Weekly Market Update: Wild week Ends with Biden Candidacy Still in Question
Volatility resurfaced in a major way this week as investors absorbed a deluge of news making events. At the top of that list was a failed assignation attempt on Former President Trump over the weekend that reverberated across both the political landscape and markets. Odds of a Trump election victory and perhaps Republican sweep only climbed into the Republican convention, while the pressure on President Biden to bow out mushroomed. Small cap stocks continued to outperform megacap tech by a wide margin in a extension of the forced rotational trade that gripped markets last week. On Tuesday the Dow surged by more than 700 points helped in part by several Q2 earnings reports. June retails sales data bested expectations by a fairly wide margin suggesting the US economy may not be decelerating as quickly as some of the recent data has suggested. Nevertheless, the Fed's Kugler may have stoked the flames further by indicating she saw a rate cut coming, potentially sooner rather than later if the unemployment rate continues to move higher.
Midweek US stock markets rolled over in a big way and it was led by the semis despite strong earnings reports from TMSC and ASML. Both President Biden’s and former President Trump’s commentary appeared to be the catalyst that sent SMH below its 50-day moving average and the VIX above 16, both for the first time since April. Separately, US initial jobless claims rose to a 1-year high forcing the Fed’s Goolsbee to call the cooling jobs market “definitely an area of concern.” Also, the Fed's Beige book saw seven Districts report some level of increase in activity, five noted flat or declining activity—three more than in the prior reporting period. Equity markets continued to track lower into Friday’s session when worldwide IT outages for some enterprise Microsoft users cast a pall on trading. For the week the Dow rose 0.7%, S&P lost 2%, NASDAQ fell 3.7% and the Russell 2K added another 1.7%.
The ECB left rates unchanged as expected this week and Lagarde emphasized Sep is "wide open" in an attempt to illustrate the rate path has not been predetermined. Sticky UK core and services CPI data seemed to push back expectations for a BOE rate cut supporting the Pound. But Friday’s weak UK June retail sales data appeared to keep an Augusrt rate cut on table. The BOJ appeared to intervene on behalf of the Yen for the third time since the cooler than expected US CPI print earlier this month.
J&J and UNH helped power the Dow higher this week as both saw big movers up post earnings. Bank of America and Goldman Sachs also came in with significant earnings beats. Blackstone deployed $34B in the quarter which was the highest amount in 2-years while saying they believe they positioned to be the largest investor in AI infrastructure in the world. Homebuilders initially moved up on bullish comments and a beat by D.R. Horton. Domino's pizza slumped after US SSS missed estimates and management ratcheted back international expansion plans for this year. Netflix beat on the bottom line but top line growth and guidance seemed to disappoint. PPG industries and JB Hunt were just two of handful of disappointing cyclical/industrial firms globally to report disappointing results and or cut their outlook. On the other hand Steal Dynamics noted that inventories have plumbed to such low levels that prices is reached and inflection point to the upside. Consumers spent total $14B +10.5% y/y during Amazon prime days despite the offering steep discounts. On Friday the world was upended by bug in a software update from cybersecurity name Crowdstike causing wide spread IT outages for Microsoft windows users. CRWD shares sold of hard on real worries of lasting reputational damage and liability. Starbucks rallied late in the session report activist Elliott has taken a significant stake.
