holds rates unchanged as Exp
– “…continue to follow a data-dependent and meeting-by-meeting approach to determining the appropriate level and duration of restriction.”
– “…The Governing Council is not pre-committing to a particular rate path.”

– Strong Philly Fed
– ALTHOUGH soaring inflation expectations

– Jobless rebounds to highest since Aug 2023, 243K Prev 223K
– Continuing claims also picked up to highest level since Nov 2021, 1.867m

Beige Book:
– Seven Districts reported some level of increase in activity, five noted flat or declining activity—three more than in the prior reporting period.

COMPANIES:
– Taiwan Semiconductor Manufacturing Co. (TSMC) Earnings & Forecasts better than expected:
– Net income NT$247.8 billion, +36% y/y, estimate NT$235 billion
Gross margin 53.2% vs. 53.1% q/q, estimate 52.6%
Operating profit NT$286.56 billion, +42% y/y, estimate NT$274 billion
Operating margin 42.5% vs. 42% q/q, estimate 41.5%
– Sales NT$673.51 billion, +40% y/y, estimate NT$658.14 billion
3rd Qtr Forecasts:
– Sees sales $22.4 billion to $23.2 billion
– Sees gross margin 53.5% to 55.5%, estimate 52.5%
                – Sees operating margin 42.5% to 44.5%, estimate 42.1%

– Domino’s Pizza Inc crashes 14% after temporarily suspending store growth Guidance metric

– Tesla’s Californian registrations fell 24% in Q2

– Berkshire Hathaway, Amex, RBC hit all-time highs

GENERAL:

– Chicago Fed Goolsbee pushes for cuts

– US Government Debt to hit $35 TRILLION
($34,940,154,000,000 to be somewhat more precise)
– 120% of GDP
– Earlier this year the cost of INTEREST PAYMENTS ALONE passed Defense spending

– Mortgage rates fall to lowest level since mid-March

– OpenAI has talked to AVGO about developing new AI chip.

– The third Chinese plenum – which sets out the country’s economic priorities for the next five years concluded on Thursday and delivered some newsworthy developments, most notably that President Xi Jinping vowed to “deepen reform” and “resolve” the risks of mounting real estate and local government debt as well as make “high-quality development” the guiding force of the world’s No. 2 economy

– Israel considers letting EU control Rafah crossing

– Copper hits 3-month Low (-3.63%)

– US Nat Gas rebounds from 10-week Low (post EIA data) (+4.08%)

– Euro Bourses pare gains to close mixed post ECB

– Corn -5% Oats +4.69% Cocoa +4.17%

– DOLLAR/CRUDE UP, GOLD/EQUITIES/CRYPTO DOWN (DOW LEADS)

DOLLAR DX up: 103.91                  +0.45% (103.44 – 103.94) Off HIGHS
– AUD down: 67.05                          -0.4% (67.44 – 66.99) Off LOWS
– EUR up: 91.74                                 +0.32% (91.40 – 91.76) HIGHS
– GBP down: 1.2947                        -0.46% (130.12 – 129.45) LOWS
– JPY up: 157.34                                 +0.74% (155.98 – 157.37) HIGHS

GOLD down: $2447                                         -0.5% (2478 – 2442) Off LOWS
DOW/ES/ND DOWN/down/down:           40947 -1.33%, 5594 -0.79%, 19896 -0.5%
CRYPTO: BTC/ETH down:                              63446 -1.3%, 3398 -0.6%
CRUDE down: $80.79                                     -0.8% (80.61 – 82.27) LOWS

Coming up:

– UK: GfK Consumer Confidence, Retail Sales
– GE Producer Prices
– CA Producer Prices, Retail Sales
– JAP CPI

Speakers:

– Fed: Williams, Bostic

EARNINGS:

– NETFLIX, American Express, SLB, Travelers

MAJORS:
DX:
The Dollar saw notable gains on Thursday with DXY hitting a high of 104.210 as risk-off sentiment was sparked with Biden’s re-election chances diminishing. Several top Democrats told Axios that the rising pressure of party congressional leaders and close friends will persuade Biden to decide to drop out of the presidential race. Meanwhile, Former President Obama also reportedly told allies that Biden needs to re-assess his viability as Dem leader.

