Good morning. Happy Friday.
The Asian/Pacific markets were weak. The Philippines did well, but Hong Kong, South Korea, India, Taiwan and Australia posted big losses. Europe, Africa and the Middle East are mostly down. Denmark is doing well, but the UK, Poland, France, Germany, South Africa, Finland, the Netherlands, Spain, Italy and Sweden are down. Futures in the States point to a positive open for the cash market.
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The dollar is up. Oil and copper are down. Gold and silver are down. Bonds are down.
Stories/News from Seeking Alpha…
Flip the switch
Our modern world is very interconnected. So interconnected that when one little piece of the system goes sour, it can bring down entire industries. In recent years, that reality has led to a pushback against the trend toward globalization, with many countries and companies advocating for diversification, reshoring and protectionism. Let’s see if a similar development will happen in the world of cyber.
Little piece of code: Outages were seen across the world overnight, which impacted everything from airports and health providers to banks and stock exchanges. Many businesses that run Microsoft (MSFT) systems also experienced difficulties, with employees forced to face the “blue screen of death.” While there was some initial confusion over the origin of the outage, cybersecurity provider CrowdStrike (CRWD) admitted guilt in the ensuing hours, tracing the issue to “a defect found in a single content update for Windows hosts.”
Whether it was panicking investors, or traders looking to make a quick buck, shares of the cybersecurity firm slumped as much as 20% in premarket trading. At issue seems to be one of the company’s main products called CrowdStrike Falcon, which is a platform designed to stop cybersecurity threats using cloud technology. The impact was enormous, to say the least, and resulted in several rival cybersecurity stocks heading higher.
We’re on it: “This is not a security incident or cyberattack. The issue has been identified, isolated and a fix has been deployed,” CrowdStrike CEO George Kurtz wrote on X. “We refer customers to the support portal for the latest updates and will continue to provide complete and continuous updates on our website. We further recommend organizations ensure they’re communicating with CrowdStrike representatives through official channels. Our team is fully mobilized to ensure the security and stability of CrowdStrike customers.” (46 comments)
Streaming situation
Netflix (NFLX) shares fell 2% AH on Thursday as the streaming giant’s revenue and user growth surpassed expectations, though free cash flow took a step back. The stock later pared losses to trade largely unchanged once Netflix started its post-earnings call, as executives gave lengthy answers about the quarter and their outlook. There was plenty to be pleased with, with CFO Spence Neumann detailing outsized paid net additions, stronger acquisition, and “very healthy” retention. He also raised this year’s operating margin target to 26% from the prior 25%, although Investing Group Leader Long Player has warned of limits to margin expansion. (2 comments)
World’s No. 2 economy
China’s closely-watched Third Plenum has come to an end, where top policymakers gather to explore long-term issues facing the country. Leaders pledged to support all-around innovation, deepen scientific and technological reform, improve the financial system, and advance Chinese modernization. However, they stopped short of unveiling any major policy shifts, dashing hopes of support or stimulus seen as needed for an economic rebound. Without shoring up demand, industrial metal copper (HG1:COM) continued to decline and was on track for its biggest weekly loss since 2022. (3 comments)
Prime record
Amazon (AMZN) has set a new Prime Day record, selling the most items during the two-day event this year than ever before. The e-commerce giant said millions more Prime members shopped during the event compared to Prime Day 2023, and independent sellers sold over 200M items. Other highlights included the new AI-powered conversational shopping assistant and more visits to Amazon Inspire – the in-app experience designed to make shopping easier. Adobe Analytics estimated that shoppers spent $14.2B this Prime Day, up 11% from a year ago, highlighting strong consumer spending despite high inflation. (32 comments)
Today’s Economic Calendar
10:40 AM Fed’s Williams Speech
01:00 PM Baker Hughes Rig Count
01:00 PM Fed’s Bostic Speech
What else is happening…
Costco (COST) may be winning the market for apocalypse food.
FDA approves seven more e-cigarette products for marketing.
Meta (META) eyes stake in Ray-Ban maker EssilorLuxottica.
