Round up of today’s market news

North American News

NASDAQ index continues its upward streak, marking the 4th consecutive day of gains for major indices

• NASDAQ is up 3.5% on the week

The NASDAQ index continued to lead the stock indices higher. The Dow industrial average is lagging but still close higher for the 4th consecutive day.

Top sectors in the Dow included:

• Communication services, up 2.32%,
• Technology, up 1.5% and
• Consumer discretionary, +1.08%

Energy fell -0.45% despite gains of $1.50 or 1.9% in the crude oil futures. Exxon Mobile fell -2.97%. Chevron fell -1.51% leading to the declines.Energy fell -0.45% despite gains of $1.50 or 1.9% in the crude oil futures.Exxon mobile fell -2.97%. Chevron fell -1.51%

A look at the major indices shows:

• Dow industrial average rose 47.71 or 0.14% at 34395.13
• S&P index rose 37.90 points or 0.5% at 4510.05
• NASDAQ index rose 219.60 points or 1.58% at 14138.56

The major indices are on track for gains for the week with one more day to go. For the week:

• Dow Industrial Average is up 1.96%
• S&P index is up 2.53%
• NASDAQ index is leading the week with a gain of 3.50%NASDAQ index is up 3.50%

Some of the big names that rose today included:

• Adobe +1.96%
• Nvidia +4.74%
• Alphabet +4.72%
• Microsoft +1.62%
• Amazon +2.68%
• Alcoa +4.71%
• Snowflake, +7.2%
• Block, +6.99%
• Shopify, +6.7%

US treasury auctions off $18B or 30 year bonds at a high yield of 2.91%

• WI level of 3.890%

• High yield
• WI (when-issued) yield at the time of the auction 3.890%
• Tail 2.0 bps
• Bid to cover 2.43X versus 6 month average of 2.39X.
• Tail 2.0 basis points vs 6 month average of -0.2 basis points
• Directs (a measure of domestic demand) 20.13% vs 6 month average of 18.4%.
• Indirects (a measure of international demand) 69.02% vs 6 month average of 70.8%
• Dealers (they take the rest) 10.9% versus 6 month average of 10.8%.

US initial jobless claims 237K vs 250K est. The Continuing claims 1.729M vs 1.723M est.

• Weekly US initial jobless claims and continuing claims
• Prior week 248K. Revised to 249K
• For the week ending July 8, initial claims were at a seasonally adjusted figure of 237,000 versus estimate of 250K, a decrease of 12,000 from the previous week’s revised level of 249,000.
• The 4-week moving average for initial claims was 246,750, a decrease of 6,750 from the previous week’s revised average of 253,500.
• The seasonally adjusted insured unemployment rate for the week ending July 1 was unchanged at 1.2 percent.
• Continuing claims, or the number for seasonally adjusted insured unemployment during the week ending July 1, was 1,729,000 versus estimate of 1,723,000, an increase of 11,000 from the previous week’s revised level of 1,718,000.
• The 4-week moving average for continuing claims was 1,735,250, a decrease of 10,750 from the previous week’s revised average of 1,746,000.

US June PPI final demand 0.1% vs 0.4% expected. Ex food and energy 2.4% vs 2.6% expected

• US PPI final demand data for June 2023
• Prior month, 1.1%
• PPI MoM 0.1% vs 0.2% estimate, after a -0.4% decline in May (was -0.3%) and a 0.1% increase in April.
• The index for final demand increased by 0.1% on an annual basis vs 0.4% estimate.
• The rise in June’s final demand prices is attributed to a 0.2% increase in the index for final demand services, while the prices for final demand goods remained unchanged.
• Ex food and energy YoY up 2.4% vs estimate of 2.6%. The prior month was revised to 2.6% from 2.8% previously reported
• Ex food and energy MoM rose 0.1% versus 0.2% expected. The prior month was revised to 0.1% from 0.2%
• Final demand excluding foods, energy, and trade services MoM rose by +0.1% in June, after no change in May.
• Final demand excluding food, energy, and trade services YoY increased by 2.6% vs 2.8% last month.

