Round up of today’s market news

North American News

Nvidia Closes Day with Over 6% Decline

Closing changes:

• S&P 500 -0.25%
• DJIA +0.7%
• Nasdaq -1.1%
• Russell 2000 +0.7%

Dallas Fed June manufacturing index -15.1 vs -19.4 prior

• The latest survey of manufacturing from the Dallas Fed

• Prior was -19.4

Details:

• General business activity -15.1 vs -19.4 prior
• Company outlook -6.9 vs -13.4 prior
• Prices paid +21.5 vs +20.4 prior
• New orders -1.3 vs -2.2 prior
• Shipments +2.8 vs -3.0 prior
• Employment -2.9 vs -5.3 prior

Comments in the report are much more negative than the report numbers.

Food manufacturing

• We have been fortunate to be on the receiving end of some of our competition’s breakdowns/challenges.
• Markets are stabilizing, raw material costs have stopped increasing (seasonally), and demand for our products feels strong.
• We just added two new retail customers. It is mixed news—it is always good to have growth, but we are having trouble maintaining our production line. We had 25 percent turnover this year.

Paper manufacturing

• We are really neutral at this time on our outlook.

Printing and related support activities

• We are starting to see things slow down, and while many in our industry continue to be slow, we are pretty busy. We had “hooray” billing in both April and May, so I’m sure June will be less. It is hard to figure out why we have been so busy when many are not. Perhaps it’s just luck of the draw with our customers needing us more than their customers needed them?

Primary metal manufacturing

• Our overall building and construction sales continue downward for the majority of our customers. Decreased housing starts, increased mortgage rates and overall housing costs are hampering this market. Our transportation market is off as well. Trailer orders are down, resulting in fewer being built.
• Legacy work has declined over the past 1.5 years and has not changed. Looking forward, we will be adding product offerings not previously supplied to bolster business.

Fabricated metal product manufacturing

• We are continuing to align production capacity to the lower order volumes projected for 2024.
• We have a good backlog, but owners have slowed down their approvals of projects and start dates for the projects we have purchase orders for.

Machinery manufacturing

• The summer doldrums are upon us! Orders are hard to come by, layoffs have been made, and the future really doesn’t look that encouraging at the present. Our sales team is flipping every rock, our “creative” team is looking far and wide for new ideas, and our operations team is squeezing out every penny they can.
• We saw a small spurt of incoming work from long-time repeat customers, but overall it is still a very volatile work environment. We would like to hire but cannot: a) guarantee long-term employment and b) find skilled help.
• Business is slowing.
• Business remains sluggish at best. We see no signs of improvement and anticipate that there will be no major changes in economic activity before the election.

Computer and electronic product manufacturing

• We are seeing the expected cyclical bottom forming. Markets are still asynchronous.
• High interest rates are still playing a major role in the industrial capital equipment industry.

Transportation equipment manufacturing

• While we still have a very large production backlog that is allowing us to continue to increase production and capacity utilization, our volume of new orders has slowed substantially, causing us to reevaluate longer-term plans.

Furniture and related product manufacturing

• [Labor shortages in] skilled trades in millwork manufacturing,installation and CNC [computer numerical controlled equipment]operators continue to be the largest inhibitor of our growth.

Miscellaneous manufacturing

• I think the election and fear of world conflict is scaring buyers from ordering nonessential material.

Fed’s Daly: Bumpiness of inflation data so far this year has not inspired confidence

• Comments from Daly

• Recent inflation readings more encouraging but hard to now if on track to price stability
• We have made a lot of progress on inflation, still work to do
• Nearer to a point where benign outcome on labor market could be less likely
• Must fully restore price stability without a painful disruption to the labor market
• If inflation falls more slowly than expected, policy rate must stay higher for longer
• If there are gradual declines in inflation, slow labor market rebalancing then the Fed an normalize over time
• At this point, we have a good labor market not a frothy one
• Initial claims still coming in low
• We see cautious optimism in the business community
• At this point, the risks to inflation and employment are in better balance
• From contacts, concerns now are the ones we had in 2019
• There’s no evidence that stagflation or recession is in our future

US prosecutors recommend criminal charges against Boeing

• Reuters sources

• Justice Department has until July 7th to decide whether to go ahead with prosecution
• Justice department’s findings is that the company breached a 2021 agreement that shielded it from fraud charges
• Relatives of the victims are urging the prosecutors to seek for a $25 billion fine as well as criminal prosecution

