Before the Open (Aug 15-19)

Good morning. Happy Friday.

The Asian/Pacific markets were mostly weak. China, South Korea, India, New Zealand, Malaysia and Singapore all posted moderate lossees. Europe, Africa and the Middle East are currently mostly down. Poland, France, Germany, South Africa, Hungary, Spain, the Netherlands and Italy are leading to the downside. Futures in the States point towards a moderate gap down open for the cash market.

————— Leavitt Brothers Overview –>> here —————

The dollar is up. Oil is down; copper is up. Gold and silver are down. Bonds are down. Bitcoin is down.

Stories/News from Seeking Alpha…

Housing crunch

“New Episode Alert! Weekend Bite, a Seeking Alpha original series. This week we’re joined by Seeking Alpha’s Head of Quantitative, Steven Cress. We dive in with Steve about what Alpha Picks by Seeking Alpha is, and how his team designed the product to make investing easier for all investors.”

This week’s housing data did much to confirm a slowdown sought by the Federal Reserve. Along with what may have been peak inflation last week, cooler housing data is another piece in the puzzle as the FOMC tightens conditions. The outlier remains the labor market, where jobless claims dropped this week and payroll growth remains strong.

By the numbers: the August NAHB measure of homebuilder confidence fell below 50 for the first time since May 2020. Housing starts for July dropped 9.6%, more than expected, (although permits dropped less than forecast). And most recently the NAR reported that July existing home sales fell 5.9%, more than anticipated.

“Existing home sales have now fallen for six months in a row, and are 26% lower than the January peak,” Pantheon Macro Economist Ian Shepherdson said. “But the bottom is still some way off, given the degree to which demand has been crushed by rising rates; the required monthly mortgage payment for a new purchaser of an existing single-family home is no longer rising, but it was still up by 51% year-over-year in July.”

“To make matters worse, the market is now grappling with rapidly rising supply as well as crumbling demand,” he added. “Our measure of seasonally adjusted existing single-family homes for sale rose 6% in July, but it has a long way to go before it reaches pre-Covid levels.”

“Home sales likely have further to fall,” Odeta Kushi, deputy chief economist at First American Financial, tweeted. “Mortgage applications so far in August point to another decline in existing-home sales. This month’s number of 4.81 million puts us at about 2014 sales level.” (See chart at bottom.)

Fed reaction: The market predictions for the Fed’s move next month have been volatile through the week and there is still Jackson Hole coming next week. But while chatter from members remains hawkish, after all the housing figures expectations are back to a 65% chance of 50-basis-point hike over 75.

“Fed officials pay particularly close attention to the housing market and are monitoring how higher mortgage rates are impacting home sales and housing prices in order to gauge how tighter monetary policy is affecting the broader economy,” Wells Fargo economists wrote.

In the July FOMC minutes just released, members said housing activity “had slowed notably.”

“We agree with the Fed’s assessment that home sales likely have further to fall,” Wells Fargo said. “As of August 12, mortgage applications for purchase have declined on a week-to-week basis in seven of the previous eight weeks.”

Retail resilience? While housing is struggling there were also signs for some optimism. Results from Home Depot (HD) and Lowe’s (LOW) showed that the home improvement consumer is “holding up quite well,” according to Oppenheimer analyst Brian Nagel.

“The single most startling number in the July retail sales report was the 1.5% jump in the building materials component, the best performance in the sector since January,” Pantheon’s Shepherdson said. “But don’t be fooled; this is noise, not signal. The monthly data are erratic, but the trend is clear.”

“In short, the worst is yet to come for housing-sensitive retailers,” he said. “Their sales will fall even as other retailers and providers of domestic services benefit from the rebound in discretionary incomes now underway as gas prices drop and payrolls continue to rise rapidly.” (1 comment)

Bed Bath & Beyond plunge

Bed Bath & Beyond (BBBY) is down 40% in premarket trading after GameStop Chairman Ryan Cohen’s RC Ventures cut its entire stake in the retailer.

