Round up of today's market news *

North American News

Tech Titans Take Center Stage: Alphabet Surprises, Tesla Falls Short

Visa Inc (V) Q3 2024 (USD): Shares are trading down -2.11% after the close.

Adj. EPS: $2.51 (exp. $2.43) BEAT
Revenue: $8.9B (exp. $8.89B) BEAT

Tesla Inc (TSLA) Q2 2024 (USD): Shares are trading down -5.22% after trading down -2.04% during the day.

Adj. EPS: $0.52 (exp. $0.62) MISS
Revenue: $25.5B (exp. $24.77B) BEAT

Tesla’s focus remains on company-wide cost reduction, while plans for new vehicles stay on track. The energy storage business continues to grow rapidly, setting a record in Q2 with 9.4GWh of deployments. The company saw a sequential rebound in deliveries in Q2 due to improved consumer sentiment and expects a sequential increase in production in Q3 after a decline in Q2. However, they project that 2024 vehicle growth rate may be lower than 2023 levels, and the new vehicles approach will result in less cost reduction than previously expected. The robo-taxi will also be delayed

Alphabet Inc (GOOGL) Q2 2024 (USD): Shares of Alphabet are down -0.38% in after hours trading.

EPS: $1.89 (exp. $1.84) BEAT
Revenue: $84.742B (exp. $84.18B) BEAT
- Google Advertising Revenue: $64.6B (exp. $64.4B) BEAT
- Google Cloud Revenue: $10.35B (exp. $10.158B) BEAT
- Google Search & Other Revenue: $48.51B (exp. $47.65B) BEAT
- YouTube Ads Revenue: $8.66B (exp. $8.9B) MISS
- Google Network Revenue: $7.44B (exp. $7.87B) MISS
- Google Subscriptions, Platforms and Devices Revenue: $9.31B (exp. $9.38B) MISS
- Google Services Revenue: $73.93B (exp. $73.58B) BEAT

Texas Instruments Inc (TXN) Q2 2024 (USD): Shares are trading up 3.99% in after-hours trading. In. Today the price fell -3.69%

EPS: $1.22 (exp. $1.17) BEAT
Revenue: $3.82B (exp. $3.82B) MET

It seems like we have some mixed reactions in the after-hours market. Let’s break down each company’s performance:

Visa Inc (V) – Despite beating estimates on both EPS and revenue, its shares are trading down 2.11%. This could be due to concerns about future growth.
Tesla Inc (TSLA) – Although it beat expectations on revenue, the company missed on adjusted earnings per share. The focus on cost reduction, new vehicles, and energy storage business is promising, but the delay in robo-taxi launch might be a concern for some investors.
Alphabet Inc (GOOGL) – Google’s parent company had an impressive quarter, beating estimates across various revenue streams like advertising, cloud, search, and more. However, YouTube ads revenue missed expectations, which could have contributed to a minor decline in after-hours trading.

As for Texas Instruments Inc (TXN), it seems like the market is reacting positively to its quarterly performance, with shares up 3.99% in after-hours trading.

Stocks hold steady in front of the close

Steady as you go for the major indices

Dow Industrial Average average fell -57.27 points or -0.14% at 40,358.10
S&P index fell minus 8.65.4 -0.16% at 5555.75
NASDAQ index fell -10.22 points or -0.06% at 17997.35

The small-cap Russell 2000 rose 22.61 points or 1.02% at 2243.26.

U.S. Treasury auctions off $69 billion of 2-year notes at a high yield of 4.434%

WI level at the time of the auction 4.457%

High yield 4.434%
Tail -2.3 basis points vs six month average of 0.2 basis points
Bid to cover 2.81X vs six month average of 2.58X. Best since August 2023
Direct (a measure o domestic demand) 14.42% versus six month average of 21.0%. Weakest since Jan of 2022
Indirects (international demand) 76.57% versus six month average of 64.3%. Highest on record.
Dealers 9.01% versus six month average of 14.7%

Richmond Fed July manufacturing index -17 vs. -7 expected

July manufacturing and services data from the Richmond Fed

Manufacturing index -17 vs. -7 expected and -10 prior.
Services index 5 vs. -11 prior.
Manufacturing shipments index -21 vs. -9 prior.

