Before the Open (Jul 8-12)

Good morning. Happy Friday.

The Asian/Pacific markets leaned to the upside. Hong Kong, India and Australia did well while Japan, South Korea and Taiwan were weak. Europe, Africa and the Middle East are currently mostly up. France, Switzerland, Norway, Hungary, Italy and Sweden are leading. Futures in the States are mixed. The Nasdaq is down; the S&P is flat; the small caps are up.

————— Free Online Course: Mini Masterclass in Trading —————

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

Stories/News from Seeking Alpha…

Take it to the bank

Get ready for the coming flood of corporate earnings, with the big banks ready to kick off the festivities. As interest rates are still high and Federal Reserve rate cuts remain in the future, many expect loan growth and net interest income to remain weak, but investment banking fees are likely to benefit as activity starts to rebound. For investors in the sector, guidance may be almost as important as the results, and can shed light on how banks are preparing for the upcoming monetary cycle.

Mark your calendar: Coming up this morning are Q1 earnings from JPMorgan Chase (JPM), Citigroup (C) and Wells Fargo (WFC). Goldman Sachs (GS) will follow on Monday, with Morgan Stanley (MS) and Bank of America (BAC) releasing quarterly numbers on Tuesday. There’s also a whole host of regional players, asset managers, credit card companies and other financial institutions reporting over the next week. See the full list on Seeking Alpha’s earnings calendar.

Many economic stats will be on watch in the coming sessions even for those not invested in the banking industry, which recently passed the latest round of Fed stress tests. Provisions for credit losses can provide a window into how well banks expect the economy to hold up and will shed light on the viability of commercial real estate. Consumer spending and credit card delinquencies will also be in the spotlight, and don’t forget comments on the macro situation from some of the biggest CEOs on Wall Street.

The earnings show: “Consensus annual forecast for 2024 Q2 earnings to rise 9%, with expectations of continued growth for the second half, so positive future guidance revisions are expected,” writes SA analyst David Lerner. “However, every earnings season, the market overreacts both on the upside and downside. I fear that expectations are too high for earnings results and that a lot of growth stocks will be taken to the woodshed. This is why, I think traders should trim profitable positions, and do the same for trades that haven’t moved all year. For long-term investments, stick with it, especially if you are still adding funds to your investments.”

Is it disinflation?

The Consumer Price Index cooled further in June, edging down 0.1% M/M, compared to the 0.1% rise expected, according to the Bureau of Labor Statistics. Similar progress was seen in core CPI, giving the Federal Reserve another data point indicating inflation is heading toward its 2% goal. While stock futures initially rose, market indices ended largely lower on Thursday, weighed down by the Magnificent 7. “We’re clearly in a pronounced disinflationary state based on the last three inflation reports,” said SA analyst Jeremy LaKosh, adding the latest CPI puts a September rate cut on the table. (146 comments)

China investment

European allies will curtail their investment in China if Beijing continues its “indirect help to Russia,” President Biden announced at the conclusion of NATO’s summit in Washington. China denied supporting Russia’s defense industry, saying NATO’s claim that China is responsible for the Ukraine crisis is “ill-motivated” and undermines Beijing’s ties with Europe. Biden’s press conference was also closely watched amid concerns over his fitness and included some verbal stumbles (accidentally referring to Kamala Harris as Vice President Trump and introducing Ukraine’s Volodymyr Zelenskyy as President Putin). (3 comments)

Another delay

Tesla (TSLA) swung 8% lower on Thursday after Bloomberg reported that the company may delay its robotaxi event scheduled for Aug. 8 to October as it needs more time to build autonomous vehicle prototypes. CEO Elon Musk has been mentioning the robotaxi event since April, while the robotaxi concept has been part of Tesla’s Master Plan for at least eight years. J.P. Morgan recently warned that Tesla investors may have gotten ahead of themselves in terms of baking in a robotaxi premium. While most SA subscribers think Tesla should remain in the Magnificent 7, here are two stocks that could potentially replace the EV maker on the list. (304 comments)

Today’s Economic Calendar
08:30 AM Producer Price Index – Final Demand
10:00 AM Consumer Sentiment
01:00 PM Baker Hughes Rig Count

What else is happening…

Delta (DAL) leads airline stocks lower after fare discount warning.