RC Ventures reduced its stake to zero, according to a regulatory filing. RC Ventures sold almost 8 million shares on Tuesday and Wednesday at prices ranging from $18.68 to $29.22. The news comes after it was disclosed on Thursday that RC Ventures had filed for the right to sell its 9.45 million shares of Bed Bath & Beyond through JP Morgan Securities.

The company has tapped restructuring experts Kirkland & Ellis as legal help, Bloomberg reports, with a focus on addressing the firm’s debt load. The firm will advise the retailer on options for raising new money, refinancing its debt, or both. (138 comments)

Starbucks COO exit

Starbucks (SBUX) Chief Operating Officer John Culver is leaving his post, according to an SEC filing. His departure, effective October 3, comes after he spent 20 years with the company, working his way from VP of food service to his present role. Culver’s role is to be eliminated, according to the report. Instead, Culver’s subordinates will report directly to either CEO Howard Schultz or chief strategy and transformation officer Frank Britt.

Culver’s exit comes only two months after North America Chief Rossann Williams left her post and four months after former General Counsel Rachel Gonzalez departed. The company continues to seek a replacement for former CEO Kevin Johnson, who retired in April. Only external candidates are being considered for the role, according to Schultz. (20 comments)

Big Ten’s Big deal

The Big Ten Conference has struck a deal for media rights to its college sports that is reportedly worth up to $7.5B, amping up an already competitive arms race in sports programming as power among colleges continues to concentrate in a few buckets.

The conference reached a seven-year deal with CBS (PARA) (PARAA), NBC (CMCSA), Fox (FOX) (FOXA) and NBCU streaming platform Peacock, and will also show sports on the Big Ten Network and Fox Sports 1. The approach resembles the NFL’s stance of spreading media rights over several partners, and the breadth will “place conference football, women’s and men’s basketball and Olympic sports student-athletes on the biggest stage and provide fans with the most exciting matchups across traditional over-the-air linear television and direct-to-consumer streaming,” the Big Ten says. (76 comments)

AMAT’s solid guidance

Applied Materials (AMAT) posted third-quarter results that beat expectations and issued guidance that seemed to stave off fears of a slowdown. For the period ending July 31, Applied Materials said it earned $1.94 a share, on $6.52B in revenue. Gross margins ticked down year-over-year to 46.1% from 47.9%.

The company also said that it expects fourth-quarter earnings to be between $1.82 and $2.18 per share, with the midpoint of $2 above the $1.94 analysts were anticipating. Fourth-quarter sales are expected to be between $6.25B and $7.05B. (19 comments)

Today’s Economic Calendar
9:00 Fed’s Barkin Speech
10:00 E-Commerce Retail Sales
10:00 Quarterly Services Report
1:00 PM Baker-Hughes Rig Count

What else is happening…

Apple (AAPL) could see another 30% upside if it surpasses its December 2021 highs.

Elon Musk reportedly seeks ad tech company data in lawsuit with Twitter (TWTR).

AMC (AMC) responds to Cineworld (OTCPK:CNWGY), touting liquidity and Q4 rebound.

MoffettNathanson downgrades Verizon (VZ).

Court orders Starbucks (SBUX) to reinstate union-supporting workers in Tennessee.

Shell (SHEL) slashes production at Germany’s biggest oil refinery.

White House making additional 1.8M doses of monkeypox vaccine available. (BILL) stock jumps after strong fiscal Q4 results, robust guidance.

Robinhood (HOOD) net cumulative funded accounts unchanged in July.


Good morning. Happy Thursday.

The Asian/Pacific markets leaned down. Indonesia did well, but Japan, China and Hong Kong were weak. Europe, Africa and the Middle East currently lean up. Poland, Turkey, Germany, Norway, Italy, Israel and Sweden are up; Denmark, the UAE and Hungary are down. Futures in the States point towards a slight positive open for the cash market.

————— VIDEO: State of the Market —————

The dollar is up. Oil and copper are up. Gold and silver are up. Bonds are up slightly.

Stories/News from Seeking Alpha…

iPhone 14

Apple (AAPL) is looking at holding its annual fall product event, including the announcement of its iPhone 14 product line, on Sept. 7, according to a Bloomberg report.