US 30 year fixed-rate mortgage 6.96% during the July 13 week

• 30-year fixed-rate mortgage according to Freddie Mac

The US 30-year fixed rate mortgages averaged 6.96% in the July 13 week. That compares to 6.81% in the prior week.

Bank earnings start tomorrow.JP Morgan Citigroup and Wells Fargo all scheduled to announce

• The smaller regional banks will be of interest this quarter

The earnings season kicks off tomorrow led by some major banks. J.P. Morgan, Citigroup and Wells Fargo are also scheduled to release tomorrow

• J.P. Morgan is expected to announce earnings of $3.96 on the $39.15 billion of revenues
• Citigroup is expected to announce earnings of $1.37 on $19.59 billion revenue
• Wells Fargo is expected to announce earnings of $1.18 on $20.15 billion of revenue.

J.P. Morgan shares are up around 11% this year while both Citigroup and Wells Fargo are each about 5.35%. The larger money center banks escaped the deposit which role scenario that forced the smaller regional banks to come under pressure. The earnings are also under pressure as they have to pay higher for deposits in order to keep the deposit base high enough to fund their assets.

Nvidia pierces $450 on Recursion deal, soft inflation

• NVDA advances above $450 to a new all-time high on Thursday.
• The AI tech leader has invested in biotech firm Recursion for drug discovery.
• NASDAQ 100 rebalancing will cause major selling of NVDA stock.
• June CPI is clearly bullish for NVDA and the general market.

Nvidia (NVDA), the mega-tech supplier of artifical intelligence hardware and software, saw its stock rise more than 3.5% on Thursday, reaching above the psychological $450 level for the first time ever.Lower-than-expected inflation data from the US further fueled the stock’s rally as it diminished chances of more aggressive tightening from the US Federal Reserve, generally a negative for the rate-sensitive stock market.

Nvidia’s gains came after the company announced a substantial investment into a biotech company called Recursion which is utilizing artificial intelligence (AI) on Nvidia’s platform for new-drug discovery.Additionally, SoftBank has courted Nvidia to become an anchor investor in the coming Arm IPO.Nvidia attempted to acquire Arm two years ago.The NASDAQ Composite has increased by 1% in the first half-hour of trading.

SF Fed Pres Daly: The good news on inflation this week is indeed good news

• Feds Daly on CNBC
• Saying that we needed to 2 hikes was a way to keep optionality open
• The good news on inflation this week is indeed good news
• To early to say we can declare victory on inflation
• Lags in monetary policy is 12 – 24 months
• There is still cumulative effects of monetary tightening to work its way through the system
• Thought that the banking crisis could be worth 1 to 2 tightenings, but not seeing that impact
• Am mindful that we still have an economy that has a lot of momentum
• We are going to continue to work on rate hikes until we are sure that inflation is on the path to come back down toward 2%
• There is a risk that we over-tighten and a risk that we under-tighten. That is why we are data dependent
• Hard to say wage growth is going to lead inflation down
• Was not aware of problems at Silicon Valley Bank
• If wait until inflation is 2% and have monetary lags, you want to head to a less restrictive policy to adjust for the lags.
• As inflation starts coming down, can start lowering the nominal rate to bring real rates down to neutral levels
• Wants to start heading towards the neutral rate as we approach 2% on inflation
• We are not there yet.
• The standing pad at the June meeting is about slowing the pace of hiking as we start to reach our destination
• A way to slow the path is to skip a meeting
• We don’t know a lot of things. WHat is happening to inflation? What are the credit risk? What are the lags?
• The market might be really focused on the CPI yesterday. I have more optionality. Fed should not be declarative.

For what it’s worth,Goldman partner gives the S&P a better than fighters chance of new ATH

• S&P all-time high is 7.10% away

John Flood, a partner at Goldman Sachs in a note to clients on Wednesday after the CPI data commented that

“For the 1st time in 2023, we are currently being asked by multiple clients if we think the S&P 500 is on track to clock an ATH before year-end”. Flood responds, “I am going with a yes on this”.