MON 07-15
(RU) Russia Dep PM Novak: Russia might decide by the end-July whether to reinstate a gasoline exports ban from Aug if the situation on the domestic fuel market gets tense
(UR) Hungary PM Orban reportedly sent Ukraine peace proposals to EU leaders after meeting Ukraine Pres Zelenskiy, Russia Pres Putin and Former US Pres Trump during last few weeks - press
(UR) Ukraine Pres Zelenskiy: Want Russia representative to join next peace summit; Aim to have all elements of peace plan ready for second summit to take place in Nov 2024; Changes in Ukraine govt being discussed; Ukraine will receive invitation to join NATO once the war has ended
(US) Reportedly 1.3M member Teamsters union considering withholding endorsement of both Biden and Trump candidacies - press [**Note: The Teamsters endorsed Biden in 2020]
(US) Newly-nominated Trump VP running-mate, J.D. Vance (R-OH): VP needs to support President in enacting agenda; China is the biggest threat to our country and we are completely distracted from it - first comments at RNC as running-mate
(US) Elon Musk says he commits ~$45M a month to pro-Trump SuperPAC – WSJ
(US) FORMER PRES TRUMP SELECTS SEN. J.D. VANCE (R-OH) AS VP RUNNING MATE - TRUTH SOCIAL POST
(US) US Pres Biden: I will be on the ballot 'unless I get hit by a train'; Will debate Trump again in Sept, as earlier agreed - interview comments [**Note: VP Harris also accepted debates with JD Vance]
(US) Reportedly Trump met with Robert F. Kennedy Jr. earlier today to seek possible endorsement - Politico (update)
(US) Fed's Goolsbee (non-voter for 2024): Rate cuts will soon be warranted; Last weeks mild June inflation reading makes him more confident that price pressures are easing in a way that supports lowering interest rates – WSJ
(US) Adobe Analytics estimates 2024 Prime Day expected to drive $14B online for US retailers
(US) JULY EMPIRE MANUFACTURING: -6.6 V -8.0E; New orders, Employment remain negative
BOSS.DE Reports prelim Q2 Rev €1.02B v €1.0B y/y; Cuts FY24 guidance, notes ongoing uncertainties regarding the future development of global consumer sentiment
BLK Reports Q2 $10.36 v $9.96e, Rev $4.81B v $4.86Be
BND *US 30-YEAR YIELD RISES ABOVE 2-YEAR YIELD FOR THE FIRST TIME SINCE JAN 2024
BRBY.UK Issues Q1 Trading Update: Retail Rev £458M v £589M y/y; Retail Comp Sales -21% v +18% y/y; Slowdown in trading continued into July; To halt dividends for FY25; Expect to report a H1 FY25 operating loss and FY25 operating profit to be below current consensus
GS Reports Q2 $8.62 v $8.52e, Rev $12.7B v $12.6Be; Notes improving, but complex environment
RWA.UK Issues Q2 Trading update: Q2 Net fee income £84.8M, -15% y/y, -12% y/y (cc); June Fees -18% (cc) y/y, whilst new job flow in the month was also weaker than expected
UHR.CH Reports H1 (CHF) Net 147M v 498M y/y, Op 204M v 500.2Me, Rev 3.45B v 3.77Be; Notes sharp drop in demand for luxury goods in China; Sees strong growth in Japan and the US in H2 2024
TUES 07-16
(DE) GERMANY JULY ZEW CURRENT SITUATION SURVEY: -68.9 V -74.8E; EXPECTATIONS SURVEY: +41.8 ADJ V +41.0E; Notes for the first time in a year, economic expectations for Germany are falling
(EU) ECB Q2 Bank Lending Survey: EU consumer loan demand rises for first time since 2022
(JP) BANK OF JAPAN (BOJ) ACCOUNTS DATA SUGGESTS ~¥2.1T (~$13B) OF FX INTERVENTION ON FRI, JULY 12TH - PRESS
(UR) Hungary PM Orban letter to EU leaders: It is generally observed that Russia-Ukraine military conflict will radically escalate in the near future; Trump ready to act as a peace broker immediately after his election
(US) Goldman Sachs analysts: Our base case remains for a September Fed rate cut, but we also see solid rationale for cutting as early as July
(US) Atlanta Fed GDPNow: Raises Q2 GDP forecast from 2.0% to 2.5% (update)
(US) US Pres Biden on conditions which would make him drop out of 2024 race: If I had some medical condition that emerged, if somebody, the doctors came and said you've got this problem, that problem; There is more to do, and I am reluctant to walk away - preview of interview to be aired on Wed, 22:00ET
(US) REPORTEDLY US PRES BIDEN TO ANNOUNCE SUPPORT FOR MAJOR SUPREME COURT CHANGES - Washington Post
(US) JUN NAHB HOUSING MARKET INDEX: 42 V 43E