Hawaiian Electric (HE) surges on report of $4B Maui settlement.
Eli Lilly (LLY), Novo extend multi-day decline in rare selloff.
Latest earnings: Blackstone (BX) revenue beats estimates.
D.R. Horton (DHI) results beat consensus; plans $4B buyback.
Ford (F) ramps up production of F-Series Super Duty truck.
Taiwan Semi (TSM) rises after AI demand boosts outlook.
Fed’s Daly: Price stability not achieved, ‘we’re not there yet.’
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Good morning. Happy Thursday.
The Asian/Pacific markets were mixed. China, India and Indonesia did well; Japan, South Korea, Taiwan and Singapore were weak. Europe, Africa and the Middle East are doing very well. The UK, Denmark, Poland, France, Turkey, the UAE, Greece, Norway, Spain, the Netherlands and Italy are up; Israel is down. Futures in the States point to a positive open for the cash market.
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The dollar is up. Oil and copper are down. Gold and silver are up. Bonds are down.
Stories/News from Seeking Alpha…
A better Brexit?
Nearly 50 European leaders on Thursday will descend on Blenheim Palace in Oxfordshire, England, for a one-day session of the European Political Community. It’ll be a big moment for new U.K. Prime Minister Keir Starmer, who is looking to amend the post-Brexit relationship with the European Union. Defense and security discussions are on the menu, but trade is also in focus, especially as the parties attempt to build closer cooperation on shared issues.
Quote: “Our government is committed to resetting the relationship with the European Union, to strengthen ties, reinforce our security and tackle barriers to trade,” said Nick Thomas-Symonds, Minister for the Constitution and European Union Relations. “The EU and member states are among the U.K.’s closest friends and allies. With war in Europe, and shared global challenges, in areas such as climate change and illegal migration, a strong U.K.-EU alliance is vital.”
Labour under Starmer has ruled out rejoining the EU single market or customs union, though it will seek to improve the bilateral relationship via renegotiations. Post-economic Brexit complaints have been seen across many sectors, ranging from agriculture and the creative industry to manufacturing and just-in-time supply chains. There has also been lots of additional paperwork and applications, the need to manage multiple sets of quality standards and VAT payments, as well as a divergence in regulatory frameworks that has impacted investment.
Different channels: The European Union has been more cautious about potential changes, maintaining that it would work within “existing agreements” that are the “cornerstone of EU-Britain relations.” As expressed previously, the bloc doesn’t want the U.K. to have all the upsides of being part of the EU, without the membership that comes with it. That will make cherry-picking terms a lot harder, and with large-scale renegotiations off the table, British policymakers will need to pull off a delicate balancing act to keep within Brexit agreements and promises.
Possible split
Warner Bros. Discovery (WBD) is reportedly evaluating several strategic options, including selling assets or splitting its Max streaming service and movie studio businesses from its legacy TV networks. The move would leave its TV group with most of its $39B debt load. People close to WBD have also informally approached rival media groups to gauge interest in potential M&A options for some of its assets. Bank of America warned that a breakup could have a “devastating” impact on bondholders, similar to what happened after rival Lionsgate’s spinoff of its studio business (LION) from Starz. (24 comments)
Goodbye DEI?
Deere (DE) is the latest company to review diversity policies, and has decided to end its participation and support for social awareness events. The farm machinery maker reaffirmed that diversity quotas and pronoun identification are not company policy. The decision came after political commentator Robby Starbuck argued that DEI policies were hurting Deere’s business as the company implements job cuts amid weaker demand for farming equipment. Last month, Tractor Supply (TSCO) eliminated DEI goals and carbon emission targets that it said were unpopular with its customers. (25 comments)
Stepping down?