Source: Reuters

BOC’s Macklem Q&A: You can see some weakening of the labor force under the hood

• Comments from Bank of Canada Governor Tiff Macklem

• We’ve seen inflationary pressures ease and we think they will continue to ease
• We need to have conversations on improving our productivity
• We’ve had exceptionally-strong supply shocks
• We have too many small differences between provinces creating barriers
• The economy has been changing rapidly
• My intention today was to highlight the things we’re looking at in the labor market
• We are looking for further moderation in wages; not all wage measures are equal, some help separate out wage gains related to productivity
• I wanted to provide some info today on which productivity measures we’re watching most closely
• If the economy evolves broadly as we expect, it is reasonable to expect further cuts
• We’re going to be taking it one meeting at a time
• Since we started raising rates about 50% of mortgages have renewed but the other 50% will have a bigger reset and that’s something that’s factoring into our monetary policy decisions
• We don’t want to jeopardize the progress we’ve made on inflation

BOC’s Macklem: Increasingly we look to be on our way to hitting inflation target

• Comments from the Bank of Canada Governor

• We continue to think we don’t need a large rise in the jobless rate to get inflation to target
• There is room to grow and add jobs even as inflation moves closer to 2%
• Signs of financial stress are particularly evident among renters
• We can’t rule out bumps but increasingly we look to be on our way to hitting the inflation target
• Path to a soft landing has always been narrow and we have yet to fully stick the landing
• We are starting to see evidence that wage growth is moderating
• Looking forward we will look for wage growth to moderate further
• Gov’t has some room to slow non-permanent residents without tightening labor market too much

Canada announces 30-day consultation on China EV tariffs

• Canada’s Finance Minister

Canadian Finance Minister Freeland announced a 30-day consultation on potential tariffs on Chinese-made EVs. They will look at restricting what kinds of vehicles are eligible for Canada’s consumer EV incentives.

Commodities

Gold rises on soft US Dollar ahead of key US PCE

• Gold benefits from a weaker US Dollar, and edges up 0.45%, amid firm US Treasury bond yields.
• Investors eye the upcoming PCE Price Index, the Fed’s preferred inflation measure, which could impact rate cut expectations.
• The US Dollar Index (DXY) falls as the CME FedWatch Tool indicates a 66% chance of a rate cut in September, up from 59.5%.

Gold jumped off last Friday’s low and benefitted from a weaker US Dollar on Monday. On Friday, investors are bracing for the release of the Federal Reserve’s preferred gauge for inflation, the Personal Price Index. Gold trades at $2,331, up 0.45%

Crude Oil grinds back into the top end on Monday, WTI clips into $81.50

• WTI rebounded after a near-term dip towards $80.00.
• Energy markets are churning as investors look for firmer signs of supply drawdown.
• Ongoing geopolitical turmoil keeps supply concerns front and center, bolstering prices.

WTI US Crude Oil found a firm bid on Monday, rebounding to the $81.50 region after easing within reach of the $80.00 handle. Energy markets remain choppy as investors hope for a broad-market push higher on the possibility of rising demand in the future while trying to shrug off current supplies, which see an increasing overhang on current demand.

Natural Gas turns flat in very mild price action on Monday after Norway’s outage

• Natural Gas flirts with break below $2.80 on Monday, near last week’s support. 
• Traders assess another outage in Norway at the Hammerfest LNG plant. 

NatGas trades flat at the start of the US session after Norwegian network operator Gassco confirmed that the current outage will be short lived. Earlier this Monday, Gas prices jumper on headline risk with Norway having to report an unforeseen outage. This makes it very difficult for Europe to foresee if it will get refueled ahead of the heating seasons with Gas flows into Europe being very unpredictable. 

Natural Gas is trading at $2.85 per MMBtu at the time of writing.  

Natural Gas news: That was resolved quick

• Russia is going around the Arctic Sea quicker than expected, with Liquefied Natural Gas (LNG) tanker Eduard Toll passing through the Northern Sea Route. This is the quickest way for Russia to get LNG to Asia. 
• Norwegian network operator Gassco reported an outage at the Hammerfest LNG Plant on Monday, according to Bloomberg. Although the outage should be solved during the day, it again shows how unreliable the current Gas flows from Norway into Europe are. 
• Japan is buying into Texas shale Gas, with Mitsui & Co Limited, buying some acres to excavate for drilling. The site should be operational by 2026.
• More good news for Europe with UK’s Easington terminal set to open on June 27th, a day earlier, Reuters reports. 

