North American News
Apple crosses $3 trillion market cap, Nasdaq’s best start to the year in 4 decades. Tech’s relentless rise continues
- End of week, month, quarter
The price of Apple closed above $3 trillion for the 1st time. It was also the 1st company to do that. The NASDAQ index had its best start to the year in 40 years.
The major indices all closed higher for the week and the month.
The final numbers are showing:
- Dow industrial average rose 285.16 points or 0.84% at 34407.59
- S&P index was 53.92 points or 1.23% at 4450.37
- NASDAQ index rose 196.60 points or 1.45% at 13787.93
The Russell 2000 small-cap stocks rose 7.14 points or 0.3% at 1888.73.
For the week:
- Dow industrial average rose 2.02%
- S&P index rose 2.35%
- NASDAQ index rose 2.19%
For the month of June:
- Dow industrial average rose 4.56%
- S&P index rose 6.47%
- NASDAQ index rose 6.50%
For the 2nd quarter:
- Dow industrial average rose 3.41%
- S&P index rose 8.30%
- NASDAQ index rose 12.81%
For the 1st half of 2023:
- Dow industrial average rose 3.8%. In comparison in 2022 the Dow industrial average fell -8.78%
- S&P index rose 15.91%. In 2022 the S&P index fell -19.44%
- NASDAQ index rose 31.73%. In 2023 the NASDAQ index fell -33.10%
US May core PCE inflation +4.6% y/y vs +4.7% expected
- US May 2023 data from the US personal consumption expenditure report
- Prior was +4.7%
- PCE core +0.3% m/m vs +0.3% expected
- Prior MoM +0.3%
- Headline inflation PCE +3.8% y/y vs +4.4% prior (revised to +4.3%)
- Deflator +0.1% m/m vs +0.4% prior
Consumer spending and income for May:
- Personal income +0.4% vs +0.3% expected. Prior month +0.4% (revised to +0.3%)
- Personal spending +0.1% vs +0.2% expected. Prior month +0.5% (revised to +0.2%)
- Real personal spending +0.0% vs 0.5% prior
Atlanta Fed Q2 GDP Now +2.2% vs +1.8% prior
- The latest reading on GDP
The Atlanta Fed has upped its Q2 tracker to 2.2% from 1.8%:
“After recent releases from the US Census Bureau and the US Bureau ofEconomic Analysis, the nowcast of second-quarter real personal consumption expenditures growth and second-quarter real gross private domestic investment growth increased from 0.9 percent and 8.6 percent, respectively, to 1.1 percent and 10.4 percent, while the nowcast of the contribution of the change in real net exports to second-quarter realGDP growth decreased from -0.71 percentage points to -0.75 percentagepoints.”
June UMich final US consumer sentiment 64.4 vs 63.9 expected
- UMich consumer sentiment data for June 2023
- Prelim was 63.9
- Prior was 59.2
- Current conditions 69.0 vs 68.0 prelim (64.9 prior)
- Expectations 61.5 vs 61.3 prelim (55.4 prior)
- 1-year inflation 3.3% vs 3.3% prelim (4.2% prior)
- 5-10 year inflation 3.0% vs 3.0% prelim (3.1% prior)
Dallas Fed Trimmed mean price index falls to 3.2% annualized versus 4.3% in April
- Lowest level since April 2022
The Dallas Fed trimmed mean price index falls to 3.2% annualized versus 4.3% in April. The level is the lowest since April 2022 when it reached 3.1%.
- 6 month trimmed mean falls to 4.3% from 4.4% last month
- 12 month trimmed falls to 4.6% from 4.8% last month
Feds Goolsbee: Goods inflation has not come down as fast as have wanted it to
- Feds Goolsbee speaking on Fox Business interview
- There is nothing in the Fed’s mandate about stock prices.
- I hope markets remain sober.
- SVB bet the market was right on Fed, bet against the Fed, a terrible idea.
- Central bankers have to see through the markets ups and downs
- The strongest part of the economic data is labor market data.
- I am hopeful we can get inflation down to something like a target without a recession.
- Heartened by strength in various sectors, but we need more balance.
- If labor market is too hard, will have a hard time bringing down inflation.
- There has been cooling of inflation.
- Goods inflation has not come down as fast as have wanted it to.
- There is a lag in the impact of interest rate on the economy.
- Not made up his mind on rates.