President Biden is losing the support of senior Democrats amid concerns over his ability to win the presidential election. He also just tested positive for COVID-19, which will sideline campaigning efforts, while the DNC kicked a virtual roll call on the nomination to August. Nearly two-thirds of Democrats want Biden to withdraw, and Stifel last week assigned a 40% chance of him dropping out. Betting markets are now favoring Kamala Harris to be the Democratic nominee after Biden said he was willing to transfer power to her if health issues prevent him from serving a second term. (10 comments)
Today’s Economic Calendar
8:30 Initial Jobless Claims
8:30 Philly Fed Business Outlook
10:00 Leading Indicators
10:30 EIA Natural Gas Inventory
1:45 PM Fed’s Logan Speech
4:00 PM Treasury International Capital
4:30 PM Fed Balance Sheet
6:05 PM Fed’s Daly: “Exploring Conventional Bank Funding Regimes in an Unconventional World”
7:30 PM Fed’s Bowman: “Exploring Conventional Bank Funding Regimes in an Unconventional World”
What else is happening…
Netflix (NFLX) earnings preview: Ad-tier growth in focus.
More earnings: United Airlines (UAL) forecast disappoints.
Global chip selloff slams Nasdaq; notches worst day since 2022.
Restaurant M&A: Darden (DRI) to buy Chuy’s (CHUY) for $605M.
Capital One (COF) offers $265B community benefits in Discover deal.
Beyond Meat (BYND) in talks with bondholders over restructuring.
GE Vernova (GEV) sinks as Vineyard Wind operations suspended.
Biden to forgive $1.2B in student loans for 35,000 borrowers.
J&J (JNJ) results beat estimates as pharma segment outperforms.
Petco (WOOF) appoints Five Below’s (FIVE) Joel Anderson as CEO.
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Good morning. Happy Wednesday.
The Asian/Pacific markets were mixed. Australia, New Zealand and Malaysia did well; South Korea and Taiwan were weak. Europe, Africa and the Middle East are very weak. Denmark, Poland, France, Turkey, the Netherlands, Italy, Israel and Sweden are down the most. Futures in the States point to big gap down open for the cash market.
————— Blog: This is the Entire Leavitt Brothers Trading List —————
The dollar is down. Oil is up copper is down. Gold is up; silver is down. Bonds are down.
Stories/News from Seeking Alpha…
New directions
It was only a month ago that Wall Street Breakfast pointed to a sector rotation in the making, and the movement appears to be picking up steam. There are many reasons for the shift, including value searching due to sky-high multiples and a broadening of a rally that was supercharged by mega-cap tech stocks. Increasing rhetoric surrounding Fed rate cuts has also ignited excitement about the lending and growth environment for smaller companies, while the Trump Trade has put a focus on other parts of the market that could benefit from a new presidency.
Snapshot: The Dow Jones Industrial Average (DJI) closed within striking distance of 41,000 points on Tuesday, buoyed by a post-earnings surge in UnitedHealth (UNH). The index climbed 1.9%, tacking on an additional 742 points to mark its best day of 2024. After being on fire for five consecutive sessions, things are cooling for major stock index futures in the premarket, but some other rotation plays continue to stand out.
The Russell 2000 (RTY), a notable index that tracks a group of 2,000 small-cap U.S. stocks, soared 3.6% on Tuesday and has advanced a whopping 11% over the last five trading days. That’s the largest such move for the index since April 2020 and it’s now at its highest closing level since January 2022. Russell 2000 earnings are due to “see very favorable ‘compares’ against the same quarter of 2023,” according to SA analyst Brian Gilmartin, who also explores what forward revisions mean for the S&P 500.
As mentioned previously on WSB: A rotation could be healthy, especially for those concerned about concentration risk or overstretched valuations. It could also help sustain the current rally, which is predicated on a soft landing and Fed easing cycle, and boost other sectors that haven’t seen significant appreciation this year. While a pause may be warranted, don’t immediately dismiss the staying power of tech, as well as the enthusiasm surrounding artificial intelligence and accompanying corporate profits.