Fifth District manufacturing activity worsened in July, according to the most recent survey from the Federal Reserve Bank of Richmond. The composite manufacturing index decreased from −10 in June to −17 in July. Of its three component indexes, shipments fell notably from −9 to −21, new orders decreased from −16 to −23, and employment edged down from −2 to −5.

Firms grew less optimistic about local business conditions, as the index fell from −13 to −21. The index for future local business conditions edged down from 9 to 7 in July. The future indexes for shipments and new orders remained solidly in positive territory, suggesting that firms continued to expect improvements in these areas over the next six months.

The vendor lead time index increased into slightly positive territory for only the second time in two years. Firms continued to report declining backlogs in July as that index remained negative.

The average growth rate of prices paid and prices received decreased in July. Firms expected little change in price growth over the next 12 months.

US existing home sales for June 3.89M vs 4.00M estimate

US existing home sales for June 2024

Prior month 4.11M
existing home sales -5.4% versus -0.7% last month
inventory at 4.1 months vs 3.7 months prior or 1.32 million units
Median price $426,900 which is up 4.1% from June 2023 (record high)
These are closed sales when rates were above 7%
Average days is 22 (down from 24 days) but up from 18 days last year
First-time buyers were responsible for 29% of sales in June, down from 31% in May but up from 27% in June 2023.
All-cash sales accounted for 28% of transactions in June, unchanged from May and up from 26% one year ago
Individual investors or second-home buyers, who make up many cash sales, purchased 16% of homes in June, identical to May and down from 18% in June 2023.

All four major US regions posted sales declines:

Northeast:
- Sales: Decreased 2.1% from May to an annual rate of 470,000, down 6% from June 2023.
- Median Price: $521,500, up 9.7% from one year earlier.
Midwest:
- Sales: Decreased 8% from May to an annual rate of 920,000, down 6.1% from June 2023.
- Median Price: $327,100, up 5.5% from June 2023.
South:
- Sales: Decreased 5.9% from May to an annual rate of 1.76 million, down 6.9% from June 2023.
- Median Price: $373,000, up 1.7% from last year.
West:
- Sales: Decreased 2.6% from May to an annual rate of 740,000, unchanged from a year ago.
- Median Price: $629,800, up 3.5% from June 2023.

Houses are sitting, but inventory is increasing too:

United States Redbook (YoY)

Actual: 4.9%
Previous: 4.8%

Philadelphia Fed nonmanufacturing business outlook for July -10.0 versus +15.1 in June

Philadelphia Fed nonmanufacturing business outlook Index for July 2024

The Philadelphia Fed nonmanufacturing activity in the region declined in July, as reported by the firms in the Nonmanufacturing Business Outlook Survey. Key indicators such as general activity at the firm level, new orders, and sales/revenues turned negative. The full-time employment index also suggested a decline in employment. Both price indexes showed continued overall price increases, remaining near non-recession averages. Despite the decline, firms still expect growth over the next six months, though these expectations are less widespread.

Summary of the data:

The diffusion index for current general activity at the firm level turned negative, dropping from 15.1 in June to -10.0, the lowest since April 2023.
31% of firms reported decreases, 21% reported increases, and 44% reported no change in activity.
The new orders index turned negative, falling from 6.7 to -7.1, with 22% of firms reporting decreases and 15% reporting increases.
The sales/revenues index fell 18 points to -3.5, with 25% of firms reporting decreases and 22% reporting increases.
The regional activity index dropped 22 points to -19.1, the lowest reading since December 2020.

Employment details:

Firms reported a decrease in full-time employment, with the full-time employment index falling 20 points to -4.9, its first negative reading since June 2023.
19% of firms reported decreases in full-time employment, 14% reported increases, and 66% reported no change.
The part-time employment index declined from 13.1 to 4.0.
63% of firms reported steady part-time employment, 15% reported increases, and 11% reported decreases.

Prices details were mixed with prices paid higher but prices received lower:

Price indicator readings suggest continued increases in input prices and prices for firms’ own goods and services.
Both price indexes were near their long-run averages.
The prices paid index rose 6 points to 30.2.
- 32% of respondents reported higher input prices, 2% reported decreases, and 59% reported no change.
The prices received index declined from 16.6 to 13.9.
- 23% of firms reported increases in their own prices, 9% reported decreases, and 59% reported no change.