Earnings Summary: PepsiCo (PEP) results mixed, outlook affirmed.

Pfizer (PFE) advances development of once-daily weight-loss pill.

Mizuho: PayPal (PYPL) may profit from Apple (AAPL)-EU settlement.

Rio Tinto (RIO) weighs potential bid for Teck Resources (TECK).

AI made up a third of all venture capital funding this quarter.

Dollar General (DG) to pay fine for workplace safety violations.

Report: Boeing (BA) sees further delays in 737 Max plane deliveries.

Blue Bird (BLBD) rallies after landing DOE grant for EV manufacturing.

SA Sentiment: This weight loss stock is the best alternative to Lilly, Novo.


Good morning. Happy Thursday.

The Asian/Pacific markets did great. Japan, China, Hong Kong, South Korea, Taiwan, Australia, New Zealand and the Philippines all posted big gains. Europe, Africa and the Middle East currently is mostly up. Poland, France, Turkey, Germany, South Africa, Switzerland, Hungary, Spain, Portugal, Israel and Sweden are leading. Futures in the States point towards a flat open for the cash market.

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

Stories/News from Seeking Alpha…

The D.C. Universe

Should members of Congress be allowed to trade stocks? The debate that has triggered phrases like “insider trading” and the “free market economy” has played out for years, with even popular websites tracking the buy and sell activity of lawmakers on Capitol Hill. Raising fresh ethical concerns, a new bipartisan group of senators, including Jon Ossoff (D-GA), Gary Peters (D-MI), Josh Hawley (R-MO), and Jeff Merkley (D-OR), have unveiled a new proposal that might see some action later this month.

What’s in the bill? If approved, the ETHICS Act would stop lawmakers in Washington, D.C., from purchasing stocks and other covered investments, as well as barring members from offloading equities 90 days after the bill is enacted. Starting in March 2027, spouses and dependent children of members would also be prohibited from trading stocks. Violations of these rules would result in penalties of either the officials’ monthly salary or 10% of the value of the assets in violation of the legislation (whichever is greater).

It’s a big deal. Members of Congress have a lot of privileged and classified information that could move stock prices, as well as financial incentives from companies that routinely lobby lawmakers. Those decisions could also play a role in how much a given stock is worth, and Congress sought to counteract that in 2012 by passing a bill known as the STOCK Act. While the legislation requires lawmakers to disclose trades within 45 days, many say it doesn’t do enough to prevent insider trading and conflicts of interest.

Gravy train? It hasn’t been easy getting stock trading bans passed on Capitol Hill. The last effort, which centered on individual stocks and blind trusts, took place in early 2022 during the trading boom that followed the COVID pandemic. In terms of actual insider trading, it is very hard to convict lawmakers due to agency ethics officials rarely having a full picture of what employees are working on or the information that they are privy to. Another hurdle is proving the “material” part of “material non-public information,” as well as events that happen on the macro scale or affect entire industries. (52 comments)

Going up

For the first time in seven years, Costco (COST) has hiked membership fees for its nearly 52M customers. The news helped shares climb 3% in premarket trading, along with a 7.4% jump in June sales, which topped comparable expectations in the latest quarterly results. Effective Sept. 1, annual basic membership fees at the big-box retailer will rise to $65 from $60, and the executive membership plan will increase to $130 from $120. While high inflation has forced consumers to cut back on spending, Costco’s low prices continue to attract shoppers, driving strong sales and increased market share. (118 comments)

Guilty as charged

Bill Hwang, the “tiger cub” founder of Archegos Capital Management, has been convicted of fraud and market manipulation that led to the hedge fund managing over $36B in assets at its peak, before its 2021 collapse. A jury in Manhattan found Hwang guilty on 10 of 11 criminal charges, while Archegos’ former CFO Patrick Halligan was convicted on all three counts that he faced. Archegos’ collapse led to more than $10B in losses for banks including Credit Suisse and Nomura (NMR), and over $100B in shareholder losses for the fund’s portfolio companies. Prison time might be in the making for Hwang, who was also involved in insider trading scandals back in 2012.