The iPhone 14 lineup may include four models, including a Pro and Pro Max, which some analysts expect will both receive a $100 price increase over last year’s iPhone 13 Pro and Pro Max models. The event is likely to see the unveiling of three Apple Watch models and perhaps new Macs and iPads as well. Bloomberg also reported that the new Apple products could reach stores on Sept. 16.

Supply chain optimism: Separately on Wednesday, investment firm Wedbush Securities said Apple was seeing a “further slight improvement” in its supply chain.

Analyst Dan Ives, who has an Outperform rating on Apple, boosted his price target on the company’s stock to $220 a share from $200. Ives noted that the initial order of 90M iPhone 14 units has “stayed firm”, and despite the weakening economic conditions, strong demand is still there for Apple products. Credit Suisse upgraded Apple to Outperform on Tuesday, citing the company’s massive user base of almost 2B installed devices. (20 comments)

Fed minutes

Federal Reserve policymakers discussed downside risks to GDP growth, including the possibility tightening financial conditions “would have a larger negative effect on economic activity than anticipated,” according to the minutes of the Federal Open Market Committee’s July 26-27 meeting. In other words, its rate hikes could tip the U.S. economy into recession.

Other downside risks included more pandemic-related disruptions or that “geopolitical and global economic developments would lead to additional adverse economic or financial disturbances.”

While the July 75 basis point rate hike brought the nominal federal funds rate to within the range of the policymakers’ estimates for the longer-run neutral rate, “with inflation elevated and expected to remain so over the near term, some participants emphasized that the real federal funds rate would likely still be below shorter-run neutral levels after this meeting’s policy rate hike.”

When reading through the minutes, two things stood out for Don Calcagni, chief investment officer at Mercer Advisors: a tone that was softer than expected and the comment that its policy rate range was close to the neutral level – the point at which the rate neither hinders nor fuels economic growth. The second point “suggest that perhaps the Fed will be taking its foot off the brake,” Calcagni said in an interview with Seeking Alpha. (130 comments)

Climate liability

In a setback for big oil companies such as Exxon Mobil (XOM), Chevron (CVX) and Shell (SHEL), the 3rd U.S. Circuit Court of Appeals ruled on Wednesday that lawsuits brought by Delaware and Hoboken, N.J., seeking compensation for the impacts of climate change should be decided in state, not federal courts.

The decision is the latest procedural victory by state and municipal governments, which have sought to bring climate liability cases against major oil companies under state laws, after earlier efforts under federal laws were unsuccessful.

It was the sixth such appeals court ruling this year to keep climate cases by states and cities in state court and represents a growing legal threat to the oil industry. (172 comments)

Man United in play?

Sale talks around a stake in soccer club Manchester United (MANU) hit a new phase, with a report that the owning Glazer family has entered talks with Apollo Global Management (APO) over buying a minority stake in the team.

The Glazers have entered exclusive discussions with Apollo over the investment, the Daily Mail reported, adding that any such deal wouldn’t be wrapped up until next month at the earliest. MANU rose 6% Wednesday amid reports that one of Britain’s richest men is interested in a piece of the club action.

Billionaire Sir Jim Ratcliffe, founder of Ineos Group, is “definitely a potential buyer,” a spokesman says according to The Times of London. The under-fire ownership of the team is reportedly open to a minority investment, though it’s not ready to cede control of the team. The Glazers have faced growing fan protests over their ownership and there are calls for fans to boycott the next home game. (6 comments)

Today’s Economic Calendar
8:30 Initial Jobless Claims
8:30 Philly Fed Business Outlook
10:00 Existing Home Sales
10:00 Leading Indicators
10:30 EIA Natural Gas Inventory
1:20 PM Fed’s George Speech
1:45 PM Fed’s Kashkari Speech
4:30 PM Fed Balance Sheet

What else is happening…

Pharmacy chains ordered to pay ~$650M to Ohio counties for opioid damages.

Third Point says Disney (DIS) is largest recent addition to its portfolio.

Penn Entertainment (PENN) takes Barstool Sports stake to 100%.