On a high
Precious metals miners are scoring big gains, as gold futures settled at an all-time high following comments from Federal Reserve officials that ramped up expectations of the first interest rate cut happening in September. Front-month Comex gold (XAUUSD:CUR) for July delivery closed +1.6% to $2,462.40/oz on Tuesday, while front-month July silver (XAGUSD:CUR) finished +1.7% to $31.195/oz. Citi analysts said prices for the yellow metal might keep surging all the way to $3,000/oz, as financial flows show potential for significant expansion. They added that the weakening labor market and broader trend of disinflation are bullish for gold and silver into year-end. (24 comments)
Trumponomics
The odds of a second Trump presidency are mounting in the wake of a failed assassination attempt and his strong debate performance. His “Trumponomics” plan, as conveyed to Bloomberg, equates to low-interest rates and taxes, which would be a “tremendous incentive to get things done and bring business back to our country.” Other things on the platform include letting Fed Chair Powell finish his term, considering JPMorgan’s (JPM) Jamie Dimon as Treasury Secretary, encouraging more oil and gas drilling, cutting the corporate tax rate to 15%, no longer banning TikTok, and taking a more positive view on bitcoin (BTC-USD). (54 comments)
Sweeping changes
Reports suggest that President Biden will endorse sweeping changes to the Supreme Court, including term limits for justices and an enforceable ethics code, which can influence decisions that may extend to the economy. He is also weighing a constitutional amendment that would eliminate or limit broad immunity for presidents and other constitutional officeholders. However, imposing term limits and an ethics code for SCOTUS would be a long shot, as these changes require congressional approval. Biden’s support follows the Supreme Court’s ruling on former presidents’ broad immunity from prosecution. (5 comments)
Today’s Economic Calendar
07:00 AM MBA Mortgage Applications
08:30 AM Housing Starts and Permits
09:00 AM Fed’s Barkin Speech
09:15 AM Industrial Production
09:35 AM Fed’s Waller Speech
10:00 AM Atlanta Fed’s Business Inflation Expectations
10:30 AM EIA Petroleum Inventories
01:00 PM Results of $13B, 20-Year Bond Auction
02:00 PM Fed’s Beige Book
What else is happening…
‘The final straw’: Musk is moving SpaceX and X out of California.
Warner Bros. Discovery (WBD) set for another round of layoffs.
Consumer resilience: Retail sales flat, but still better than expected.
Bank of America (BAC) tops consensus on strong sales, trading.
Morgan Stanley (MS) earnings beat, credit loss provision climbs.
HSBC (HSBC) names finance chief Elhedery as next CEO.
TikTok parent loses in EU court to overturn ‘gatekeeper’ status.
Spirit Airlines (SAVE) shares drop on weak revenue outlook.
ASML in charts: Total sales, gross profit fall, net bookings jump.
French President Macron accepts prime minister’s resignation.
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Good morning. Happy Tuesday.
The Asian/Pacific markets leaned to the upside. Japan, China, Taiwan and New Zealand did well; Hong Kong and Indonesia were weak. Europe, Africa and the Middle East are mostly down. Turkey and Saudi Arabia are up; the UK, Poland, France, Germany, Greece, South Africa, Finland, Hungary and Spain are down. Futures in the States point to positive open for the cash market.
————— Blog: The Internals Have Surged, Participation Has Broadened Out —————
The dollar is up. Oil and copper are down. Gold and silver are up. Bonds are up.
Stories/News from Seeking Alpha…
Prime time
The macro economy can be highlighted by many micro-events, and one of them is on tap over the next 48 hours. While there have been concerns about the retail sector in recent months as the last wave of pent-up pandemic savings comes to an end, so far the expenditures seem to be holding up fine. The success of Amazon Prime Day (AMZN) will be another data point to consider on that front, with consumer spending expected to be healthy amid cooling inflation and a tight labor market.
New record: Online transactions over the two-day event are forecast to increase 10.5% Y/Y to $14B, according to Adobe Analytics, which measures e-commerce transaction data. Strong spending is likely to be driven by steeper discounts, which could range as high as 22%. Adobe also expects electronics to have the biggest discounts at 22% vs. a discounting level last year of 14%, with other significant deals likely for apparel, home/furniture, toys, and sporting goods.
