North American News
NASDAQ Clinches Modest Gain, While Dow and S&P Slip Lower in Closing Bell
- Nvidia slumps ahead of earnings tomorrow after the close
As the US trading session concluded with a varied tone, attention now turns to Nvidia’s upcoming earnings release and Powell’s imminent Jackson Hole speech. While the Dow industrial average and S&P index relinquished their early advances to end in negative territory today, the NASDAQ index held onto a modest gain, even in the face of declines from Nvidia, AMD, Adobe, and Meta. Conversely, a cohort of tech giants including Alphabet, Microsoft, Apple, Tesla, and Netflix recorded gains, offering a coherent explanation for the NASDAQ index’s ability to secure a modest ascent.
The final numbers are showing:
- Dow industrial average fell -174.88 points or -0.51% at 34288.82
- S&P index fell -12.22 points or -0.28% at 4387.54
- NASDAQ index rose 8.27 points or 0.06% at 13505.86
Looking at some of the leaders:
- Nvidia fell $-12.83 or -2.73% at $456.84.
- Charles Schwab -4.93%
- PNC financial -3.17%
- First Solar -2.86%
- Palo Alto Networks -2.6% after a surge yesterday.
- Citigroup -2.47%
- Bank of America -2.44%
Gainers today included:
- Moderna, +4.65%
- AirBNB, +2.48%
- Paypal, +2.47%
- Marriot, +2.07%
- DoorDash +1.63%
- Boeing, +1.25%
Looking at the big growth stocks:
- Netflix +1.20%
- Tesla +0.83%
- Apple +0.79%
- Alphabet +0.55%
- Microsoft +0.18%
US yields start the day lower and are ending the day with mixed results:
- 2 year yield 5.043%, +5.2 basis points
- 5 year yield 4.487%, +2.9 basis points
- 10 year yield 4.33%, -1.2 basis points
- 30 year yield 4.406%, -0.5 basis points
US existing home sales for July 4.07M vs 4.15M estimate
- US existing home sales for July 2023
- Prior month 4.16M
- Existing home sales for July 4.07M vs 4.15M estimate
- Sales are down -16.6% from a year ago
- Inventory of homes 3.3 months versus 3.1 months last month
- Supply of homes 1.11 billion at the end of July for an increase of 3.7% from the previous month.
- Northeast -5.9% MoM and down -23.8% from a year ago. Median price was $467,500 up 5.5% from a year ago
- Midwest -3.0% MoM and -20% from the previous year. The median price in the Midwest was 3 or $4600 up 3.9% from a year ago
- South -2.6% MoM and down -14.3% from a year ago. The median price in the South was $366,200 up 1.7% from a year ago.
- West +2.7% MoM and down -12.5% from a year ago. The median price was $610,500 unchanged from July 2022
Other details.
- Median sales price $406,700 versus $410.2 K last month. Prices rose in the Northeast, Midwest, and South and were unchanged in the West
- Median sales price is up 1.9% from a year ago
- 1st time buyers were responsible for 30% of the sales in July up from 27% in June and 29% in July
- All cash sales accounted for 26% of transactions in July. It was 24% in July 2022. Individual investors or second-home buyers who make up many cash sales purchased 16% of homes in July down from 18% in June but up from 14% one year ago
- Distressed sales – foreclosures and short sales – represented 1% of sales in July unchanged from the prior month and previous year
Philly Fed August nonmanufacturing index -13.1 vs +1.4 last month
- Philadelphia Fed August 2023 nonmanufacturing Index
- Prior 1.4%
- Firm level activity -0.5 versus 2.0 prior
- New orders -16.0 versus -13.3 prior
- Employment 8.1 versus 11.9 prior
- Wage and benefit 33.7 vs 39.8 prior
- Futures index 6 months forward 8.2 versus 20.5 prior. 51% of firms expecting increases in future activity down from 56% last month and 24% expect decreases up from 15% last month
US August Richmond Fed composite index -7 vs -9 prior
- Richmond Fed index for August 2023
- Prior month -9
- Shipments index -5 versus -6 in July
- Services index +4 versus -2 in July
- employment -3 versus +5 in July
- wages +22 versus +19 in July
- prices paid 3.17 versus 4.07 in July
- prices received 3.11 versus 4.01 in July
- New orders -11 vs -20 prior
- Expectations of new orders +22 vs +9 prior
JP Morgan’s AI model Quant Sentiment on Federal Reserve monetary policy at multi-year low
- The latest findings from J.P. Morgan’s proprietary Artificial Intelligence Quant Sentiment Indicators
In summary from J.P. Morgan’s proprietary AI quant model latest:
- Corporate sentiment is weak overall given financial conditions, aggregate sentiment QSI score for the S&P 500 at the 32.7th percentile
- The QSI on Federal Reserve monetary policy is at a multi-year low at the 12.2 percentile, similar to levels last seen in 2008
- cost of capital QSI came down at the 5th percentile
- credit risk was at the 13th percentile
JPM make special note on taxation and buybacks:
- Sentiment on taxation is near lows at the 2.5th percentile, “in sharp contrast to very positive sentiment leading up to and passage of Tax Act in 2017.”