Also supporting the buck was the Euro weakness after ECB President Lagarde said that September is “wide open”.

Elsewhere, the Dollar Index saw marginal weakness after initial jobless claims, for the week that coincides with NFP, came in above expectations, although Philly Fed was much better than forecast. Fed speak saw little reaction, but Goolsbee (2025 voter) reiterated his view from Monday and Logan (2026 voter) did not speak on monpol.

Looking to Friday, there is a lack of tier 1 data but Williams is scheduled ahead of Fed blackout next week.

DOLLAR DX up: 103.91                  +0.45% (103.44 – 103.94) Off HIGHS

EUR:
The Euro had the added catalyst of the ECB. On this, the central bank treaded water until a potential September showdown, although the single-currency was hit after the President suggested that the September meeting is “wide open”. However, the EUR was saw some marginal and fleeting strength on BBG sources, which noted officials consider if only one more cut is feasible in 2024. However, Reuters sources reported that ECB hawks are open to a September rate cut. EUR/USD resumed its downward path (on aforementioned Dollar strength) to a hit a trough of 1.0896

EUR up: 91.74                                   +0.32% (91.40 – 91.76) HIGHS

GBP & AUD
GBP and AUD were largely unreactive to their respective data points, whereby the UK employment change was marginally higher than expected, with earnings in line ahead of retail sales on Friday. Down under, there was better-than-expected Australian jobs growth, albeit this was accompanied by an unexpected uptick in the unemployment rate. As such, Cable hit a trough of 1.2944 against an earlier peak of 1.3012, while AUD/USD bottomed out at 0.6698, with the pair hovering around 0.6700 ahead of APAC trade.

GBP down: 1.2947                          -0.46% (130.12 – 129.45) LOWS
AUD down: 67.05                            -0.4% (67.44 – 66.99) Off LOWS

YEN:
The latest BoJ data did not immediately show evidence of intervention on July 17th, according to Reuters.

Overnight Japanese CPI is the highlight.

JPY up: 157.34                                  +0.74% (155.98 – 157.37) HIGHS

METALS:
LITHIUM!

Gold failed to hold above $2450

GOLD down: $2447                                         -0.5% (2478 – 2442) Off LOWS

BONDS:
Bonds were dumped alongside stocks today with the whole curve up 3-4bps, back higher on the week

EQUITIES:
MAG 7 continued to give back all July gains

US:
– SPX -0.78% 5,544
– NDX -0.48% 19,705
– DJI -1.29% 40,665
– RUT -1.82% 2,198

EUROPE:
– DAX -0.40% 18,363
– FTSE +0.21% 8,205
– CAC +0.21% 7,587
– ES50 -0.41% 4,871

Sectors (W to S): Health -2.29%, Consumer Discretionary -1.28%, Financials -1.28%, Materials -1.02%, Real Estate -0.81%, Industrials -0.73%, Consumer Staples -0.48%, Communication Services -0.29%, Technology -0.23%, Utilities -0.06%, Energy +0.33%.