- There is a number of data releases before the next Fed meeting (*the next Fed rate decisions on July 26)
Bank of Canada Q2 business outlook survey sees improving inflation expectations
- Highlights of the BOC business outlook survey
- 64% of firms expect inflation to remain above 3% for the next two years, down from 79% in Q1 survey
- Demand for labor is softening as sales expectations moderate
- Indicator of future sales -6% vs -18% prior
- Firms expect input and output prices to grow at a slower rate for fourth consecutive quarter
- More firms than in Q1 think it will take five or more years for inflation to return close to 2%
- Firms see price pressures easing due to factors, including weaker commodity price rises and softer demand
- Investment intentions in non-resource firms 6.86 vs 12.0 prior
- Average expected wage increase 4.48% vs 4.67%
Separate highlights from the consumer survey:
- Expectations for 5-year inflation to 2.89% from 2.92%
- Consumers think interest rates will drop in next 12 months
- Expectations for 1-year inflation to 5.09% from 6.03%
- 2-year inflation to 3.93% from 4.27%
Canada GDP for April 0.0% versus 0.2% expected
- April 2023 Canadian GDP data
- Prior month 0.0% revised to +0.1%
- April GDP 0.0% versus 0.2% expected
- goods producing industries up 0.1%
- service producing industries 0.0%
- 11 of 20 industrial sectors posted increases
- Advanced GDP for May is expected at 0.4%. The advanced number for April was expected at 0.2%
Commodities
Silver gains ground following soft PCE data
- The XAG/USD jumped above $22.70, seeing more than 0.80% gains and is set to close a winning week.
- Core PCE declined to 4.6% YoY in May, lower than expectations.
- Following the data the USD and US bond yields retreated.
Silver surpassed the $22.70 mark on Friday and registered an increase of over 0.80%. This positive momentum positions it for a week of gains after two weeks of losses. The boost in Silver prices can be explained by the release of soft Core Personal Consumption Expenditures (PCE) data from the US from May, which revealed a decline to 4.6% year-on-year in May, falling short of expectations. As a result, the US dollar and US bond yields retreated in response to the data favoring the precious metal.
Natural Gas price rebounds strongly on weaker US Dollar after inflation data miss
- Natural Gas price recovers following the release of US inflation data which comes out lower than expected, weighing on the US Dollar.
- Natural Gas had been trading flat-to-lower prior to the data on Friday due to greater-than-expected stockpiles in Europe.
- This largely eclipsed US data out on Thursday showing a fall in inventories last week.
Natural Gas price recovers on Friday after the release of US inflation data shows an unexpected fall in prices which weighs on the US Dollar. The lower inflation data reduces the chances of the Federal Reserve (Fed) hiking interest rates at its next meeting which is negative for USD. Natural Gas, which is mainly priced and traded in US Dollars, rose on the news.
The commodity had been trading slightly lower prior to the release on the back of easing supply concerns, after data from S&P Global showed European stockpiles at 77% capacity, reassuring traders that storage tanks will be full in time for the winter demand glut. This undid the gains made on Thursday after US data showed a surprise fall in inventories last week.
Natural Gas news and market movers
- The Fed’s prefered guage of inflation, the Core Personal Consumption Expenditure Price Index undershoots expectations in May, coming out at 0.3% month-on-month, instead of 0.4% forecast. Year-on-year it shows a 4.6% result versus the 4.7% expected, according to data from the Bureau of Economic Analysis.
- The result reduces the likelihood of the Fed hiking interest rates at the next meeting in July.This weakens the US Dollar since higher interest rates tend to attract greater inflows of foriegn capital.The weaker USD has the effect of raising Natural Gas prices which are priced in USD.
- European storage levels of Natural Gas – built up in preparation for the winter – are substantially higher than in previous years, easing supply concerns and putting a lid on prices.
WTI crude Oil futures settle at $70.64
- Up $0.78 or 1.12%
The price of WTI crude futures are settling at $70.64.The high price reached $71.04. The low price was at $69.53.
The Baker Hughes rig count fell for the 9th consecutive week.Earlier this week crude oil inventories shows a huge drawdown of 9.6 million barrels much higher than expectations.
Baker Hughes oil rig count -1 to 545 rigs
- The weekly Baker Hughes rig count data
- Oil rigs -1 to 545 rigs
- Natural gas rigs -6 to 124 rigs
- Total rigs -8 on the week to 674 rigs
The rigs count is down for the 9th week in a row.
EU News
European equity close: Strong finish to the quarter
- Closing changes
I love it when a month and a quarter both end on a Friday. It’s a tidy finish that sets up a fresh start next week.
French stocks haven’t shown any aversion to the intense scenes of disruption overnight.
Closing changes:
- Stoxx 600 +1.2%
- German DAX +1.3%
- UK FTSE 100 +0.8%
- French CAC +1.3%
- Italy MIB +1.2%
- Spain IBEX +1.0%
On the week:
- Stoxx 600 +2.0%
- German DAX +2.0%
- UK FTSE 100 +1.0%
- French CAC +3.4%
- Italy MIB +3.8%
- Spain IBEX +3.7%
In the quarter:
- Stoxx 600 +0.9%
- German DAX +3.3%
- UK FTSE 100 -1.3%
- French CAC +1.7%
- Italy MIB +4.2%
- Spain IBEX +4.0%
Eurozone June preliminary CPI +5.5 vs +5.6% y/y expected
- Latest data released by Eurostat – 30 June 2023
- Prior +6.1%
- Core CPI +5.4% vs +5.5% y/y expected
- Prior +5.3%
Eurozone May unemployment rate 6.5% vs 6.5% expected
- Latest data released by Eurostat – 30 June 2023
- Prior 6.5%
Germany May retail sales +0.4% vs 0.0% m/m expected
- Latest data released by Destatis – 30 June 2023
- Prior +0.8%
- Retail sales -3.6% vs -4.3% y/y expected
- Prior -4.3%
Germany May import price index -1.4% vs -1.4% m/m expected
- Latest data released by Destatis – 30 June 2023
- Prior -1.7%
- Import price index -9.1% vs -9.1% y/y expected
- Prior -7.0%
UK Q1 final GDP +0.1% vs +0.1% q/q prelim
- Latest data released by ONS – 30 June 2023
The UK economy grew marginally in Q1 with the initial estimate being confirmed in this report.