In special questions this month, firms were asked about changes in wages and compensation over the past three months, as well as their expected changes to various input and labor costs for 2024.

Almost 30% of firms reported increased wages and compensation in the past three months, 68% reported no change, and 2% reported decreases.
60% of firms reported not adjusting their 2024 budgets for wages and compensation since the start of the year.
18% of firms are planning to increase wages and compensation more than originally planned.
16% of firms are planning to increase wages and compensation sooner than originally planned.
Firms expect higher costs across most expense categories in 2024.
- Median expected increases were in line with or slightly lower than expectations when last asked in April.
- Firms expect somewhat lower increases in costs for wages, intermediate goods, and nonhealth benefits compared to April.
- Expectations for increases in total compensation (wages plus benefits) costs remained at a median of 4 to 5%.

Lockheed Martin $LMT

EPS. vs Forecast
7.11 / 6.45

Rev. vs Forecast
18.1B / 17.03B

Market Cap: 113.87B

Lockheed Martin lifts 2024 sales target on fighter jet, missile demand

U.S. defense company Lockheed Martin raised its annual sales target for the first time this year on Tuesday, following the unexpected resumption of deliveries of its F-35 aircraft after Pentagon began accepting the jets last week.

Coca-Cola $KO

EPS. vs Forecast
0.84 / 0.8

Rev. vs Forecast
12.4B / 11.77B

Market Cap: 279.03B

Coca-Cola raises annual organic sales forecast

Coca-Cola raised its annual organic sales forecast on Tuesday, signaling strong demand for the beverage giant’s sodas, energy drinks and juices in its U.S. and international markets.

Reuter/Ipso Poll: Harris 44% Trump 42% among registered voters

Within 3% margin of error

Democratic presidential candidate Kamala Harris leads Republican Donald Trump 44% to 42% among registered voters, within 3-point margin of error, Reuters/Ipsos poll finds.
56% of registered voters in Reuters/Ipsos poll consider Harris ‘mentally sharp’; Trump seen as sharp by 49% of voters.
In a three-way matchup including Independent Robert F. Kennedy Jr., Harris leads Trump 42% to 38%; Kennedy supported by 8% – Reuters/Ipsos poll.

Reuters Poll: 70 of 100 economists see a rate cut in September

70 out of 100 economists predict a 25 basis points rate cut in September, with expectations for further cuts in 2024 according to Reuters survey.

Reuters Poll Summary:

70 of 100 economists anticipate a 25 basis points cut in the federal funds rate in both September and December, compared to 58 of 116 in June.
73 of 100 economists expect the Federal Reserve to cut rates by 50 basis points in 2024. 13 say 25 bps in 2024. 3 see no cuts in 2024

Analyst says the “forces underway for inflation to fall like a rock are in place”

Says its urgent that the Fed cut rates

Tom Lee is Fundstrat Global Advisors co-founder and head of research. Spoke with CNBC on Monday.

He is expecting inflation data from the US due on Friday (PCE) to be cooler.

“One print can be uncertain, but I think the forces underway for inflation to fall like a rock are in place”
there do not seem to be any new drivers of inflation
so it can surprise to the downside
expects inflation to fall sharply due to a recession in durable goods
said there is “urgency” for the Federal Reserve to begin cutting interest rates

The data is due on Friday 25 July.

US Q2 GDP data is due Thursday – Goldman Sachs expect +2.3%

Above consensus

Goldman Sachs have been concerned about the US economy drifting along in H1 but have been encouraged by recent retail sales and industrial production data.