Inflation check

The Consumer Price Index will be published at 8:30 AM ET, providing fresh data on whether the Fed’s tight policy is succeeding in pushing inflation down toward its 2% goal. If the disinflation trend continues after stalling earlier this year, the central bank may be closer to cutting its key interest rate for the first time since 2020. Economists will specifically watch housing costs, which accounted for more than two-thirds of the increase in core CPI over the past year. While Mott Capital Management’s Michael Kramer sees owners’ equivalent rent inflation bottoming within a couple of months, SA Analyst Damir Tokic said the metric won’t moderate until the “housing bubble bursts.” (2 comments)

Today’s Economic Calendar
08:30 AM Consumer Price Index
08:30 AM Initial Jobless Claims
10:30 AM EIA Natural Gas Inventory
11:30 AM Fed’s Bostic Speech
01:00 PM Fed’s Musalem Speech
01:00 PM Results of $22B, 30-Year Bond Auction
02:00 PM Treasury Statement
04:30 PM Fed Balance Sheet

What else is happening…

Is Google (GOOG) shelving its takeover plan of HubSpot (HUBS)?

The Netherlands, Denmark are sending F-16s to Ukraine – Blinken.

Pharmacy-benefit managers to face FTC lawsuits over insulin.

AI prep: Intuit (INTU) to let go, and then rehire, thousands of workers.

Tesla’s (TSLA) Optimus design will be completed in 2024 – Musk.

Neuralink could implant second brain device within weeks.

Apple (AAPL) reaches deal with EU over ‘tap and go’ tech.

Newsroom overhaul: Warner Bros.’ (WBD) CNN cuts 100 jobs.

Citi (C) fined for failing to make progress on 2020 consent orders.

Wall of support? Biden’s re-election bid is facing new peril.


Good morning. Happy Wednesday.

The Asian/Pacific markets were split. Japan, Taiwan, New Zealand and Singapore did well; China, Hong Kong and the Philippines were weak. Europe, Africa and the Middle East are currently mostly up. The UK, France, Germany, Norway, Hungary, Spain, the Netherlands, Italy and Portugal are doing well; Poland, Turkey and Greece are weak. Futures in the States point towards a positive open for the cash market.

————— Leavitt Brothers Overview —————

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

Stories/News from Seeking Alpha…


Get ready for Day 2 of testimony from Fed Chair Jerome Powell. Fresh off an appearance before the Senate Banking Committee, the central bank leader will sit before the House Financial Services Committee, with many investors watching his every word on rates, the current environment, and clues about upcoming policy. There is a lot to digest ahead of the big show, which will take place at 10 AM ET.

Recap: The Fed is definitely inching closer to cutting rates due to the “considerable progress” that has been made in taming inflation. However, policymakers still need to be reassured that inflation is moving sustainably toward their 2% goal, meaning a rate cut later this month is likely out of the cards. It might be unsurprising given a similar narrative the Fed has declared for much of the past year, but WSB subscribers were early to flag this in the latest SA Sentiment Survey on Monday, assigning only a 1% chance the FOMC cuts in July, compared to the 8% seen last month.

“Reducing policy restraint too late or too little could unduly weaken economic activity and employment,” Powell declared, outlining the importance of “carefully assessing” the incoming data, their implications, and the balance of risks. As such, the majority of WSB subs (45%) now forecast the first rate cut will happen in September, up from 37% seen in June (see all the latest SA Sentiment figures here). Rate cut chatter on Capitol Hill also helped the S&P 500 (SP500) notch a fresh closing high, marking the index’s 36th record of 2024.

Not the only risk: The semiannual update on monetary policy also contained the Fed’s outlook on the broader economy after somewhat of a slowdown that saw 206K jobs added in June, with the unemployment rate rising to 4.1%. The labor market is “pretty much” where it was in the pre-pandemic era regarding demand-supply dynamics, Powell added, but the FOMC would respond if it witnesses unexpected weakening. “We’ve seen that the labor market has cooled really significantly across so many measures… It’s not a source of broad inflationary pressures for the economy now.”