Cisco (CSCO) pops as guidance, Q4 results top expectations amid concerns of slowdown.

Netflix (NFLX) set to block downloads on no-frills ad-supported version.

Supertanker rates surge to two-year high on record U.S. crude oil exports.

WWE’s (WWE) McMahon paid unrecorded $5M to Trump charity.

Tesla (TSLA) is closer to opening up Superchargers stations to other EV brands.


Good morning. Happy Wednesday.

The Asian/Pacific markets leaned up. Japan, China, Hong Kong and India posted gains; South Korea and the Philippines were weak. Europe, Africa and the Middle East are currently mostly down. Denmark, Turkey, the UAE and Saudi Arabia are up; Poland, France, Germany, South Africa, Finland, Norway, Hungary, Spain, the Netherlands, Israel, Austria, Sweden and the Czech Republic are down. Futures in the States point towards a moderate down open for the cash market.

————— VIDEO: State of the Market —————

The dollar is flat. Oil is flat; copper is down. Gold is down; silver is up. Bonds are down.

Stories/News from Seeking Alpha…

50 or 75?

It’s hard to find a week where the Fed won’t steal the spotlight. Later today, the markets will get a more detailed view of what was discussed at the Federal Reserve’s July 26-27 meeting, when the FOMC raised its policy rate by 75 basis points for a second-straight meeting, as it struggles to bring inflation under control.

Fed minutes arrive at 2 p.m. ET.

Tame inflation data last week shifted expectations for September’s hike to 50 basis points from 75. But mixed data this week on housing and industrial production has pushed the odds back to around 50-50 while the Treasury yield curve (US10Y) (US2Y) continues to flatten.

Last month, Fed Chairman Jerome Powell provided some more details at his post-decision press conference, saying that another “unusually large increase could be appropriate” at its next meeting, which will be Sept. 20-21. He also commented that the FOMC hasn’t yet decided on when it will slow its rate hikes. Fed watchers will be on high alert for any hints of when the committee may slow down their rate-hiking pace.

As of their June meeting, the median expectation was for the federal funds rate target range to be at 3.25%-3.50% at the end of the year. That’s 100 bps higher than its current range of 2.25%-2.50%. In early August, St. Louis Fed President James Bullard, one of the more hawkish Fed members, estimated the central bank will need to raise it to 3.75%-4.0% by the end of the year.

“With the uneven, but generally positive, data that has come in over the past 30 days or so, we believe the discussion during the recent Fed meeting was animated,” Brendan Connaughton, managing partner at Catalyst Private Wealth, told Seeking Alpha. “We are still in the camp that the Fed will go 75 bps at the next meeting” due to the recent tone of Fed member comments, he said.

Any talk of recession will be of particular interest. Although the officials didn’t provide updates to their economic projections at this meeting, there’s sure to be discussion of how the economy has changed since their last meeting. Keep in mind the meeting occurred just before the Commerce Department announced that GDP fell for a second straight quarter in Q2.

What does this mean for markets? Given the time of year and the earnings that are still being reported, Connaughton doesn’t see big moves in either direction for the capital markets in the near term, i.e. three months. “Net-net, we are constructive on the equity markets generally, at least domestically,” he said. “We are less attracted to bonds, although still believe in their risk-mitigating characteristics.”(7 comments)

NatGas record

U.S. natural gas futures ended Tuesday’s session at 14-year highs, lifted partly by soaring natural gas prices in Europe that have climbed in recent days to their highest levels since Russia’s invasion of Ukraine, and just shy of all-time highs.

Front-month Nymex natural gas (NG1:COM) for September delivery settled +6.9% to $9.329/MMBtu, the best closing level since August 2008; gas was trading at ~$66/MMBtu in Europe and a record $57 in Asia.

Other factors contributing to gains in U.S. natural gas include a heat wave in California, higher air conditioning demand than previously expected, forecasts for more hot weather, and technical and option trading.(69 comments)

Musk United?

Tesla (TSLA) founder Elon Musk stirred up soccer fans and investors late Tuesday when he tweeted that he was buying Manchester United (MANU). Four-and-a-half hours later he said that he was joking.