GS now expect Q2 GDP growth at 2.3% (annualised)

“Our estimate implies that GDP grew at a 1.9% annualized pace in 2024H1 and domestic final sales grew at a 2.3% pace, easily beating gloomy consensus expectations at the start of the year and falling only a touch short of our own initial forecast”
Goldman forecasts consumer spending is set to grow by about 1.8% in the first half of 2024, only slightly below the year’s initial forecast.
Investment, including residential, business, and inventory investment, exceeded expectations, although housing activity slowed in Q2 following a Q1 surge prompted by lower mortgage rates.
Net exports fell short due to ongoing weaknesses in goods exports

Further out, GS expect:

2.6 %GDP growth in Q3 2024
2.4% in Q4 2024

Deutsche Bank expect further losses still to come for large cap tech stocks

Via CNBC, thoughts from Deutsche Bank on further losses still to come for large cap tech stocks:

rotation away from big tech into small caps that happened will be more than a short-term blip
market is still pricing in too much optimism about the growth areas of the market that have led most of the bull rally
overall equity positioning remains elevated
sharp rotations in positioning and flows away from (megacap growth) and tech and into other sectors and small caps, these have plenty of legs to run medium term.
“MCG & Tech positioning is still aligned with a continuation of extremely strong earnings growth and upgrades while we see a slowing as growth catches back down to the trend rate in place for the last 2 decades”

US Vice President Harris passes 1,976 delegates

Is now the Democratic Party’s Presumptive Nominee for November’s Presidential Election.

Media reports that US Vice President Harris passed 1,976 Delegates.

That’s a magic number, it means she is the Democratic Party’s Presumptive Nominee for November’s Presidential Election. The formalities of a vote are yet to take place of course, but with that number of delegates she appears to have it locked in.

Macquarie analysts reiterate that “Trump 2.0 will be a more inflationary policy regime”

Macquarie on populist economics

In a note on Monday analysts at the investment bank reiterated:

Trump’s expected policies are likely to be more inflationary
“Trump 2.0 will be a more inflationary policy regime, given restricted immigration, higher tariffs, and the extension of the Tax Cut and Jobs Act of 2025”
forecast US Treasury yields and the dollar to be higher
Trump regime may restrict immigration … the removal of low-cost labor supply may put upward pressure on wages
federal deficit … also likely to expand under Trump

JP Morgan is Leaning Towards a Hold at This Week’s BoC Meeting

Bank of Canada (BoC) announcement on Wednesday July 25

JP Morgan considers the upcoming Bank of Canada (BoC) meeting to be a close call but leans towards the BoC holding rates steady. Governor Macklem has previously emphasized a gradual easing approach to avoid jeopardizing progress on inflation. Recent data showing reacceleration in core inflation and wage firming, despite some labor market softening, suggests a compelling case for patience until September.

Key Points:

Governor Macklem’s Stance:
- Gradual Easing: Governor Macklem has advocated for a gradual easing cycle to avoid undermining progress made on inflation.
- Caution Against Rapid Cuts: Cutting rates too quickly could jeopardize the gains made in controlling inflation.
Economic Indicators:
- Core Inflation: The 3-month annualized growth of the BoC’s preferred core inflation measures has reaccelerated to the top of its target band since the June rate cut.
- Business Uncertainty: Businesses expressed more uncertainty about the inflation outlook in Q2.
- Wage Growth: Wages have firmed recently, despite some further softening in the labor market.
Market Expectations:
- Nearly Priced In: Markets are nearly fully priced for a 25bp cut this month.
- Balancing Act: The BoC may not want to surprise markets, but the economic evidence supports waiting until September.
Comparison with the Fed:
- Gradual Fed: The BoC may consider the gradual approach of the Fed as a factor in its decision-making process.

Conclusion:

JP Morgan leans towards the BoC holding rates steady at this week’s meeting, despite market expectations for a cut. Governor Macklem’s preference for gradual easing, alongside recent economic data, supports the case for patience until September. The BoC’s decision will balance market expectations with the need to ensure sustainable progress on inflation.

Commodities

Crude oil futures settle at $76.96

Down -$1.44 or -1.84%

Crude oil futures are settling at $76.96. That is down $-1.44 or -1.84%. The price moved to a 6-week low (lowest since June 7)and fell for the 4th consecutive day. The price moved down close to 8% from the high last Wednesday.

Later today, the private oil inventory data will be released ahead of the EIA data tomorrow. Crude oil inventory is expected to have a draw of -1.583M barrels. Gasoline is expected to show a draw of -0.391M barrels and distillates are expecting a build of 0.249M barrels. Oil inventories have seen 3 consecutive weekly drops in US oil inventories. High US oil demand is being offset by weak demand from China.