Feds Bullard is stepping down in August

• He will become the new Dean at Purdue University’s school of business

St. Louis Fed Pres. James Bullard is announcing that he will be stepping down in August (August 14). He will become the Dean at Purdue University’s Mitchell E. Daniels, Jr., School of Business. Bullard is not a voter in 2023. The next time the St. Louis Fed President votes is in 2025.

Bullard was one of the leaders in calling for rates to move higher quicker over the last few years. As such he has been known more as a hawk but he has played both sides as well during his years at the Fed.

Bullard is the longest serving Fed President.

Commodities

Silver rises to highs not seen since May after soft PPI figures from the US

• The XAG/USD records more than 2% gains on the day, jumping to the $24.70 area.
• Following soft CPI figures on Wednesday, weak PPI on Thursday applied further pressure on the US Dollar.
• Falling US Treasury yields and dovish bets on the Fed allowed precious metals to advance.

Silver recorded a fifth consecutive day of gains and jumped to its highest level since mid-May towards the $24.70 area. In that sense, following soft Consumer Price Index (CPI) and Produce Price Index (PPI) data from the US, investors refrained from betting on an additional hike from the Federal Reserve (Fed) past July which made the US yields decline across the board.

The Producer Price Index (PPI) came in at 0.1% MoM, which waslower than the 0.2% expected, while the Core Figure came in at 2.4% YoY, failing to match the expectations of 2.6%.In addition, US Jobless Claims for the week ending on July 7 decelerated.The number of people filing first-time claims for state unemployment insurance came in at 237K, lower than the consensus of 250K and its previous figure of 249K.

WTI crude oil futures settle at $76.89

• Up $1.14 or 1.5%

WTI crude oil futures are settling at $76.89. That’s up $1.14 or 1.5%.

• The price is settling near the high for the day at $76.96. The low for the day is $75.32.

Looking at the daily chart, the price is approaching its 200-day moving average at $77.33. The last time the price closed above the 200-day moving average was back on August 29, 2022.

Russia’s oil minister Novak:Companies will decide themselves whether to cut prod in August

• Russian oil minister Novak speaking

Mustard oil minister Novak to Tass says that:

• Companies will decide for themselves whether to cut oil production in August, but Russia’s task is to reduce supplies to world markets
• Russia maintains its oil production forecast for 2023 at 515 million tonnes

EU News

European indices close higher for the 5th consecutive day

• German DAX leads the way today

The major European indices are closing higher for the 5th consecutive day.The gains today were led by the German DAX:

• German DAX rose 0.74%
• Frances CAC rose 0.50%
• UK’s FTSE 100 rose 0.33%
• Spain’s Ibex rose 0.26%
• Italy’s FTSE MIB (delayed) rose 0.78%

Benchmark 10 year yields were sharply lower in Europe:

• Germany -9.1 basis points
• France -9.2 basis points
• UK -8.7 basis points
• Spain -10.3 basis points
• Italy -10.4 basis points

Eurozone May industrial production +0.2% vs +0.3% m/m expected

• Latest data released by Eurostat – 13 July 2023
• Prior +1.0%

France June final CPI +4.5% vs +4.5% y/y prelim

• Latest data released by INSEE – 13 July 2023
• HICP +5.3% vs +5.3% y/y prelim

UK May monthly GDP -0.1% vs -0.3% m/m expected

• Latest data released by ONS – 13 July 2023

• Prior +0.2%
• GDP 0.0% vs -0.1% 3m/3m expected
• Prior +0.1%

UK parliament says government strategy on China risk is ‘completely inadequate’

• The UK Intelligence and Security Committee (ISC) shares their view on the government’s approach in dealing with national security with regards to China
• The government strategy deployed is ‘completely inadequate’
• There is too much focus on short-term economics rather than long-term risks
• Beijing has taken advantage of that, targeting the UK and its interest ‘prolifically and aggressively’
• China has successfully penetrated every sector of the UK economy

ECB accounts: Members generally concurred interest rates had reached restrictive territory