“Also, I’m buying Manchester United ur welcome,” Musk replied in a thread.

“No, this is a long-running joke on Twitter. I’m not buying any sports teams,” he replied later. “Although, if it were any team, it would be Man U. They were my fav team as a kid.”

Musk may think the joke is obvious given he is already embroiled in a legal battle over his deal to buy Twitter (TWTR) itself. And the initial tweet came at 8:01 p.m. ET, right after the end of after-hours trading, so it didn’t move the share price of MANU. But the SEC isn’t known for its sense of humor when it comes to takeover tweets that can affect the markets and Musk faced fraud charges for his 2018 tweet that he would take Tesla private at $420 per share.(15 comments)

Walmart lift

A profit guidance lift from Walmart (WMT) helped the retail sector outperform in early trading on Tuesday.

While the retail giant issued a profit warning last month due to concerns over consumer spending, WMT execs said with its earnings report that it was seeing a trade-down effect with shoppers at the higher income levels buying more groceries from Walmart. Back-to-school sales were also noted to be off to a strong start and the early outlook for the holiday season was positive.

Morgan Stanley said the retail giant seemed to show that inventory and markdown issues were under control and sees more upside than downside for the near term.(5 comments)

To infinity and Bed Bath & Beyond

Bed Bath & Beyond (BBBY) shares soared nearly 30% on Tuesday amid an ongoing upswing in meme stocks. The sharp rise in shares adds to an over 300% run for the stock since the end of July.

At one point in the session, BBBY was up nearly 79% for the day. The furious activity also prompted a trading halt for volatility. The rally came as the stock continued to draw attention from short squeeze-eyeing meme traders following the disclosure of call-buying from GameStop (GME) chairman Ryan Cohen’s venture capital firm RC Ventures. Per the disclosure, the Chewy founder bought January 2023 calls on more than 1.6M shares with strike prices between $60 and $80, fueling a squeeze.(104 comments)

Today’s Economic Calendar
7:00 MBA Mortgage Applications
8:30 Retail Sales
9:30 Fed’s Bowman Speech
10:00 Business Inventories
10:30 EIA Petroleum Inventories
1:00 PM Results of $15B, 20-Year Bond Auction
2:00 PM FOMC Minutes
2:20 PM Fed’s Bowman Speech

What else is happening…

Food prices push UK inflation into double-digits and forty-year high.

Apple (AAPL) to start collecting ‘Netflix tax’ in Chicago next month.

FuboTV (FUBO) investor day tackles path to profit.

Trump SPAC Digital World (DWAC) gains even amid effort to delay earnings report.

Cassava Sciences (SAVA) surges 22% following large buy.

Shell (SHEL) to shut key Gulf of Mexico oil pipelines for maintenance.

Apple’s (AAPL) massive base of devices, loyal users at heart of Credit Suisse upgrade.

Endo (ENDP) files for Chapter 11 bankruptcy.

Steeper cord-cutting likely to weigh on pay TV media – Wells Fargo.

After warnings, digital ads’ second quarter could have been worse – Bernstein.


Good morning. Happy Tuesday.

The Asian/Pacific markets leaned up. India, Malaysia, Indonesia and the Philippines did well; Hong Kong was weak. Europe, Africa and the Middle East are currently mostly up. The UK, Russia, Greece, South Africa, Finland, Norway and Spain are posting solid gains; Turkey and Switzerland are down. Futures in the States point towards a down open for the cash market.

————— VIDEO: The Market is in Great Shape – Here are Recent Trades —————

The dollar is up. Oil is up; copper is down. Gold is down; silver is up. Bonds are down.

Stories/News from Seeking Alpha…

Whale watch

Growth stocks were among the favorites for hedge fund whales in the second quarter. Monday was the deadline for hedge funds with more than $100M in assets under management, as well as other institutional investors and endowments, to report certain stock holdings through 13F filings. The 13F season gives investors a glimpse into where the big players are betting, albeit with dated information.

A number of hedge funds and money managers looked to pick up beaten-down growth stocks, such as tech, in Q2. From April to June, the Nasdaq 100 (NDX) (QQQ) fell more than 22%, while the S&P 500 (SP500) (SPY) was down about 16.5%.