CRE risk

Amid concerns in the sector, Powell also told Congress that the commercial property industry may remain stressed for years. “Banks need to be honestly assessing what their risk is. They need to be assured that they have the capital and liquidity and the systems in place to manage this risk.” Powell noted that Fed stress tests of U.S. banks this year concluded that large institutions can manage commercial real estate risk, as well as most small banks. Regulators are still keeping a close eye on those with higher exposure to CRE, as higher-for-longer rates are expected to push more banks to build loan loss reserves through 2024. (2 comments)

Insect food

Singapore has approved 16 species of insects – including crickets, silkworms and the western honey bee – as food safe for human consumption, amid efforts worldwide to promote an alternative and environment-friendly source of protein. Insects are widely eaten in many countries in Asia and Africa, as well as Mexico. While the European Commission and Australia have approved a few species, the U.S. does not officially recognize insects as food. Singapore has been a pioneer in the alternative protein space, being the first country to approve lab-grown meat back in 2020. (1 comment)

Air defense

The U.S. and NATO allies have pledged to boost Ukraine’s air defense capabilities, including sending equipment for five Patriot systems, which are manufactured by Raytheon (RTX) and Lockheed Martin (LMT). The U.S. and other countries, including Canada and the U.K., also plan to provide dozens of tactical air defense systems in the coming months. “Ukraine will receive hundreds of additional interceptors over the next year,” President Biden declared. The commitment follows Russia’s biggest missile attack on Ukraine in months, which killed 42 people and struck a children’s hospital in Kyiv. (11 comments)

Today’s Economic Calendar
07:00 AM MBA Mortgage Applications
10:00 AM Powell delivers semi-annual monetary policy testimony
10:00 AM Wholesale Inventories (Preliminary)
10:30 AM EIA Petroleum Status Report
01:00 PM Results of $39B, 10-Year Note Auction
02:30 PM Fed’s Goolsbee and Bowman Speech
07:30 PM Fed’s Cook Speech

What else is happening…

Microsoft, Apple ditch OpenAI seats amid antitrust scrutiny?

Jeff Bezos sells more Amazon (AMZN) shares worth $863M.

Albemarle (ALB) hits near four-year low as lithium prices slide.

Bill Gross: Tesla (TSLA) is acting like a meme stock.

Fisker (OTC:FSRNQ) recalls all Ocean electric SUVs.

Hawaiian Electric (HE) soars amid reports of fire settlement.

Chipotle (CMG) CFO Jack Hartung plans to retire next year.

Modi, Putin set goal to reach $100B in bilateral trade by 2030.

Report: Oracle’s (ORCL) potential server deal with xAI falls apart.

Fed considers tweaking GSIB surcharge for biggest U.S. banks.


Good morning. Happy Tuesday.

The Asian/Pacific markets did well. Japan, China, Australia and New Zealand did the best. Europe, Africa and the Middle East currently lean down. Denmark, France, Germany, Finland, Spain, Austria and Sweden are weakest. Futures in the States point towards a positive open for the cash market.

————— Leavitt Brothers Overview —————

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

Stories/News from Seeking Alpha…

Friend or foe?

75 years after NATO was created to counter threats posed by the Soviet Union, the group is back to mark its second diamond anniversary. The expanded military alliance recently welcomed Finland and Sweden into the fold, and now consists of 32 countries that cover much of Europe, as well as Turkey, Canada, and the United States. Defense spending will be a big focus at the summit tonight in Washington, D.C., as well as how to best protect the group’s nearly 1B citizens given one of the most dangerous security environments since the end of the Cold War.

Up in arms: NATO membership for Ukraine is off the table for now, but the alliance will seek out ways to help the country hold the front line more than two years into a full-scale invasion by Russia. NATO allies are expected to pledge an additional €40B of support to Kyiv to prevent the war from expanding into their territory, though some critics argue that may only embolden Moscow or create greater geopolitical risks in a multipolar world. Keeping the alliance strong and together is not the only problem nations will face at the summit, but many of the members have increasing political troubles at home, like in France and Germany, and even potentially in America.

“Our allies are looking for U.S. leadership,” President Biden told MSNBC in an interview on Monday. “Who else do you think could step in here and do this? I expanded NATO. I solidified NATO. I made sure that we’re in a position where we have a coalition of people of nations around the world to deal with China, with Russia.” However, there is also trouble brewing with Biden’s re-election campaign, with Stifel out with a fresh research note that assigned a 40% chance to him dropping out of the race.