• The ECB releases the accounts of its June monetary policy meeting
• Members considered that there were both upside and downside risks to the inflation outlook
• It was argued that market participants would be surprised by the upward revision of inflation
• This could trigger a repricing of the forward curve
• Members broadly concurred that inflation was still projected to remain too high for too long
• It was argued that policymakers should not put too much emphasis on the behaviour of core inflation, as its mandate related to headline inflation
• Maintaining a gradual tightening path would allow the ECB to monitor and assess the impact of past monetary policy decisions and ensure that financial conditions were adjusting in a way that was consistent with inflation moving back to the 2% medium-term target
• Members generally agreed that the data-dependent approach to monetary policymaking
• Policymakers should stress that fiscal policy needed to be tightened in order to dampen demand and support the disinflation process

ECB’s Visco: We are not very far from the peak in interest rates

• Remarks by ECB policymaker, Ignazio Visco

He also adds that he “somewhat disagrees” with the preference for further tightening. 

Other News

China’s Customs Bureau says H1 2023 exports were +3.7% y/y, while imports were -0.1% y/y

Ahead of the June trade figures the Customs Bureau have released January – June collated data, in CNY terms

• exports +3.7% y/y
• imports -0.1% y/y
• CNY 2.82 tln surplus

Customs says:

• sluggish global economic growth, slowing global trade andinvestment, geopolitical risks and weakening external demand continue to impact China’s trade

Japan top currency diplomat Kanda says closely watching FX market moves

• Remarks by Japan top currency diplomat, Masato Kanda
• There is the view that speculative yen short positions are unwinding rapidly

Some not so good news on labor/inflation: SAG-AFTRA go on strike

• Hollywood shut down

Approximately 160,000 television and movie actors, members of the SAG-AFTRA union, are set to strike, joining screenwriters who started their strike in May. This results in the first industrywide shutdown in Hollywood in 63 years.

Actors’ demands echo those of the writers, and their joint strike will potentially halt the entertainment business, impacting both traditional studios and newer streaming services like Netflix, Amazon, and Apple.The labor dispute primarily involves:

• wages,
• residuals, and
• artificial intelligence

A large majority of union members endorsing the strike.

The actors’ walkout will also bolster the striking writers, who have been on strike for over 70 days.

Cryptocurrency News

XRP naysayers miss out on 70% gains after Ripple Labs and SEC share joint victory

• A federal judge has determined that XRP is not necessarily a security.
• Based on the ruling, the Ripple Labs token can only be security when sold to institutional investors.
• While the news represents a partial win for the SEC, the XRP community is elated with 70% price gains to show for it.
• SOL, ADA, and MATIC, recently deemed securities, share in the excitement with around 10% gains each.

Ripple (XRP) price has recorded a remarkable rally following a much-anticipated development in the case against the US Securities and Exchange Commission. After months of waiting, the XRP community is celebrating a partial win against the commission.

XRP is not a security on this condition

XRP, the ticker for the Ripple ecosystem, has been determined to be a commodity when sold to the general public.According to the latest determination by Federal Court Judge Analisa Torres, the remittance token only passes as a security when sold to institutional investors. An excerpt from the summary judgment reads:

Therefore, having considered the economic reality and totality of circumstances surrounding the Institutional Sales, the court concludes that Ripple’s Institutional Sales of XRP constituted the unregistered offer and sale of investment contracts in violation of Section 5 of the Securities Act. 

Former Celsius CEO Alex Mashinsky arrested by DoJ and sued by SEC, CFTC and FTC

• The bankrupt crypto lender’s Celsius CEO was arrested and charged with fraud by the US Department of Justice, per Bloomberg’s report.
• The Securities and Exchange Commission, minutes before the arrest, also sued Mashinsky for Securities fraud.
• This is SEC’s third biggest crackdown on the crypto sector this year, following Binance and Coinbase lawsuits.

Celsius, the crypto lender that went bankrupt last year, is making headlines once again.The company’s co-founder and former Chief Executive Officer (CEO), Alex Mashinsky, was arrested by US authorities on July 13. 

According to a report from Bloomberg, Mashinsky’s arrest was the result of an investigation following which, the US Department of Justice (DoJ) charged the disgraced executive with fraud. 

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