Who’s buying what?: Among the big-name disclosures, Warren Buffett’s Berkshire-Hathaway (BRK.A) (BRK.B) boosted its stake in Activision (ATVI) to ~68.4M shares from 64.3M. It also exited its stake in Verizon (VZ).

Soros Fund Management made a new investment in Tesla (TSLA) (~29.9K shares) and disposed of its stakes in MGM Resorts (MGM) and Solid Power (SLDP).

David Tepper’s Appaloosa took new positions in Salesforce (CRM), buying 200K shares, Alibaba (BABA), acquiring 100K shares, and Netflix (NFLX), with 50K shares, during Q2.

In addition, Elliott Investment Management started a stake in Pinterest (PINS) and shed Twitter (TWTR), Ray Dalio’s Bridgewater started positions in Rivian (RIVN) and Amazon (AMZN), the Gates Foundation turned to autos with Vroom (VRM) and Carvana (CVNA), and Carl Icahn eyed Bausch + Lomb (BLCO).

Dan Loeb takes aim at Disney: It wouldn’t be 13F season without some hedge fund saber rattling. Dan Loeb’s Third Point Capital revealed a new stake of 1M shares in Disney (DIS) in its filing, but added in a letter directly to the company that in recent weeks it had “repurchased a significant stake.”

Third Point lobbied for a refresh of the Disney board, made its case for an ESPN spinoff and also asked the FTC for permission to engage directly with the company.

Disney defended the composition of its board and noted that members have an average tenure of just four years. (5 comments)

WeWork founder backing

Andreessen Horowitz, the prominent Silicon Valley venture capital firm, is investing ~$350M in Flow, a new business being started by WeWork’s (WE) founder Adam Neumann.

This time Neumann’s venture is focusing on residential rentals, a shift from the flexible office space model he pioneered. The amount that Andreessen Horowitz is investing is the largest it has ever made in a round of funding a company and values the firm that hasn’t yet even started operations at more than $1B.

In a post on AH’s website, Marc Andreessen explained why the firm is putting its money into the venture. “We think it is natural that for his first venture since WeWork, Adam returns to the theme of connecting people through transforming their physical spaces and building communities where people spend the most time: their homes. Residential real estate – the world’s largest asset class – is ready for exactly this change,” Andreessen said. (4 comments)

Gas prices

Petrobras (PBR) said it would cut refinery gate gasoline prices by 4.9% starting Tuesday, the company’s third price reduction in less than a month following a drop in international benchmark prices. The company said it would cut prices to an average of 3.53 reais/liter (~$0.69) from 3.71 reais/liter, dropping them to the lowest level since mid-March.

The cut followed benchmark prices lower and was “in line with Petrobras’ pricing policy,” the company said, after also receiving frequent criticism from Brazil President Jair Bolsonaro, who trails in opinion polls ahead of the October election. (1 comments)

Software sales slowdown?

While the lion’s share of the season’s tech earnings results has already come in, the infrastructure software sector remains in line for a slate of reports that may show a slowdown in growth that could drag on for several months. That’s the view from analysts at Morgan Stanley, who on Monday lowered their revenue outlooks on a handful of software companies such as Snowflake (SNOW) and Splunk (SPLK).

Analysts led by Sanjit Singh said that factors such as longer sales cycles for companies that sell to large enterprises, slower usage trends that charge customers based on their product usage and growing weakness in Europe have conspired to result in a more cautious view of the infrastructure software sector. (1 comments)

Tencent boosts payers

Tencent Music Entertainment (TME) reported second-quarter earnings where it saw some broad user declines but boosted subscription revenues alongside an increase in paying users. Revenues fell by 13.8% to 6.91B yuan (about $1.03B), a decline that was better than expected, and the figure was up 3.9% from the prior quarter.