UK June Nationwide house prices +0.1% vs -0.3% m/m expected
- Latest data released by UK Nationwide Homebuilding Society – 30 June 2023
- Prior +0.1%
- House prices -3.5% vs -4.0% y/y expected
- Prior -3.4%
France June preliminary CPI +4.5% vs +4.6% y/y expected
- Latest data released by INSEE – 30 June 2023
- Prior +5.1%
- HICP +5.3% vs +5.4% y/y expected
- Prior +6.0%
Switzerland June KOF leading indicator index 90.8 vs 90.2 prior
- Latest data released by KOF – 30 June 2023
- Prior 90.2; revised to 91.4
Former ECB vice-president says the hiking cycle will end in July
- He also says the Fed’s final hike will come next month
Former ECB vice president Vitor Constancio says that falling inflation means that the final rate hikes from the Federal Reserve and ECB will be in July.
“Inflation came down again in the Euro Area and the US.
The former deputy to Mario Draghi noted the rapid decline in the Citi economic surprise index for the eurozone as a sign of a coming recession.
Other News
US Supreme Court strikes down Biden’s student loan forgiveness program
- 6-3 decision by the Supreme Court
The US Supreme Court struck down a $430 billion program to forgive student loans held by 40 million Americans in a 6-3 decision that was generally expected.
The majority decision said that the executive has some power to alter terms of student-loan programs, the total forgiveness was an overreach.
RBA to raise cash rate by 25 bps to 4.35% next week – Reuters poll
- The bias on the decision is quite finely balanced though
Of note, 16 of the 31 economists polled are expecting a 25 bps rate hike with the remaining 15 anticipating a pause instead. That’s pretty much a 50-50 call and if you look at the OIS pricing, the probability of a 25 bps rate hike is only at 37% as opposed to no change at 62% roughly at the moment.
Australian Private Sector Credit growth in May +0.4% m/m (expected +0.4%)
Private sector credit data comes via the Reserve Bank of Australia.
Japan MOF confirms no currency intervention so far in the past four weeks
- Well, it would’ve been pretty obvious on the charts in any case
They have been releasing this periodically every month, with this one covering the period from 30 May to 28 June. The MOF notes that there was zero Japanese yen spent on currency intervention during that time.
China June PMIs: Manufacturing 49.0 (expected 49.0) & Services 53.2 (expected 53.7)
China National Bureau of Statistics (NBS) June 2023 PMIs
Manufacturing 49.0
- expected 49, prior 48.8
- 12 industries out of 21 showed expansion in their PMI, 4 more than in May
Services 53.2
- expected 53.7, prior 54.5
Composite 52.3
- prior 52.9
China reportedly surveyed some foreign banks about dollar deposit rates
- Reuters reports, citing two sources with direct knowledge of the matter
The questioning is perhaps the more polite way of doing things with the source also saying that they have guided one commercial lender to lower such rates. With the recent softness in the yuan, this has been one measure that local authorities are taking in order to deal with foreign exchange dealings.
Cryptocurrency News
Bitcoin tumbles below the $30,000 level after SEC news. What next technically?
- Watch a swing area up to $29,941
The SEC headlines on bitcoin sent the digital currency sharply to the downside. The price which reached a high of $31,260 moved down to a low of $29,508. In the process, the pair fell below what was a floor between $29,820 and $29,941. That area will now be eyed as close resistance. Stay below keeps the sellers more control.
On the move to the downside, the price also moved below the 100 and 200-hour moving average is near $30,435.If the price should step back higher, those moving averages will be eyed as resistance.
SEC says spot bitcoin filings are inadequate – WSJ
- Filings aren’t sufficiently clear and comprehensive, the report says
All is not lost though as the story indicates they can re-file to address surveillance issues.
“Some industry watchers predicted that BlackRock’s filing would appease the SEC’s concerns through an agreement to share “surveillance” of a spot bitcoin-trading platform with Nasdaq, which would list the ETF.
Yet the SEC told the exchanges that it returned the filings because they didn’t name the spot bitcoin exchange with which they are expected to have a “surveillance-sharing agreement” or provide enough information about the details of those surveillance arrangements. Asset managers can update the language and refile.”
Bitcoin prices fell nearly $1000 on the headlines but have steadied.
What’s worrisome for the bulls here is that the idea, or the hope, is that the SEC has tapped Blackrock on the shoulder and gave it an indication of how to get approval.
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