Benzinga - Economists expect this morning’s retail sales data to show the strongest growth since January. If a recession is coming, somebody forgot to tell the consumer!
Market
Prices as of 4 pm EST, 7/17/23
Macro China represents the world’s largest market for chipmakers.
- In 2022, it was responsible for $180 billion of $555.9 in global semiconductor purchases.
- The White House has recently taken action to impose restrictions on the sale of chips and related US tech to China.
- Industry players at home, naturally, have warned against such action.
- Yesterday, industry executives met with Biden administration officials to urge them to avoid further restrictions.
Manufacturing activity unexpectedly expanded for the second straight month in July.
- Expected to fall into contraction, The Empire State Manufacturing Survey’s general business conditions index dropped less than expected to 1.1.
- Underlying components were mixed as new orders and employment increased but shipments declined.
- Outlook for the next 6 months also deteriorated.
- In a positive for inflation, prices paid and received fell to their lowest since August 2020 and July 2020, respectively.
Yesterday we noted how economists were (again) pushing out recession expectations.
- Goldman Sachs has similarly cut its odds of a US recession within the next 12 months to 20% from 25%.
- The bank’s main reasons for optimism–like those of said economists–are continued progress on inflation and strong fundamentals despite significantly higher borrowing costs.
- Treasury Secretary Janet Yellen agrees: she told reporters yesterday she does not expect a US recession.
Goldman Sachs
Stocks Here’s something you already know: the Nasdaq-100 has become too concentrated.
- Currently, the top 7 stocks account for 56% of the index.
- After July 24, their collective weight will be brought down to 44%.
- Stocks seeing the biggest declines in weight: NVDA (NASDAQ: NVDA) (3%), MSFT (NASDAQ: MSFT) (3%), AAPL (NASDAQ: AAPL) (0.6%).
- It will be just the second such “special rebalance” in 25 years (the previous one in 2011 had no clear impact on the affected stocks).
- Here’s what the index will look like after the rebalancing:
EPS estimates are seeing more positive revisions than negative ones as we head into earnings season.
- In fact, consensus EPS has seen fewer pre-season cuts than usual.
- At the same time, earnings uncertainty—a measure of analyst forecast dispersion—has been falling for the S&P 500 as a whole.
- Uncertainty surrounding Tech earnings, however, has been rising:
Energy OPEC, the International Energy Agency (IEA), and the US Energy Information Administration (EIA) all see oil demand rising in Q3 (chart).
- They also forecast tightening supply in the second half of the year.
- In fact, according to Standard Chartered, the global market is already in a deficit.
- Don’t tell that to oil investors - traders have remained sellers amid warnings of a tight market.
@mikezaccardi
Earnings With 30 companies representing 11% of S&P 500 earnings having reported, here’s a (very) early look at Q2 trends:
- Companies are reporting a -7.1% YoY decline in earnings.
- The beat rate is above average at 77% but below last quarter’s 90%.
- In aggregate, reported earnings have topped estimates by 8.8%.
Fact Set
What we’re watching today:
- Bank of America (NYSE: BAC)
- Novartis (NYSE: NOV)
- Morgan Stanley (NYSE: MS)
- Lockheed Martin (NYSE: LMT)
- Prologis (NYSE: PLD)
- Goldman Sachs (NYSE: GS)
- Charles Schwab (NYSE: SCHW)
- PNC Financial (NYSE: PNW)
- Bank of NY Melon (NYSE: BK)
- Omnicom (NYSE: OMC)
- JB Hunt (NASDAQ: JBHT)
- Synchrony (NYSE: SYF)
- Interactive Brokers (NYSE: IBKR)
- Pinnacle Financial (NASDAQ: PNFP)
- Western Alliance (NYSE: WAL)
Top Headlines
- Euro AI battle: France and the UK are competing to establish themselves as the leading country for AI in Europe.
- Survey says: BofA’s Global Fund Managers survey reveals increasing optimism about a soft landing.
- Diversification rules: Large US investment funds are being restricted from purchasing more shares in popular tech stocks.
- Telecom slump: AT&T shares fell to their lowest closing price in 30 years following a WSJ investigation.
- Ridesharing: Shares of Uber dropped following a court victory for its drivers.
- Ford EVs: Ford reduced the price of its base model F-150 Lightning by 17% to ramp up competition.
- Twitter writedown: Cathie Wood’s ARK wrote down its Twitter stake by 47%.
Crypto
Prices as of 4 pm EST, 7/17/23
- Steady inflows: A $742 million, inflows into crypto products last month hit their highest level since 2021.
- Addresses surge: The number of unique addresses on the Bitcoin network has topped 500k for the first time since May 2021.
- COIN goes to DC: Coinbase (NASDAQ: COIN) CEO Brian Armstrong will meet with House Democrats tomorrow to discuss legislation and regulation.
- Reddit tokens: Reddit’s MOON and BRICK tokens surged after the company explicitly allowed for trading of its Community Points.
- Crypto liquidation: Celsius’ $160 million liquidation has begun with a $63 million transfer to FalconX.
Deals
- Finish line: The $69 billion Microsoft/Activision deal is unlikely to close by its deadline (today).
- Space investments: Private investment in space companies is showing signs of stabilization after years of steady declines.
- Space unicorn: Rocket startup Firefly is close to announcing the closure of an oversubscribed capital raise.
- Mining M&A: Glencore has agreed to acquire the remaining 18% stake in PolyMet Mining for ~$73 million.
- BTC mining SPAC: Bitcoin mining company Bitdeer has become one of the world’s largest crypto miners just 3 months after its SPAC merger.
Meme Of The Day
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