Revenue from music subscriptions, though, jumped nearly 18% to 2.11B yuan (about $315M). In total user metrics, mobile monthly active users in online music fell by 4.8% to 593M, and mobile MAU for social entertainment slid by 20.6%, to 166M – a decline the company attributed to lower marketing spending. While paying users for social entertainment also fell 28.2% to 7.9M, paying users for online music jumped nearly 25%, to 82.7M (which the company credited to expanded sales channels and paying user loyalty, along with moderated promotions). (0 comments)

Today’s Economic Calendar
8:30 Housing Starts and Permits
9:15 Industrial Production

What else is happening…

Bullet Train (SONY),’ ‘Maverick’ lead slowest box office in six months.

BP (BP) looking to dispose of its Mexican oil assets.

Turquoise Hill (TRQ) rejects Rio Tinto’s (RIO) bid to take control of huge Mongolia mine.

FTC’s move to block Meta’s (META) Within purchase gets December court date.

Elon Musk tells China his views on the future of technology and society.

Lockheed (LMT) F-35 jets return to flight for Air Force after two-week grounding.

Nu (NU) stock climbs after Q2 revenue beat on customer, portfolio growth.

Hong Kong’s Magic Empire (MEGL) stock rallies 77% after plunging 93% last week.

HSBC sees more than 35% downside ahead for Carnival Corp. (CCL) stock.


Good morning. Happy Monday. Hope you had a good weekend.

The Asian/Pacific markets leaned up. Japan, Taiwan, Australia, New Zealand and the Philippines posted gains; Hong Kong and Indonesia were weak. Europe, Africa and the Middle East currently lean down, but a handful of markets are closed. Denmark is up; Russia, Norway, Hungary and the Czech Republic are down. Futures in the States point towards a moderate down open for the cash market.

————— VIDEO: The Market is in Great Shape – Here are Recent Trades —————

The dollar is up. Oil and copper are down. Gold and silver are down. Bonds are up.

Stories/News from Seeking Alpha…

China the outlier

China lowered two key lending rates and injected more cash into its economy Monday as it looks to keep stimulating the economy. The country remains the global monetary policy outlier, with the rest of the major economies tightening in an effort to tame inflation.

The People’s Bank of China cut its one-year lending facility rate by 10 basis points to 2.75% and cut the seven-day lending rate the same amount to 2%. The PBOC added 2 billion yuan through seven-day reverse repos.

Economists had expected the seven-year rate to stay steady. But policymakers are still clearly worried that risks are to the downside with strict COVID policies and weakness in housing, even though plenty of liquidity is stoking inflation pressures.

Later in the day, the government reported a batch of mostly disappointing economic data.

China July Industrial Production rose 3.8% y/y (vs. 4.6% expected) and slightly lower than the 3.9% figure reported in June. Retail sales increased 2.7% in July compared with the same period in 2021, below the 5% forecast. In addition, China’s jobless rate for 16-to-24-year-olds hit 19.9%, the highest ever recorded. And new house prices were down 0.9% y/y (vs. down 0.5% prior).

The Shanghai Composite (SHCOMP) was flat. The Hang Seng (HSI) was down 0.5%. China bond yields were lower.

Rebound still seen: Still, the “question is no longer whether we get a rebound (in the Chinese economy), but how much of one,” Morgan Stanley Economist Seth Carpenter wrote in a note. “Covid-zero policies are slowly easing and we think more relaxation will follow the Party Congress in October,” Carpenter said. “But will freedom of mobility be enough to reverse the challenges of the housing market? Recent policy action to address the housing crisis will help, but I fully expect that a much larger package will be needed. Ultimately consumer and property confidence will need to make a rapid recovery if the rebound can take shape,” he added. (2 comments)

Retail revisions

The bad news for major retailers is likely to continue flowing into the second half of 2022, according to Morgan Stanley.

While consumer discretionary stocks have underperformed in 2022, the sector has surged as of late. For example, the Consumer Discretionary Select Sector SPDR (XLY) has roared about 20% higher in the past month as bulls pounce on signs of peak inflation and improving (albeit modestly) consumer sentiment. Retailers, of course, have been major beneficiaries of this swift sentiment shift.