EU News

European equity close: French stocks reach 11-day high

• Closing changes for the main European bourses on June 24, 2024

• Stoxx 600 +0.8%
• German DAX +1.0%
• UK FTSE 100 +0.7%
• French CAC +1.1%
• Italy MIB +1.6%
• Spain IBEX +1.3%

Germany June Ifo business climate index 88.6 vs 89.7 expected

• Latest data released by Ifo – 24 June 2024

• Prior 89.3
• Current conditions 88.3 vs 88.5 expected
• Prior 88.3
• Expectations 89.0 vs 91.0 expected
• Prior 90.4; revised to 90.3

Belgian June business sentiment -11.1 vs -11.0 prior

• Sentiment ticks lower

SNB total sight deposits w.e. 21 June CHF 451.8 bn vs CHF 453.5 bn prior

• Latest data released by the SNB – 24 June 2024
• Domestic sight deposits CHF 443.4 bn vs CHF 445.3 bn prior

UK June CBI trends total orders -18 vs -25 expected

• Latest data released by CBI – 24 June 2024
• Prior -33

Manufacturing orders in the UK fell again in June but at a slower pace as compared to May at least. The balance for manufacturing output expectations also increased to 13 from 7 previously, marking the highest since October last year. CBI notes that the readings are “encouraging” and that the recovery should “broaden out over the summer”.

Asia-Pacific-World News

China calls for EU to scrap tariffs on EVs by 4 July

• This comes as talks are set to resume after a call over the weekend

For some context, the EU is set to impose provisional tariffs of up to 38.1% on imported Chinese-made EVs starting from 4 July. This has caused quite a stir between the bloc and China in the past week or so. But over the weekend, there was a call between EU commissioner Dombrovskis and China’s commerce minister Wang. The two spoke and agreed to restart talks on trade after the most recent spat.

Today, the Global Times is reporting that China is calling for the EU to remove the above tariffs before they go into effect. That would be the “best outcome” according to Chinese officials. That said, I don’t see the EU willing to make such a concession unless there is concrete progress on what it deems as “excessive and unfair” trade policies by China.

PBoC injects 50 billion Yuan via 7-day reverse repos

• Sets 7-day reverse repo rate at 1.8% vs 1.8% prior

• PBoC injects 50 billion Yuan via 7-day reverse repos
• Sets 7-day reverse repo rate at 1.8% vs 1.8% prior

CNH continues to lose ground due to capital outflows

• Foreigners pull $4.54B via stock connect scheme

The USDCNH has continued to grind higher as capital outflows from China ramps up.

According to Reuters, foreigners has pulled $4.54B this month via the stock connect scheme.

PBOC sets USD/ CNY reference rate for today at 7.1201 (vs. estimate at 7.2647)

• PBOC CNY reference rate setting for the trading session ahead.