What else to watch: Some strains have surfaced over military spending, with only 23 out of 32 NATO allies on track to meet 2024 targets of spending 2% of their annual GDP on defense. There will likely be calls for that number to be the floor, and not the ceiling, especially with members like Canada that have been dodging their commitments for a decade. Outgoing NATO Secretary General Jens Stoltenberg has also noted the economic power of the alliance, outlining that “NATO allies have half of the world’s economy and half its military might.”

We have a problem

Most of Houston remained without power as Tropical Storm Beryl made landfall along the Texas coast on Monday, and the blackout may be extended for days in the hardest-hit areas. CenterPoint Energy (CNP), Houston’s main utility, said close to 2.3M customers lost power during the storm, with at least three people killed in the area from winds and flash flooding. Southeast Texas is now facing high temperatures, which poses a greater risk given the widespread blackout. Before Beryl’s landfall, authorities restricted vessel traffic at key ports in Texas out of an abundance of caution.

Record travel

As air travel continues to surge this year, more than 3M passengers were screened nationwide by the Transportation Security Administration on Sunday, marking the busiest day in the agency’s 22-year history. TSA saw eight of its 10 busiest days on record in 2024, with the number of travelers crossing pre-pandemic levels as a result of cheaper flight tickets and hotel prices. While many investors have expressed concerns about an economic slowdown, TSA boarding pass scans can provide an upbeat data point for the economy, according to Apollo Asset Management. J.P. Morgan also sees stronger oil demand due to revenge summer travel.

Energy earnings

Increased demand may not be enough to help Big Oil, with BP (BP) expecting to book impairment charges of $1B-$2B for Q2 amid “significantly lower” refining margins. The news sent its shares down 4% in premarket trading, while upstream production is projected to be broadly flat sequentially. BP’s forecast comes just a day after Exxon Mobil (XOM) guided for lower Q2 upstream earnings, also hurt by weaker gas prices and refining margins. Elsewhere in the sector, Devon Energy (DVN) announced that it will acquire Grayson Mill’s Williston Basin business in a $5B cash-and-stock deal.

Today’s Economic Calendar
06:00 AM NFIB Small Business Optimism Index
09:15 AM Fed’s Barr Speech
10:00 AM Jerome Powell Speech
01:00 PM Results of $58B, 3-Year Note Auction
01:30 PM Fed’s Bowman Speech

What else is happening…

WSB sentiment survey results: Rate cuts, risks and rankings.

Microsoft to China staff: Drop Android, use iPhones for work.

Testimony on tap: Will Powell make the same mistake twice?

Eli Lilly (LLY) to buy Morphic (MORF) for $57 a share in cash.

Amazon (AMZN) unveils new alarm clock ahead of Prime Day.

Big Lots (BIG) sets another all-time low as bankruptcy looms.

Broadcom (AVGO) edges up as 10-for-1 stock split approaches.

Study finds patients lost more weight on Mounjaro than Ozempic.

Danaos (DAC) adds newbuilding container ships valued at $509M.

Pentagon pushes ahead with Sentinel nuke despite cost overruns.


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

The Asian/Pacific markets leaned down. Taiwan, Thailand and the Philippines did well; China, Hong Kong and Australia were weak. Europe, Africa and the Middle East are currently mixed. Turkey, Switzerland, Spain and Italy are up; Norway, Hungary, Portugal and Israel are down. Futures in the States point towards a slight up open for the cash market.

————— Leavitt Brothers Overview —————

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

Stories/News from Seeking Alpha…

Content is king

A new chapter is opening for Paramount Global following several drama-filled twists that saw it finally agree to a merger with David Ellison’s Skydance Media. It’s a complex transaction (see the details below), but there are hopes it can resurrect a Hollywood icon that has erased about 70% of its market value following the recombination of Viacom and CBS in 2019. The company was later rebranded Paramount Global, but has since experienced cash troubles with its streaming business (Paramount+), suffered a decline in linear TV (CBS and MTV), and saw S&P Global downgrade its debt to “junk” status.