In a note to clients previewing Q2 and second-half results across hardlines retail ahead of a busy earnings week, equity analyst Simeon Gutman advised that the sector’s rally may be short-lived. He observed that about half of the companies in his coverage have already cut guidance this year. Yet, despite the preemptive move to temper expectations, Gutman sees it as “almost inevitable” that more negative revisions come during earnings week.

“Only the Dollar Stores and (to a lesser extent) Home Depot appear relatively insulated in Q2,” he explained. “For the rest, there is potential for downward revisions, even from companies that have pre-announced.”

As such, he retained Buy-equivalent ratings on Dollar General (DG), Walmart (WMT), AutoZone (AZO), and Driven Brands (DRVN). He was conversely cautious on more discretionary names such as Target (TGT), Best Buy (BBY), and Williams Sonoma (WSM). (48 comments)

Streaming ratings

Netflix’s (NFLX) runaway hit Stranger Things topped streaming ratings yet again – holding status as the only program to stream a billion minutes for the week, and then some.

The show, riding high off an Independence Day weekend release of the end of its fourth season, streamed 2.947B minutes to easily top Nielsen’s most recent weekly streaming ratings (for July 11-17). The offering that came closest to the horror/sci-fi hit was Netflix’s own animated film The Sea Beast, which doubled up its minutes from the prior week, to 920M.

But Amazon Prime Video (AMZN) is keeping up its recent momentum with two top-five programs: Action series The Terminal List landed at the No. 3 spot with 887M minutes streamed; and with its season over, Amazon’s The Boys held a lot of the prior week’s viewing to sit at No. 5 with 828M minutes, just behind Netflix’s new take on Resident Evil (858M minutes), and just ahead of No. 6 – a show on both Netflix and Hulu (DIS) (CMCSA), Alone (818M minutes). (9 comments)

Saudi Aramco record

Saudi Aramco CEO Amin Nasser said on Sunday it is ready to raise crude oil production to its maximum capacity of 12M bbl/day if asked to do so by the Saudi government.

“We are confident of our ability to ramp up to 12M bbl/day any time there is a need or a call from the government or from the ministry of energy to increase our production,” Nasser reportedly said.

The comments came as Aramco (ARMCO) reported a 90% surge in Q2 profit to a stronger than expected 181.64B riyals ($48.4B), the state oil company’s highest quarterly net profit since it started trading shares on the Saudi stock exchange in 2019. (6 comments)

Long inflation road

Last week’s inflation data – July’s consumer price index and producer price index – started to show some relief in rising prices, but the U.S. economy is still a far way off from reaching the Federal Reserve’s 2% inflation target.

Much of the relief came from lower gasoline prices. The bad news is that the “stickier” prices such as shelter costs kept rising.

“So this month-to-month 0% increase is better than what we’ve been seeing, but there’s still a lot of worrying, underlying trends and inflation,” said Robert Frick, corporate economist at Navy Federal Credit Union, in an interview with Seeking Alpha.

“One of the more troubling things that I don’t think got enough analysis was food costs,” he said. Global upward pressure on grain prices is fueling baked goods prices. The avian flu has reduced the chicken flocks, and the U.S. milking herd is very low. “So you’re going to see a lot of stickiness in food costs,” which traditionally are fairly flexible – “but not this time around.” (23 comments)

Today’s Economic Calendar
8:30 Empire State Mfg Survey
10:00 NAHB Housing Market Index
10:50 Fed’s Waller Speech
4:00 PM Treasury International Capital

What else is happening…

Analysts rule out major industry impact from drug pricing negotiations.

Merck (MRK) potential purchase of Seagen (SGEN) likely back in focus after Daiichi (OTCPK:DSKYF) arbitration loss.

Goldman sees $5 gas coming back.

Oracle (ORCL) could be the fourth hyperscaler.

AbbVie (ABBV), Roche (OTCQX:RHHBY), Regeneron (REGN) could significantly benefit as AMD market expected to soar.

Musk, Twitter (TWTR), Disney (DIS) and Apple (AAPL) make some waves.

Watch these electric vehicle stocks after the climate bill jolted the industry.

Niu Technologies (NIU) narrows FY22 sales volume guidance.


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