- “This is important given lower effective tax rates and interest expense were steady tailwinds for margins for almost three decades,”
- Over the past 12 months corporate sentiment for taxation and buybacks “has reversed sharply and is at multi-year lows.”
- Sentiment on buybacks “continues to fade and likely remains challenge … given already rich valuation, less incentive for debt funded share repurchases, high interest on balance sheet cash and new buyback tax.”
Fed’s Barkin: says he won’t pre-judge the outcome of the September FOMC meeting
- Comments from Barkin
- Try not to focus too much on short-term market moves
- Fed needs to achieve 2% target to ensure its credibility
- Accounting for implications of work-from-home still has a ways to go
- Credit card debt is basically on-trend from from before the pandemic
- Balance sheet normalization is a ‘background’ policy at this point
- Consumer spending and economic strength make it possible US economy could re-accelerate before inflation cools
- If inflation remains high and demand gives ‘no signal’ it is likely to drop, that would require tighter monetary policy
- Recent moves in bond yields not a sign of ‘inappropriate’ market tightening, likely a response to strong economic data
Commodities
Gold price surrenders gains as cautious market mood improves US Dollar appeal
- Gold price falls back vertically as US Dollar delivers V-shape recovery.
- A tight US labor market could be a restricting factor for achieving price stability.
- Fed Powell’s speech at Jackson Hole is the key event this week
Gold price faces selling pressure after failing to sustain above the crucial resistance of $1,900.00. The US Dollar recovers strongly as investors hope that higher interest rates by the Federal Reserve (Fed) for a longer period will impact risk-perceived assets.The precious metal recovers as investors seem confident that the Fed is not planning to raise interest rates further but also admit that rate cuts are unlikely to be under discussion this year.
Silver faces resistance near $23.50 as focus shifts to Jackson Hole
- Silver price finds selling pressure near $23.50 as investors turn cautious ahead of Jackson Hole.
- US equities found buying interest despite Moody’s and S&P Global downgraded the credit ratings of US commercial banks.
- Fed Barkin said that the central bank needs to achieve the 2% inflation target to ensure its credibility.
Silver price faces fragile barricades around $23.50 after a sharp recovery in the early New York session. The white metal struggles to extend recovery as the US Dollar rebounds after remaining lackluster. The US Dollar attracts some bets amid caution ahead of the Jackson Hole Symposium, which will start on Thursday.
Oil to flip in green as Greenback rallies and Harold hits Texas
- Oil (WTI) trades around $80 per barrel within the middle of last week’s range.
- The US Dollar moves lower as traders await the Jackson Hole Symposium on Friday.
- The weekly API numbers could drive prices up should there be another drawdown in the US stockpile.
Oil prices are set to flip into green as the US Dollar is on the front foot and Tropical Depression Harold is hitting the shores of Texas this Tuesday with several drilling and pipeline installations being shut down or being secured to work on low capacity. That main event later this week is the annual Jackson Hole Fed Symposium where on Friday Fed chairman Jerome Powell will take the stage and communicate any possible changes toward its monetary policy. Clues or hints for earlier than foreseen rate cuts would boost economic growth and demand for oil, which would result in a sharp price rise on Friday.
API Reports Small Crude Draw
API has reported a 2.418-million-barrel draw on U.S. crude inventories, compared with the previous week’s 6-million-barrel draw, as oil prices slip on China growth concerns.
EU News
European equity close: Solid gains across the continent but well off the highs
- Closing changes in Europe
- Stoxx 600 +0.7%
- German DAX +0.6%
- FTSE 100 +0.2%
- French CAC +0.6%
- Italy MIB +0.7%
- Spain IBEX +0.6%
Eurozone June current account balance €35.8 billion vs €9.1 billion prior
- Latest data released by the ECB – 22 August 2023
- Prior €9.1 billion
The surplus widens largely as a result of the current account balance in goods, as imports slide further. That continues to be a reflection of better energy price developments.