The shopping holiday is anticipated to generate strong back-to-school spending online this year, due in part to the slightly later date on the calendar for Amazon Prime Day. Discounts and promos are available on millions of items across more than 35 product categories, including “Lightning Deals” that sell out fast or expire in just a few hours. Some even liken the bonanza to the new Black Friday, but with a lot less chaos and waiting in line (although that is changing as well).
Shopping cart: Amazon’s level of discounting could have an impact on other companies in the retail sector, ranging from Nordstrom (JWN) to Target (TGT), which also conduct big sales during the same period to compete with Prime Day. Shares of AMZN are up 45% over the past year, and the stock is just “swimming in catalysts,” according to Investing Group Leader Envision Research. Looking ahead, Adobe even sees $229B worth of online spending in Q3 (+7.2% Y/Y), on top of the $503B (+7.4%) spent by U.S. consumers in the first six months of 2024. (6 comments)
Running mate
Over at the RNC, Donald Trump selected Ohio Senator J.D. Vance as his running mate in the presidential election, sending shares of Rumble (RUM) up as much as 29% on Monday. Vance is an investor in the conservative-focused media platform and his stake may be worth around $1.5M at current levels. Meanwhile, Trump Media & Technology (DJT) was up 31%, after the assassination attempt on Trump as well as the dismissal of the DOJ’s classified documents case against the former president. With the events boosting his popularity, here are five stocks to play the Trump Trade. (408 comments)
Not waiting
Recent data has added to the Fed’s confidence that inflation is moving sustainably toward 2%, according to Jerome Powell, although the central bank may not hold out until things end up there. “The implication of that is that if you wait until inflation gets all the way down to 2%, you’ve probably waited too long, because the tightening that you’re doing, or the level of tightness that you have, is still having effects which will probably drive inflation below 2%,” Powell said at an event hosted by the Economic Club of Washington, DC. He also added that getting the balance right between easing too early or too late is what keeps him up at night. (13 comments)
Speed limiters
All new cars sold in the European Union must be fitted with new safety technology that tracks speed and limits it when needed, according to new rules that went into effect this month. The Intelligent Speed Assistance system will automatically ensure that drivers do not exceed speed limits through AI, GPS, sensors, and cameras. How effective would this be? The European Court of Auditors recently said the EU’s measures won’t lead to fewer deaths as implementation has weakened and Europeans replace their cars less often. While the U.S. does not have such measures in place, California recently passed a bill mandating passive speed limiters. (7 comments)
Today’s Economic Calendar
08:30 AM Retail Sales
08:30 AM Import/Export Prices
10:00 AM Business Inventories
10:00 AM Housing Market Index
02:45 PM Fed’s Kugler Speech
What else is happening…
WSB survey results: In need of a trading crackdown on Capitol Hill.
Earnings: Goldman Sachs (GS) tops estimates and hikes dividend.
Google-Wiz deal would be ‘shot across the bow’ at these firms.
Report: Apple’s (AAPL) annual sales in India climb to a record $8B.
Macy’s (M) shelved acquisition weighs on department store stocks.
U-turn: BlackRock’s Larry Fink calls bitcoin (BTC-USD) ‘digital gold.’
Cybertruck (TSLA) outsells the F-150 (F); Robotaxi delay explained.
Solar stocks drop as SolarEdge (SEDG) announces more layoffs.
Starboard calls on Match Group (MTCH) to fix Tinder or go private.
Yield curve: US30Y jumps above US2Y for first time since January.
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Good morning. Happy Monday. Hope you had a good weekend.
The Asian/Pacific markets were mixed. Australia, Malaysia and the Philippines did well; Hong Kong and Indonesia were weak. Europe, Africa and the Middle East lean to the downside. Greece and Saudi Arabia are down; Denmark, France, Germany, South Africa, Finland, Norway, Portugal and Sweden are up. Futures in the States point to a moderate gap up open for the cash market.
————— Blog: The Internals Have Surged, Participation Has Broadened Out —————
The dollar is up. Oil and copper are down. Gold is up; silver is down. Bonds are down.