(US) JUN ADVANCE RETAIL SALES M/M: 0.0% V -0.3%E; RETAIL SALES (EX-AUTO) M/M: +0.4% V +0.1%E; Retail Sales (control group) rose highest since March
(US) JUN IMPORT PRICE INDEX M/M: 0.0% V -0.2%E; Y/Y: 1.6% V +1.0%E
(US) Zillow: Inventory rose in June in all but five major metros while the nationwide deficit continues to shrink; Monthly home value growth, while still positive, hit a 14-year low for June as competition relaxes
005930.KR Reportedly plans new NAND flash production line at Pyeongtaek Plant 4 in South Korea; The move shows Samsung begins new investment in memory chips, ending prolonged output reduction - press
ADS.DE Reports better than expected prelim Q2 Rev €5.82B v €5.6Be, operating profit €346M; Raises FY outlook
BAC Reports Q2 $0.83 v $0.79e, Rev $25.4B v $25.2Be
CFR.CH Reports Q1 Rev €5.27B v €5.28Be; Notes low level of consumer confidence in China
FIVE Names Kenneth Bull as Interim CEO, effective immediately; Cuts Q2 $0.53-0.56 v $0.62e (prior $0.57-0.69), Rev $820-826M v $835Me (prior $830-850M)
JBHT TTN Earnings Call Summary: Cuts FY24 Capex $650-700M (prior: $800M-1.0B); On the demand side, Q2 felt more like what we're accustomed to seeing prior to the pandemic disruption; During June, did see a nice seasonal lift in volume, particularly toward the end of the month
LUV Partners with Amazon for Prime Day deal; Prime members can save up to 30% off base fares for travel on Southwest [**Note: the first airline partner for Amazon Prime Day]
PNC Reports Q2 $3.39 v $3.00e, Rev $5.41B v $5.30Be; Nonperforming loans +5%
UNH Reports Q2 $6.80 v $6.65e, Rev $98.9B v $98.7Be; Increases estimate for Cyberattack impact on FY24 EPS from $1.15-1.35/shr to $1.90-2.05/shr; Intends to sell remaining South American ops
WED 07-17
(US) Former House of Representatives speaker Pelosi reportedly told Pres Biden that polls show that he Cannot beat Trump; Pelosi said to have told she and other Democratic lawmakers worry that he’s dragging down the party; One Pelosi ally said it was possible she would press Biden publicly to give up his spot atop the Democratic ticket - US press [**Note: Axios piece earlier said Biden respects Pelosi's iconic stature, "he would listen to her"]
(AU) AUSTRALIA JUN EMPLOYMENT CHANGE: +50.2K V +20.0KE; UNEMPLOYMENT RATE: 4.1% V 4.1%E
(NZ) New Zealand sells total NZ$500M vs. NZ$500M indicated in 2029, 2034 and 2037 bonds
(UK) King's Charles III Speech: UK priority is planning reform, housebuilding; UK govt to legislate to ensure all significant tax and spending changes are subject to independent assessment by OBR; Will legislate to strengthen audit and corporate governance; UK economic policy to be based on stability - comments on first program for UK Labour government
(UK) JUN CPI M/M: 0.1% V 0.1%E; Y/Y: 2.0% V 1.9%E; Services CPI remains sticky
(US) JUN HOUSING STARTS: 1.353M V 1.300ME (bounce from pandemic lows); BUILDING PERMITS: 1.446M V 1.400ME
(US) Mid-July Manheim wholesale used vehicle Index: 199.7 v 196.1 prior; +1.8% m/m, -5.7% y/y
(US) TTN Note: During Tue, July 16th speech at N.A.A.C.P. conference, US Pres Biden said "Kamala Harris is not only a great vice president; She could be president of the US.”
(US) Unidos Official: US Pres Biden tests positive for Covid-19, noted that Biden said he could not appear at the Unidos event
ALLY Raises lower-end FY24 NIM 3.30% v 3.35% y/y (prior 3.25-3.30%); Peak loss timing of 2022 vintage is key driver of H1 2024 net charge-offs – slides
ANTO.UK Reports Q2 copper production 155.3Kt, +20% q/q; Sees FY24 production towards lower-end of outlook
ASML.NL Reports Q2 €4.01 v €3.54e, Rev €6.24B v €6.00Be; Q2 bookings strong, but guides Q3 below estimates; Still expect industry recovery to continue in H2 2024
BA IAM Union confirms that Seattle area factory workers approve strike with vote of >99% - financial press [**Note: IAM workers contract expires on Sept 12th]
CRM Announces Einstein Service Agent, Salesforce’s first fully autonomous AI agent; Einstein Service Agent interacts with large language models (LLMs) by analyzing the full context of the customer’s message and then autonomously determining the next actions to take
ELV Reports Q2 $10.12 v $9.99e, Rev $43.9B v $43.0Be; Affirms FY24
GTLB Said to be exploring a sale after attracting acquisition interest, including from Datadog – press