UK August CBI trends total orders -15 vs -9 prior
- Latest data released by CBI – 22 August 2023
- Prior -9
UK factory output drops at its fastest rate in nearly 3 years with the net balance of output for the three months to August coming in at -19 from +3 in July, marking the lowest reading since September 2020. As order books are also deteriorating, it’s a gloomy outlook to say the least for the manufacturing sector in the UK.
Switzerland July trade balance CHF 3.13 billion vs CHF 4.82 billion prior
- Latest data released by the Federal Statistics Office – 22 August 2023
- Prior CHF 4.82 billion; revised to CHF 4.79 billion
The Swiss trade surplus narrowed in July as exports were seen down by a whopping 16.7% while imports were also marked down by 12.5% on the month.
Other News
China raids, fines US firm for foreign-related statistical investigations without approval
China imposed roughly US$1.5 mn in financial penalties on the Beijing arm of Mintz Group for allegedly conducting unapproved statistical work.
The info comes from a Wall Street Journal (gated) report, in brief:
- Beijing Municipal Bureau of Statistics said Mintz’s Beijing office had carried out “foreign-related statistical investigations” without seeking and obtaining approvals for such work, and that such unsanctioned activities were in violation of Chinese regulations.
- Mintz allegedly engaged in unapproved foreign-related statistical investigations across 37 projects conducted from March 2019 to July 2022, according to the ruling
JP Morgan says the Chinese yuan will keep on falling
Analysts at JP Morgan remain bearish on the RMB:
- “The fundamental case for additional yuan weakness remains very much intact.”
- “We see the dollar-yuan uptrend as durable, but recent events are a reminder that authorities will periodically try to disrupt one way moves.”
BOJ’s Ueda says did not discuss FX volatility in meeting with Kishida
- Ueda remarks after his meeting with Japan prime minister Kishida
- Explained to Kishida the BOJ’s July policy decision
- Kishida said that he understood the reasoning behind it
- Says would prefer to refrain from mentioning what was discussed
- But Kishida asked questions on various aspects of the economy, financial developments
- Kuroda had met with PM on regular basis, this meeting today was similar
BNP on the sliding yuan – no hard line-in-the-sand
BNP on a lower RMB, saying it’ll keep falling:
- “Ultimately it depends on the yield difference between US and China, and we’re witnessing a nearly record widening of nominal rates differential.”
- “We don’t think there is a hard line-in-the-sand for the exchange rate.”
TD, too, are bearish:
- In an unexpected move, China’s 1-year LPR was cut less than expected by 10 bps to 3.45% and the 5-year rate was kept unchanged at 4.20%. Overall, the disappointment in the LPR decision adds more confusion for investors, especially after the meeting between PBoC and state banks which pledged for increased loan support. Despite a stronger-expected-fixing today (~880 pips), markets may read the LPR decision as a step back in policy support from authorities and may pressure USD/CNH back to YTD highs at 7.35.
Cryptocurrency News
Constrained US Russia ties positions Binance for probable legal risks after monthly $428M in P2P transactions
- Binance exchange is reportedly facing additional legal risks in the US for helping Russians send money overseas.
- According to a report in the Wall Street Journal, the exchange violated US sanctions against Russia by helping its countrymen move money.
- The exchange has defended itself, saying it “follows global sanctions rules and has no banking relationships anywhere for its peer-to-peer service.”
- Meanwhile, Russian President Putin says the US dollar is losing its global role in an “objective and irreversible” process.
Constrained relationships between the United States and Russia over geopolitical reasons has reportedly put the largest cryptocurrency exchange by trading volume, Binance, in a possible legal bind. Based on a report in the Wall Street Journal, the exchange helped Russians move money, thereby violating the law.
Binance reportedly in a legal bind for dealing with Russians
Binance exchange helped Russians move approximately $428 million, even monthly, by using its peer-to-peer (P2P) function. In doing so, the exchange may have violated the sanctions that the US has against Russia, intended to cripple the country’s economy with hopes of impeding Russia’s military enforcement against Ukraine.
Bitcoin sags as Grayscale verdict awaited
- We could get a decision at 11 am ET
Cryto traders are watching the clock today and waiting for an 11 am (or just before) ruling on the Grayscale Trust vs SEC case in the D.C. Circuit Court. It won’t necessarily come at that time, or today at all but rulings typcically come on Tuesdays and Fridays.
It’s tough to guess how the market will react to a positive decision but with an extension. I assume it’s good news for bitcoin because it would mean that an ETF is coming, though Grayscale would be beaten to it.That may close the discount in GBTC over time but a 240-day wait against a 26% discount might not be worth the volatility.
Update:
Looks like no SEC vs GBTC decision today
- The waiting game continues
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