Snapshot: Sony Pictures (SONY) and Apollo (APO) have also been after the company, as well as IAC Chair Barry Diller. There have been serious M&A tensions along the way, which resulted in the April ouster of Paramount CEO Bob Bakish, who was quickly replaced by an “Office of the CEO” led by three division chiefs. However, the upcoming deal will bring together old and new Hollywood, with the end of the road for the Redstone dynasty and the rise of the Ellison era after big hits like Top Gun: Maverick and the Reacher. Paramount and Skydance have even worked together in the past, co-producing films in the Terminator, Transformers, and Mission: Impossible franchises.

“Given the changes in the industry, we want to fortify Paramount for the future while ensuring that content remains king,” Shari Redstone declared, echoing a call from her father and family patriarch, Sumner Redstone. “Our hope is that the Skydance transaction will enable Paramount’s continued success in this rapidly changing environment. As a longtime production partner to Paramount, Skydance knows Paramount well and has a clear strategic vision and the resources to take it to its next stage of growth. We believe in Paramount and we always will.”

Fine print: The two-step deal would initially see Skydance and its partners acquire National Amusements, which holds the Redstone family’s controlling stake in Paramount, for $2.4B in cash. The next step will merge Skydance with Paramount, offering a total of $4.5B – or $23 in cash or stock to Class A voting shareholders (PARAA) and $15 for non-voting Class B (PARA) shares – as well as an additional $1.5B for Paramount’s balance sheet. Once the deal closes, Ellison will become CEO of the new Paramount, while former NBCUniversal CEO Jeff Shell (who currently works at Skydance investor RedBird Capital) will run the day-to-day as president. The deal also grants Paramount 45 days to find a competing offer, and will likely take months to close in its current form as regulators review the combination. (16 comments)

Left, right and center

France is set for unprecedented political uncertainty as the New Popular Front emerged as the surprise winner of legislative elections, securing more seats than President Emmanuel Macron’s Ensemble alliance and Marine Le Pen’s National Rally. But with no side securing a majority, modern France will see its first parliament without a dominant party. Traders appear to have played down the uncertainty, with the CAC 40 Index (CAC:IND) reversing earlier losses to rise nearly 1%. As the three groups have widely differing agendas when it comes to issues ranging from taxes to immigration, it’s unclear how they will move forward to form a government. (15 comments)

Beverage giant

Third time’s the charm. London-listed soft drinks maker Britvic (OTCQX:BTVCF) has agreed to a takeover by Danish brewer Carlsberg (CABGY), creating a beverage giant “with a strong platform for continued success.” The move will help Carlsberg diversify outside the beer market, with an expansion into non-alcoholic beverages. The sweetened takeover bid was valued at £3.28B ($4.2B) after Britvic rejected two earlier offers that it deemed to be too low. The new combination will also involve PepsiCo (PEP), given its long-running arrangements with Britvic over production and sales in the U.K. (1 comment)

Planemaking felon

Boeing (BA) has agreed to plead guilty to a criminal conspiracy charge to defraud the U.S. government after the DOJ found that it violated a settlement over two fatal 737 MAX crashes in 2018/19. The planemaker will face the maximum fine for the offense, or $487.2M, and will be required to invest $455M to strengthen its compliance and safety programs. Victims’ families said the plea deal, which will avoid the courtroom, fails to hold Boeing accountable for the deaths of 346 people killed in the crashes. Legal experts also believe the guilty plea may not affect Boeing’s defense contracts, as the Pentagon is highly dependent on the company. (9 comments)

Today’s Economic Calendar
3:00 PM Consumer Credit

What else is happening…

Tropical Storm Beryl shutters oil-exporting hub in Texas.

SA Asks: What’s a good alternative stock to Nvidia (NVDA)?

Despicable Me 4 leads box-office sales with $75M weekend haul.

Visa (V), Mastercard (MA) extend caps on non-EU card fees.

Apple (AAPL) clears Epic Games marketplace app in Europe.

AI boom: Google’s emissions jump by nearly half in five years.

ConocoPhillips (COP) sues to stop Biden plan to ban Arctic drilling.

BNP Paribas: Rise in jobless rate may prompt call for two rate cuts.

Will Rivian (RIVN) ever land an AI premium like Tesla (TSLA)?

5,600 in sight for the S&P 500. Take WSB’s July Sentiment Survey.


Leave a Reply