NZ Exports for May 7.16B vs 6.42B prior

• Data for May 2024

• NZ exports May 2024 7.16B vs 6.42B

• NZ imports May 2024 6.95B vs 6.32B

• NZ trade balance May 2024 204M vs 91.0M

NZ credit card spending YY 0.0% vs -0.6% prior

• Data for May 2024

• NZ credit card spending YY 0.0% vs -0.6% prior

BoJ summary of opinions for the June meeting

• Summary of opinions for the June meeting

• BOJ June meeting summary of opinions: One member said BOJ expected to raise interest rate if underlying inflation rises as projected.
• BOJ June summary: One member said given chance of upside risk to inflation, must consider further adjustment to degree of monetary easing
• BOJ June summary: One member said must raise interest rate in timely fashion without delay in accordance to heightening chance of achieving price target.
• One member said BOJ can wait in shifting level of interest rate until it can confirm through data clear uptrend in inflation, inflation expectations.
• One member said it is appropriate to keep easy policy for the time being due to lack of strength in consumption, some disruption to auto shipments.
• BOJ June summary: One member said weak yen could lead to overshoot in inflation, which means appropriate level of policy rate would be pushed up.
• BOJ June summary: One member said FX volatility affects a wide range of economic activity, and levels that deviate from fundamentals would hurt the economy.
• One member said monetary policy isn’t swayed by short-term FX volatility.
• BOJ June summary: One member said BOJ must trim bond buying by a sizable amount in a predictable fashion.
• BOJ June summary: One member said must diminish BOJ’s presence in the bond market by trimming its bond buying.
• BOJ June summary: One member said must normalise BOJ’s balance sheet at appropriate, timely fashion while staying in close dialogue with market participants.
• BOJ June summary: One member said BOJ should spend time and cautiously proceed with bond tapering.
• BOJ June summary: One member said no change to BOJ’s baseline scenario on economy, price data also on track.
• BOJ June summary: One member said consumption lacks momentum, watching to what degree wage hikes, government steps will push up consumption.
• BOJ June summary: One member said risk of inflation overshoot behind worsening consumer sentiment.
• BOJ June summary: One member said underlying inflation yet to reach 2%.
• BOJ June summary: One member said Japan making steady progress toward achieving price target, when looking at corporate wholesale, service price data.

Japan Finance Minister Suzuki on the wires

• No comments on forex levels

• Won’t comment on forex levels.
• Desirable for currencies to move in stable manner reflecting fundamentals.
• Excessive FX change undesirable.
• Want to respond appropriately as needed.
• says no comment, when asked if current FX moves are excessive.

Japan FX Diplomat Kanda doesn’t comment on FX levels

• Comments:

• Won’t comment on daily forex levels.
• Will take appropriate steps if there is excessive forex move.
• No impact at all from U.S. report on forex monitoring.
• US govt suggests there is no problem in Japan’s forex intervention.
• Don’t have specific forex level in mind.
• Will respond to rapid forex moves by speculators.
• Won’t comment if recent forex moves are excessive

Cryptocurrency News

Trump in talks to speak at bitcoin convention

• He would speak at the end of July

US Presidential hopeful Donald Trump is in talks to speak at Bitcoin 2024 in Nashville at the end of July, according to Axios.

“I will end Joe Biden’s war on crypto,” Trump said in Wisconsin.”We will ensure that the future of crypto and the future of Bitcoin will be made in America.”

Bitcoin flirts with $60,000 in a dangerous moment for risk appetite

• This doesn’t bode well for risk trades

Bitcoin is currently trading at its lowest point since mid-May, following a sharp sell-off in Europe. The cryptocurrency has found support around the $60,600 level, but the inability to break above $72,000 and the formation of a top is concerning. If Bitcoin falls below $60,000, and potentially $57,000, it could signal a bearish trend targeting prices below $50,000.

Bitcoin often reflects broader risk sentiment, though its influence is more immediate rather than predictive over several days. Notably, Bitcoin’s recent bottom in late October 2023 coincided precisely with the stock market’s bottom, highlighting its correlation with other risk assets.

Crypto ETF outflows cross $500 million as Bitcoin decline persists

• CoinShares’ weekly report reveals crypto ETF outflows reached $584 million last week.
• US Bitcoin ETFs saw major outflows, CoinShares speculates that correction is underway.
• Multi-asset crypto products saw $98 million in inflows.

According to a CoinShares report on Friday, crypto exchange-traded products saw a second consecutive week of outflows, with over $584 million leaving these products last week.The recent increased outflows may engender a steeper crypto correction.

Crypto ETFs record outflows for the second week in a row

Global crypto ETFs experienced increased outflows in the past week, totaling $584 million as of Friday.Digital assets outflows have hit a cumulative $1.2 billion combined with outflows from the previous week.

US crypto ETFs saw the highest outflows, settling at $475 million.This may be due to growing FUD among investors toward the recent rate cuts by the Federal Reserve (Fed).The Fed’s move may have spiked increased bearish sentiment toward crypto products.

Canada, Germany and Hong Kong crypto ETFs also saw outflows in the past week that surpassed $150 million.Only Brazil and Switzerland saw inflows of $48.5 million and $39 million, respectively.

Bitcoin ETFs continue to experience the highest outflows with $630 million in total.
This follows a continuous decline in the asset’s price, which closed the past week at $63,000 and has dipped to $60,900 at the time of writing.

Ethereum investment products also saw their fair share of outflows last week. Globally, they saw $58 million of outflows despite the SEC’s “light” comment on issuers’ S-1 drafts and submission of subsequent amendments.

CoinShares predicts that recent price movement and increased outflows could cause the crypto market to experience steeper corrections.

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