Silver hangs on at the June lows for now

The retreat since last week draws in some key support levels on the chart

Despite the sharp fall since last week, silver is still hanging in there in July trading. On the month itself, the precious metal is now down by 0.3% after erasing its monthly gains in the last five trading days. Price is now currently trading around $29.05, down 0.4% on the day. Still, buyers are not completely down for the count just yet.

The low today hit $28.67 and that calls into question the June lows at the $28.57-65 region. For now, that is still largely holding but a break below that will be a massive blow to the upside momentum since March.

The 61.8 Fib retracement level at $28.50 is one to watch, alongside the 100-day moving average at $28.35 currently.

TD on gold, wary of downside risks from many directions, including an “Asian buyer strike”

Downside level to watch for a liquidity vacuum

Amongst concerns TD ennumerate on gold are:

discretionary trader positioning “remains bloated” (to the long side), which means positioning risks are now asymmetrically skewed to the downside
froth above and beyond what is consistent with expectations of Fed cuts
Asia on a buyer’s strike
notable long liquidations on Shanghai Futures Exchange

TD says a “a liquidity vacuum could ensue with fewer buyers to offset potential liquidations”. As for levels TD says gold is vulnerable to a break south of US$2380/oz.

EU News

Major European indices close mixed. German DAX higher. France CAC and UK FTSE lower

Mixed results for the major European indices

The major European indices are ending the day with mixed results. A snapshot of the closing levels shows:

German DAX, +0.77%
France CAC, -0.31%
UK FTSE 100 -0.38%
Spain’s Ibex, +0.61%
Italy’s FTSE MIB +0.07%

10 year yields are trading modestly lower:

EU consumer confidence flash for July -13 vs -13.4 estimate

EU flash consumer confidence for July 2024
Prior month -14.0
consumer confidence -13 versus -13.4 estimate

Germany German 2-Year Schatz Auction

Actual: 2.730%
Previous: 2.800%

UK to shut down bibby stockholm migrant barge, telegraph reports

Britain’s new Labour government will shut down a barge used for housing migrants off the south coast of England, as part of an overhaul of the asylum system, the Telegraph newspaper reported on Tuesday.

ECB’s de Guindos: September is a much more convenient month for taking decisions

European Central Bank Vice President Luis de Guindos on Tuesday said that the most important element for the ECB in deciding on further rate cuts was confidence about the restoration of price stability at the end of next year.

In an interview with Spanish news agency Europa Press, de Guindos said, ‘The current level of uncertainty is huge, so we have to be prudent when taking decisions. When we say that we want to have more confidence, we mean more confidence that at the end of 2025 inflation will be at our definition of price stability, which is an inflation rate of 2% over the medium term. That’s the key question.’

The Governing Council decided to keep interest rates unchanged at the July meeting and wait until September, when more information would be available, to reassess its monetary policy stance, he said.

‘Data-wise, September is a much more convenient month for taking decisions than July was’, he said.

The ECB would continue to look at all incoming data, especially related to services, he said. ‘[T]he new macroeconomic projections will be the most important’ part of assessing convergence towards the 2% inflation target.

All measures of underlying inflation were decelerating, and wages had also started to slow down, he said.

‘And if wage increases moderate, services inflation – which is most sensitive to wage developments – will moderate too, and that will enable us to reach our 2% inflation target at the end of next year’, he said.

The political uncertainty in Europe called for ‘more cautious and prudent decision-making’, he said.

Asked about the fiscal situation in France, he avoided specifics, saying that it was ‘very important that all countries respect and implement the fiscal framework we have given ourselves in Europe.’

Asia-Pacific-World News

China’s loan collateral tweak will ease ‘asset famine’

China loosened Medium-term Lending Facility (MLF) collateral requirements on Monday

The People’s Bank of China (PBOC) said it would lower the collateral requirement for the medium-term lending facility (MLF) loan to increase the size of tradable bonds in the market. The move comes in the context of a record-long rally in China’s sovereign bond markets that has prompted repeated central bank warnings and measures to put a floor under falling yields and prevent a market bubble.

Chinese state media are talking it up today, saying it’ll alleviate the “asset famine” pressure on the bond market.