KRO Reports prelim Q2 Rev $495-510M v $568Me; Implemented TiO2 selling price increases – filing
JNJ Reports Q2 $2.82 v $2.71e, Rev $22.5B v $22.4Be; Cuts FY24 eps outlook as costs associated with recent strategic acquisitions more than offset improved performance
ROG.CH Unit Genentech announces positive Phase I results of oral once-daily GLP-1 receptor agonist CT-996 for treatment of people with obesity; Adj mean weight loss of -6.1% within four weeks; Notes CT-996 could potentially be dosed without regard to meal timing, thereby affording greater dosing flexibility for patients; Could potentially be used for oral weight maintenance therapy following weight loss induced by injectables
STLD Reports Q2 $2.73 v $2.67e, Rev $4.63B v $4.42Be; Cust inventories 'incredibly low' - Believe steel pricing has reached a pivot point to the upside
SYF Reports Q2 $1.55 v $1.35e, Rev $4.5B v $4.44Be
THRS 07-18
(EU) EU Commission President Von Der Leyen: I will launch clean industry deal to cut emissions and energy prices; Will appoint a Commissioner for Defense; Will focus on building a "True European Defence Union" over next five years - guidelines for next 5 years
(EU) ECB Chief Lagarde: Question of what to do in September 'wide open'; Determined not to have predetermined rate path - press conf comments
(EU) EU Commission President Von Der Leyen wins EU parliament vote to remain head of the commission
(EU) ECB LEAVES KEY RATES UNCHANGED; AS EXPECTED
(EU) ECB hawks said to be open to September rate cut provided upcoming data confirm disinflation is underway - press citing ECB sources
(EU) ECB officials reportedly consider if only one additional cut is feasible in 2024 - press
(FR) French lawmakers reelected the centrist candidate Braun-Pivet from Macron’s party to a second term leading the National Assembly; Three voting rounds were needed in indication of divisions – press
(JP) BANK OF JAPAN (BOJ) ACCOUNTS DATA SUGGESTS NO NEW INTERVENTION ON JULY 17TH – PRESS
(JP) JAPAN JUN NATIONAL CPI Y/Y: 2.8% V 2.9%E; CPI EX-FRESH FOOD (CORE) Y/Y: 2.6% V 2.7%E
(RU) Russian Deputy Foreign Min Ryabkov: Russia does Not exclude deployment of missiles with nuclear warheads in response to deployment of US missiles in Germany
(UK) UK Chancellor of the Exchequer (Fin Min) Reeves: Difficult decisions ahead to fix UK economy; Want to make it easier for UK firms to sell in EU; New UK fiscal lock to prevent Truss-style turmoil - tv interview
(US) JULY PHILADELPHIA FED BUSINESS OUTLOOK: 13.9 V 2.9E (above all estimates); New Orders: +20.7 v -2.2 prior (highest since March 2022)
(US) Reuters citing one Biden campaign official source on Biden candidacy: "Yes, it's over. Just a matter of time"; Another source said "Biden's soul searching is actually happening, I know that for a fact... He's thinking about this very seriously."
(US) INITIAL JOBLESS CLAIMS: 243K V 229KE (1-year high); CONTINUING CLAIMS: 1.867M V 1.856ME (highest since early Mar 2024)
(US) TTN Reminder: International Longshoremen's Association (ILA), which represents 45,000 dockworkers at US East and Gulf Coast ports, last week highlighted a lack of progress in negotiations with the United States Maritime Alliance (USMX) over a new 6-year master contract; Tier1 analysts see the lack of progress heightening the risk for a potential strike in October 2024 [**Note: current ILA contract set to expire on Sept 30th, 2024]
(US) Fed's Goolsbee (non-voter for 2024): We've had better months of inflation data; Inflation fight is not done, but feels much better
(US) Elon Musk denies speculation that he has committed ~$45M a month to pro-Trump SuperPAC - post on X
(US) Redfin: Pending sales down 5.6% y/y, the biggest decline in eight months; Redfin’s Homebuyer Demand Index—a measure of requests for tours and other buying services from Redfin agents—is down 15%; Daily average mortgage rates have dropped to their lowest level since February after last week’s cooler-than-expected inflation report
(US) Atlanta Fed GDPNow: Raised Q2 GDP forecast from 2.5% to 2.7% (update from July 17th)
005930.KR Reportedly Samsung union (~30K workers, about 25% of Samsung total) and Samsung management may resume wage talks as its strike enters into 11th day - press
005930.KR Follow up: Management re-starts talks with Samsung union (as expected) - financial press