Stories/News from Seeking Alpha…
The Trump Trade
Financial markets are reopening following an assassination attempt on Donald Trump at a weekend campaign rally in Pennsylvania. A bullet that grazed the former president’s ear, and could have had a very different result, is still making headlines, amid calls for unity to bring the country together. The shooting also came before the Republican National Convention – which runs from Monday through Thursday – kicks off in Milwaukee, with many analysts weighing in on what the recent spate of events can mean for investors.
Bigger picture: The odds of Trump winning in November are seen as increasing following the attack, and some betting markets even show the House swinging in the GOP’s favor, as well as the Senate. Republican wins would likely result in extended tax cuts and hawkish trade policies like heavy tariffs. It can also mean looser regulation for hot-button topics ranging from climate change to cryptocurrency, especially if a so-called “Red Wave” materializes.
Bitcoin (BTC-USD) rose to levels seen in early July, climbing as high as 5% to $63,204, and pushing up other crypto-related stocks. Stock futures were also in the spotlight, with contracts tied to the Dow and Nasdaq 100 ahead by 0.6%, and those linked to the S&P 500 up by 0.5%. Trump Media & Technology (NASDAQ:DJT), which is known for its meme qualities and can follow Trump-related developments, also soared 71.5% to $52.95/share, and will likely be on the move for most of the premarket session.
Go deeper: Condemnations have poured in from across the political spectrum, but some high-profile names in the business community formally backed Trump following the shooting. “I am going to formally endorse @realDonaldTrump,” Pershing Square’s (OTCPK:PSHZF) Bill Ackman declared, adding that full details will be forthcoming. “Last time America had a candidate this tough was Theodore Roosevelt,” Tesla’s (TSLA) Elon Musk wrote on X. “I fully endorse President Trump and hope for his rapid recovery.” Take the WSB survey. (35 comments)
Gee Wiz
Google parent Alphabet (GOOGL) is reportedly in advanced discussions to acquire cybersecurity startup Wiz for roughly $23B. If completed, the deal would be the tech giant’s biggest acquisition ever, and help boost its efforts in cloud computing, an important and growing business where it has lagged behind peers. Any transaction would come at a time when antitrust authorities are scrutinizing the market power of Alphabet, as well as other technology companies. Wiz’s investors include Insight Partners, Blackstone (BX), Sequoia, Salesforce Ventures (CRM) and Lightspeed. (40 comments)
Third Plenum
The economy is on the radar as top Chinese policymakers gather for a meeting known as the Third Plenum. The assembly typically focuses on long-term issues facing the country and have resulted in sweeping reforms in the past. Hurt by a property downturn, weak domestic demand, a falling yuan, and trade frictions with the West, China’s gross domestic product expanded by 4.7% in the April to June period, according to official data. That represented a slowdown from the 5.3% growth reported in Q1 and also missed economist expectations.
Bring home the bacon
The world’s biggest pork producer has some big plans. WH Group, the Chinese parent of Smithfield Foods, intends to float the company’s business in the U.S. and Mexico on the New York Stock Exchange or Nasdaq. WH Group bought Smithfield for $4.7B in 2013, marking one of the biggest takeovers of an American business by a Chinese company at the time. Smithfield was removed from the NYSE as a result, but still owns popular brands like Nathan’s Famous and slaughters about 30M hogs a year. (6 comments)
Today’s Economic Calendar
8:30 Empire State Mfg Survey
12:00 PM Jerome Powell Speech
4:35 PM Fed’s Daly: “The Bull, the Bear, and the Banker”
What else is happening…
‘Ease, please’: 7 points on why the Fed should start cutting rates.
Despicable Me 4 leads the box office for the second week.
Goldman (GS) challenges Fed’s demand it hold more capital.
U.S. business bankruptcies hit highest level in 14 years in June.
UBER and LYFT may have nothing to fear from Tesla’s robotaxi vision.
Boeing (BA) starts 777-9 trials, marking key certification milestone.
Supreme Court’s Chevron ruling may limit action on climate, EVs?
Burberry names Michael Kors boss as CEO, issues profit warning.
Verizon (VZ) sued by record labels for allowing copyright theft.
SA Asks: What are the best chip stocks to invest in right now?
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