Info via Reuters

UBS says PBOC 0.1% rate cut on Monday maybe just a ‘down payment’

Via UBS on the Bank’s rate cuts:

The decision of the People’s Bank of China to cut rates by 0.1 percentage point was perhaps inevitable—even on official data, the domestic economy is lethargic.
Does a small change in borrowing costs really alter anything?
Arguably, China is not constrained by the cost of credit.
This is a signal of policymakers’ concerns over economic growth, and perhaps represents a downpayment on future action.

PBOC sets USD/ CNY central rate at 7.1334 (vs. estimate at 7.2746)

PBOC CNY reference rate setting for the trading session ahead

In open market operations:

PBOC injects 267.3bn via 7-day RR, sets rate at 1.7%
676 billion yuan mature today
and ths it’s a net drain of 408.7bn yuan

Australian Consumer Confidence Index, weekly survey, hits its highest in 6 months

ANZ-Roy Morgan Australian Consumer Confidence

A better showing for this indicator of consumer sentiment in Australia.

Comes in this week at 84.4

a 6 month high
prior 78.5

The 5.9 point rise is the largest rise in a week since April 2021

ANZ says:

Each of the subindices rose by at least 5pts

Japan senior government member says BOJ policy should be made clearer

Bank of Japan

Toshimitsu Motegi is Secretary-General of Japan’s ruling party the Liberal Democratic Party (LDP)

Report via the Nikkei that he thinks Bank of Japan policy should be made clearer.

South Korean June PPI +2.5% y/y, seventh straight month of higher

South Korean Producer Price Index for June 2024:

-0.1% m/m

prior +0.1%

+2.5% y/y

prior +2.3%

The Bank of Korea is eyeing rising inflation but there are signs it’ll begin to fall from August.

SK’s finance minister is thinking the same – says inflation may temporarily rebound higher in July, it should stabilise from August.

Cryptocurrency News

Ripple Stablecoin Unlikely to Face SEC Legal Issues; XRP Loses Key Support

Summary: Ripple is set to launch its stablecoin RLUSD with a compliance-first approach, making it unlikely to face legal issues from the Securities and Exchange Commission (SEC). Meanwhile, XRP has lost key psychological support at $0.60.

Key Points:

RLUSD Launch: The stablecoin will be launched towards the end of 2024, aiming to capture market share.
Compliance First: Ripple’s SVP Markus Infanger emphasized a compliance-first approach for RLUSD, reducing the likelihood of SEC legal issues.
SEC vs. Ripple Lawsuit: The lawsuit remains unresolved, and traders await settlement or a final ruling.
XRP Price Action: XRP has lost key support at $0.60, hovering around $0.5956.

Solana (SOL) Price Poised for a Bullish Reversal: Key Levels to Watch

Summary: The Solana (SOL) price is poised for a potential bullish reversal after successfully breaking above the descending trendline, which has been in place since March. This breakout occurred on July 19 and led to a 9% rally over the following two days.

Currently, SOL is facing resistance at the weekly level of $183.88 but maintaining its bullish bias. On-chain data indicates an increase in active wallets for SOL, highlighting growing ecosystem engagement and potential user adoption. If this trend continues, it could drive prices higher and lead to a rally.

Key Levels to Watch:

Weekly Resistance: Solana’s price has encountered resistance at the weekly level of $183.88. A close above this level would confirm a bullish reversal and potentially propel SOL to new highs.
Support Zone: The support zone around $155.22 serves as a critical area for potential reversals. This level aligns with the 50% price retracement from the swing low of $121 on July 5 to the swing high of $185.13 on July 21, trendline support, and daily support.
Daily Support: The daily support level is located at around $133.92. A close below this level would invalidate the bullish thesis.

If SOL bounces off the support zone ($155.22), it could rally approximately 18% to retest its weekly resistance at $183.88, potentially leading to a stronger uptrend.

ICYMI: US SEC approves first spot ether ETFs

Reuters citing two firms for the info

Reuters have the report, citing

The U.S. Securities & Exchange Commission has told at least two of the eight firms that have applied to launch the first U.S. exchange-traded funds (ETFs) tied to the price of ether that their products can begin trading on Tuesday.

Products from BlackRock, VanEck and six others will begin trading Tuesday morning

On 3 exchanges, Cboe, Nasdaq and NYSE

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Round up of today’s market news

ByBilals Tech