ABBN.CH Reports Q2 Net $1.10B v $1.03Be, Rev $8.24B v $7.39Be; Orders miss estimates
DHI Reports Q3 $4.10 v $3.80e, Rev $9.97B v $9.68Be; Announces $4.0B share buyback
DHI Guides Q4 home sales gross margin similar q/q; Construction times have been falling; Buyer incentives remain elevated - earnings call
DPZ Reports Q2 $4.03 v $3.70e, Rev $1.10B v $1.10Be; To miss FY24 international store growth goal citing challenges in both openings and closures being faced by Domino's Pizza Enterprises
TSM *CFO: GUIDES Q3 REV $22.4-23.2B V $22.5BE (V $17.3B Y/Y); RAISES FY24 REV OUTLOOK NOTING "DEMAND IS SO HIGH AND ITS CUSTOMERS DOING VERY WELL" - EARNINGS CALL
MAN Reports Q2 $1.24 v $1.27e, Rev $4.52B v $4.52Be; Notes permanent recruitment activity softened slightly further q/q and employers in North America and Europe continue to remain cautious
NOKIA.FI Reports Q2 €0.06 v €0.05e, Adj Op €423M v €372Me, Rev €4.47B v €4.84Be; Board now intends to accelerate our on-going €600M buyback program with the view to completing it by the end-2024 v end-2025 prior
NFLX Ads will become a "meaningful contributor" to Rev by 2026; ARM on Ad tier lower than Non-Ad tier - earnings call
NFLX Reports Q2 $4.88 v $4.70e, Rev $9.56B v $9.53Be; To start facing out lowest-cost ad-free Basic plan in the US and France; Notes ad tier membership +34% q/q
NOVN.CH Reports Q2 Core EPS $1.97 v $1.85e, Rev $12.5B v $12.2Be
OPENAI.IPO Reportedly in talks with Broadcom about developing new AI chip, discussions are in an early stage - The Information
PPG Reports Q2 $2.50 v $2.48e, Rev $4.79B v $4.91Be; Cuts EPS outlook and guides Q3 below est; Notes global automotive builds weakened as the quarter progressed; US economic conditions have remained subdued in several end-use markets
TSM Reports Q2 (NT$) Net 247.8B v 238.8Be, Op 286.6B v 202.0B y/y, Rev 673.5B v 673.5B prelim (v 480.8B y/y)
WAL Reports Q2 $1.75 v $1.71e, NII $656.6M v $550.3M y/y
FRI 07-19
(UR) Hungary Foreign Min: Ukraine's decision to block Lukoil oil transfers to Hungary and Slovakia through Ukraine seriously endangers safety of supply over long run
(US) BOFA INSTITUTE: WEEK-TO-JULY 13TH TOTAL CARD SPENDING -1.6% Y/Y V -0.5% AVERAGE IN JUNE; The drop compared to last week was likely at least partly due to the impact of Hurricane Beryl
REPORTEDLY 'MANY' WINDOWS USERS GLOBALLY FACE MASSIVE OUTAGE AND EXPERIENCE BLUE SCREEN OF DEATH (BSOD) ERRORS DUE TO NEW CROWDSTRIKE UPDATE - PRESS
AXP Card Member Loans 30+ Days Past Due at 1.2% v 1.3% q/q v 1.5% pre-pandemic - earnings slides
CMCSA *SKY NEWS CHANNEL HAS NOT BEEN ABLE TO BROADCAST LIVE THIS MORNING – PRESS
CMCSA *SKY NEWS CHANNEL BACK ON AIR AFTER OUTAGE – PRESS
CRWD *REPORTEDLY NOW IN THE PROCESS OF ROLLING BACK THE UPDATE CAUSING OUTAGES GLOBALLY - CNBC [*Note: earlier, major US airlines grounded all flights, UK's LSE and major oil/gas trading platforms had tech issues, EU airports reported system incidents and UK supermarkets, key Australian banks, media and govt offices were experiencing outages]
CRWD *CEO: THIS IS NOT A SECURITY INCIDENT OR CYBERATTACK; ISSUE HAS BEEN IDENTIFIED, ISOLATED AND A FIX HAS BEEN DEPLOYED - COMMENTS ON X
ELUXB.SE Reports Q2 (SEK) adj Op 419M v -124M y/y, Rev 33.8B v 32.7B y/y; Market conditions in Q2 remained similar to the most recent quarters; Demand in North America has been stable year to date, supported by the aggressive pricing environment; Notes it outperformed the market in Europe and North America
HBAN Reports Q2 $0.30 v $0.28e, Rev $1.82B v $1.81Be
LLY Mufengda (tirpatide injection) approved by National Medical Products Administration (NMPA) for indication of long-term weight management
LSEG.UK *REPORTEDLY LSE PLATFORMS SUFFER OUTAGE PREVENTING PRESS RELEASES FROM BEING PUBLISHED – PRESS
MSFT *Statement: Underlying cause of global outage has been fixed
RF Reports Q2 $0.52 v $0.49e, Rev $1.78B v $1.75Be; Notes favorable credit trends
SBUX Reportedly Activist Elliott discloses large stake; Aims to push Starbucks privately to boost stock price - WSJ
TRV Reports Q2 $2.51 adj v $2.22e, Rev $11.3B v $11.5Be; Continue to be very confident in the outlook
WPRO.IN CEO: Seeing momentum in consumer business in US; No impact from Crowdstrike to WiPro - post earnings comments