Benzinga - Are we inching closer to the elusive “soft landing”? An increasing share of global fund managers sees it as the most likely outcome over the next 12 months:
Market
Prices as of 4 pm EST, 7/18/23
Macro Here are some highlights from BofA’s latest Global Fund Manager Survey:
- Investors still expect global growth to weaken in the next 12 months.
- But only 48% predict a recession by the end of Q1 2024.
- In fact, most (68%) see a soft landing as the most likely outcome over the next year.
- Sentiment, however, is still stubbornly low.
- Investors expect the Fed’s first cut will come in Q2 2024.
June’s retail sales report revealed mixed signals about consumer strength.
- Headline sales missed expectations, rising by 0.2% (vs. 0.5% expected) MoM to 1.5% YoY (vs. 1.6% expected).
- On the other hand, spending on the core/control group–which excludes food, autos, gas, and building materials and is used to calculate GDP–jumped by 0.6%.
- Overall, consumer spending softened but flashed resilience in June amid higher prices and borrowing costs.
Homebuilder confidence rose for the 7th consecutive month in July.
- The NAHB Housing Market Index is at its highest since June 2022.
- With record-low inventories boosting demand, why wouldn’t it be?
- According to Redfin, the total number of homes for sale dropped 15% YoY in June to an all-time low (chart).
- At the same time, home prices may have bottomed: June’s median sale price decline was the smallest of the past 5 months (chart) and homes are beginning to sell above their list prices.
Redfin
Stocks Microsoft (NASDAQ: MSFT) shares reached fresh all-time highs after the company announced new generative AI subscriptions for Microsoft 365.
- The (not cheap) $30-a-month add-on includes AI tools that work with Teams, Word, and Excel.
- Separately, Microsoft also announced a new partnership with Meta (NASDAQ: META).
- As Meta’s preferred partner for Llama 2, Microsoft will make the AI language model software available (for a price) to its Azure customers.
Let’s turn back up on BofA’s Global Fund Manager Survey for some more insights:
- There’s a massive divergence in sentiment between institutional and retail investors (chart).
- Equity allocation increased in July but remains net 24% underweight.
- Bond allocation has been overweight in 7 of the last 8 months and remained so in July despite ticking down.
- Investors are the most underweight commodities since May 2020.
- Over the last month, they rotated out of healthcare, Japan, bonds, and tech, and into the US, insurance, staples, EM, and equities.
- Global profit expectations are the most optimistic since February 2022.
Bank of America
Energy According to a new International Energy Agency (IEA) report, global power demand is poised to grow just under 2% this year.
- That’s below the 5-year pre-pandemic average of 2.4%.
- In 2024, however, growth is expected to jump to 3.3% as global economies rebound.
- The agency predicts that next year—for the first time ever—renewable sources will account for more than 1/3 of the total global power supply:
Earnings Yesterday’s highlights:
Bank of America (NYSE: BAC): $0.88 EPS (vs. $0.84 expected), $25.33 billion in sales (vs. $25.05B expected).
- A 14% jump in net interest income (in-line) drove an 11% gain in total revenue.
- The bank expects net interest income to expand by 8% for the year.
“We continue to see a healthy U.S. economy that is growing at a slower pace, with a resilient job market.”Morgan Stanley (NYSE: MS): $1.24 EPS (vs. $1.15 expected), $13.46 billion in sales (vs. $13.08B expected).- CEO Brian Moynihan
- The bank’s wealth management business posted record revenue, beating estimates with 16% growth fueled by higher interest income.
- As with others across the industry, its investment banking division disappointed.
“While we may not be quite at the end of rate increases, I believe we are very, very close to it.”- CEO James Gorman
What we’re watching today:
- Tesla (NASDAQ: TSLA)
- ASML Holding N.V. (NASDAQ: ASML)
- Netflix (NASDAQ: NFLX)
- International Business Machines (NYSE: IBM)
- Goldman Sachs (NYSE: GS)
- Elevance Health (NYSE: ELV)
- US Bancorp (NYSE: USB)
- Crown Castle (NYSE: CCI)
- Las Vegas Sands (NYSE: LVS)
- Kinder Morgan (NYSE: KMI)
- Baker Hughes (NASDAQ: BKR)
- Halliburton (NYSE: HAL)
- Discover Financial (NYSE: DFS)
- Equifax (NYSE: EFX)
- Nasdaq (NASDAQ: NDAQ)
- M&T Bank (NYSE: MTB)
- Steel Dynamics (NASDAQ: STLD)
- United Airlines (NASDAQ: UAL)
- Northern Trust (NASDAQ: NTRS)
- Citizens Financial (NYSE: CFG)
- Rexford Industrial Realty (NYSE: REXR)
- First Horizon (NYSE: FHN)
Top Headlines
- UK CPI: Inflation in the UK fell more than expected in June, dropping to 7.9%.
- Stock ban: Two Senators will introduce legislation banning federal executive branch members and lawmakers from owning single stocks.
- Regional banks: Slowing credit growth and deteriorating credit conditions are in the outlook for US regional banks, according to Apollo.
- USD weakness: SocGen expects the USD will return to its December 2020 lows.
- Slowing returns: Bernstein strategists predict US equities will show an annualized total return of 4% over the next decade.
- Teamsters strike: The Teamsters union is threatening to strike against trucking company Yellow.
- Pharma suit: Johnson & Johnson joins Merck, Bristol Meyers, and others in suing the US government over the new drug price controls law.
- PSA: Jim Cramer does not see a recession on the horizon.
Crypto
Prices as of 4 pm EST, 7/18/23
- XRP demand: Open interest in XRP futures hit a new YTD record high after climbing above $1.1 billion.
- Polygon 2.0 roadmap: Polygon (CRYPTO: MATIC) will create a new governance framework aimed at decentralizing control.
- Crypto flows: Inflows into digital asset investment products over the last 4 weeks were the highest since Q4 2021.
- French license: SG Force, a Societe Generale division, is the first company to receive a crypto license in France.
- Crypto nominee: Presidential hopeful RFK Jr. says he would exempt Bitcoin (CRYPTO: BTC) profits from capital gains tax.
Deals
- Merger rules: The Biden administration is proposing tougher antitrust merger guidelines aimed at private equity and tech.
- UK OK: Broadcom’s $69 billion acquisition of VMWare has received provisional clearance in the UK.
- Crowdfunding nightmare: Investors who contributed $63 million for real estate deals through CrowdStreet have watched their funds disappear.
- Beauty IPO: Oddity Tech raised $424 million in its IPO after pricing shares above the marketed range.
- PE admin: Private equity firm THL will acquire a majority stake in Standish Management for ~$1.6 billion.
Meme Of The Day
© 2023 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.