STOCKS:
United Airlines (-1.17%) – Beat on EPS and reaffirmed FY24 profit view. Expects FY earnings to be at the low end of the USD 9-11/Shr forecast.
TSMC (+0.39%) – Topped sales and EPS expectations, alongside raising guidance. (See COMPANY section above for breakdown)
Novartis (-4.10%) – Net income was below forecasts.
Blackstone (+1.15%) – Distributable EPS and revenue missed, though beat slightly on adj. income.
Domino Pizza (-13.48%) – Mixed earnings, and expects to fall short of its 2024 international net store goal amid challenges.
Apple (-2.05%) – Although there have been rumors of increased orders for iPhone 16 orders from time to time after WWDC, recent earnings calls from two key Apple suppliers (TSMC and Largan) have hinted that iPhone 16 orders may not have increased, via Ming-Chi Kuo.
Tesla (+0.29%) – California sales fell 24% in Q2 2024, according to a CNCDA. California’s new light vehicle registration fell by 0.7% YTD vs last year, totaling 892,363.
Broadcom (-0.53%) – OpenAI has talked to Broadcom about developing new AI chip, according to The Information; Sam Altman has had talks with TSMC (+0.39%)
Warner Bros Discovery (+2.40%) – Seeks to bolster share price, by exercising asset sales, and the splitting of digital/studio units from the legacy TV unit.

OIL
:
– $83.50 Continues to Hold in Crude.

WTI (Q4) SETTLED USD 0.03 LOWER AT 82.82/BBL; BRENT (U4) SETTLED USD 0.03 HIGHER AT 85.11/BBL

The crude complex was choppy on Thursday and ultimately settled flat, as the strength seemingly aided by heightened geopolitical woes was offset by notable Dollar strength into the close.

In the European morning, oil saw initial strength, continuing the upside from Wednesday, but ultimately pared around the time the Chinese Third Plenum communique was released, which was vague on extra stimulus.

As such, WTI and Brent hit lows of USD 82.04/bbl and 84.22/bbl, respectively, before once again reversing on concerning Middle Eastern reports, whereby Sky News Arabia reported Houthi leader threatens expanded escalation in Indian Ocean, Mediterranean, and issues new threats against Saudi Arabia. Thereafter, energy ground higher but couldn’t test the earlier peaks seen in the European morning (83.82/bbl and 85.81bbl), however, as the Dollar bid continued into the energy settlement it saw WTI and Brent pare all gains to settle more-or-less flat.

Elsewhere, via Reuters citing three OPEC sources, the OPEC+ JMMC meeting on August 1st is unlikely to adjust oil policy, including the current plan for an output hike from October.

Looking ahead, there is a lack of tier 1 US data on Friday, but Fed’s Williams is scheduled to speak as well as the weekly Baker Hughes rig count. Courtesy newsquark.

CRUDE down: $80.79                                     -0.8% (80.61 – 82.27) LOWS

BOND YIELDS:
US 1-MO 5.342 -0.001
US 6-MO 5.191 +0.003
US 1-YR 4.865 +0.019
US 5-YR 4.117 +0.048
US 10-YR 4.201 +0.056
US 30-YR 4.42 +0.062

2YR/10YR -0.27

CRYPTO
– SEC approval for ETH spot ETF’s ‘imminent’.

– Germany seized about 50,000 BTC in January from the operator of Movie2k.to, a website the state of Saxony found guilty of money laundering and other illegal activities.
– The German State sold about 49,858 bitcoin between June 19 and July 12, securing 2.6B Euros ($2.8B USD).

– Crypto Exchange Kraken paid Dave Portnoy BTC in sponsorship deal.

– In the last year, Argentina saw $85.4 billion worth of crypto transactions, making it one of the largest crypto havens in the world, according to data platform Chainalysis, as Argentines seek to battle triple-digit inflation and a struggling currency.

– The Bitcoin Conference in Nashville is taking place next week. Speakers include: Trump, Robert Kennedy Jnr & Vivek Ramaswamy.

CRYPTO: BTC/ETH down:                              63446 -1.3%, 3398 -0.6%

KEEP DOING WHATS WORKING
STOP WHAT ISNT.

Best of luck out there. Let the market come to you


Joke of the Day
:

Clip of the day:

Axios reporting Top Dems have confirmed Biden resigned to withdraw. Odds for Harris surge.

On this day:
July 18th 1536: England voids Pope’s authority

(Seize all assets of Duke and Duke enterprises)

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