June 25 -31, 2023

FEAR NOT Brave Investors

Where have we been and where are we going? Join our weekly market thread on Traders Community…

The Week That Was – What Lies Ahead?

Contents

Click on the links below to navigate to the relevant section.

• Part A: Stock markets
• Part B: Bonds
• Fed and Banks
• Part C: Commodities
• Energy – Oil and Gas
• Gold and Silver
• Part D: Foreign Exchange
• Geopolitics and Economics
• Economy Week ahead

Editorial

With Friday’s coup, not a coup in Russia, the James Bond classic, From Russia with Love was brought up. The questions were asked what has changed 60 years later? On that note some dialogue snippets struck a note:

• Tatiana: You look surprised. I thought you expected me.
• Kerim Bey: Ah, the old game: give a wolf a taste and then leave him hungry. My friend, she’s got you dangling.
• James Bond: Day and night. Go on about the mechanism.
• Donald “Red” Grant: You may know the right wines, but you’re the one on your knees. How does it feel old man?
• Donald “Red” Grant: The first one won’t kill you; not the second, not even the third… not till you crawl over here and you KISS MY FOOT!
• James Bond: That must have been a pretty sick collection of minds to dream up a plan like that.
• Ernst Blofeld: Siamese fighting fish, fascinating creatures. Brave but of the whole stupid. Yes they’re stupid. Except for the occasional one such as we have here who lets the other two fight. While he waits. Waits until the survivor is so exhausted that he cannot defend himself, and then like SPECTRE… he strikes!

We can pontificate about what happened, what will happen and so on, the reality is there are many bifurcations on this one. We must recognize the big one here, uncertainty has increased, Russia’s Putin is a wounded bear at this point, weakened but how will he react, is this the end and so forth. The answer is no one knows.

What We Know:

• President Putin’s aura of invincibility and control, already hammered by his failed invasion of Ukraine, has been fractured. Structurally this bizarre 24 hours weakens his position short and long-term.
• Prigozhin has exposed Putin, by his threats and then amnesty, he is now a dictator who has shown that he has tolerated rebellion.
• Putin had called Prigozhin a traitor and vowed that he’d be punished just hours before. The punishment? Exile and those Wagner Group mercenaries who took part in the rebellion will not be charged.
• With Russian forces decimated and demoralized after 16 months of war in Ukraine, the Kremlin is vulnerable and worried.
• Putin has been Mr. Prigozhin’s patron for two decades, from chef, fixer and mercenary warlord. His final act, Putin’s Judas or was this a preorganized play by the two to flush out foes or conspirators?

What of China and Russia?

We have been opining about the unequal and fractured relationship between China and Russia for some time. A now-deleted tweet from the Global Times Chinese state media commentator Hu Xijin speaks volumes.

The tweet said before the coup was called off that Prigozhin’s “armed rebellion” had crossed the tipping point and that “regardless of his outcome, Russia cannot return to the country it was before the rebellion”.

Safe Haven Risk

Safe haven plays are the immediate thought here with higher vol ahead, US dollar US treasuries and the Swiss Franc. Yen gets interesting given its weakness but prior role in Safe haven. They are so many possible shifts here, key will be grains, energy prices and metals. How this plays out geographically will have many twists and turns.

Watch for nay geopolitical impact on Russian alliances such as Belarus and nearby countries in the Soviet sphere. In EU what does Hungary (Orban) or NATO ally Turkey (Erdogan) do now?

Back to the week that was …

Markets behaved as largely expected after a record quad witching which had much to do with the run up last week. The OPEX forced short term shorts to cover after chilled CPI and PPI and then an FOMC that was basically ignored due to delta covering. This week we saw shorts go back on and Vol rise, a positive for structure given the shock of the weekend, in other words the market was not all one way come Friday’s close before the Russian fun began. Trading volume was extremely heavy today, reflecting the reconstitution of the Russell Indexes.

The stock market closed the week near lows, the S&P 500 and Nasdaq broke five- and eight-week winning streaks, respectively. Concerns about global growth prospects contributing after the aggressive central bank rate hikes and the dismal June PMI readings. Several central banks announced increases in their policy rates, including the Bank of England (+50 bps to 5.00%), Norges Bank (+50 bps to 3.75%), Swiss National Bank (+25 bps to 1.75%), and Central Bank of Turkey (+650 bps to 15.0%).

Fed Chair Powell said in his semiannual monetary policy testimony before the House Financial Services Committee on Wednesday that there could be two more rate hikes by the Fed before the end of the year if the economy performs as expected. This was followed by Fed Governor Michelle Bowman (FOMC voter) saying in a speech that “additional policy rate increases will be necessary to bring inflation down.”

Fed Chair Powell continued his monetary policy testimony before the Senate Banking Committee on Thursday. He didn’t provide any new surprises in terms of monetary policy views, yet there was consternation among committee members regarding capital requirements for banks. That understanding undercut the bank stocks this week. The SPDR S&P Bank ETF (KBE) fell 6.8% while the SPDR Regional Banking ETF (KRE) fell 8.1%.

Growth concerns manifested themselves in falling commodity prices, the outperformance of the dollar, and sliding Treasury yields. The Bloomberg Commodities Index dropped 2.7% this week (down 9.3% y-t-d). This week’s underperformance in shorter tenors put additional pressure on the 2s10s spread, which compressed by seven basis points since last Friday to -101 bps. Crude oil widened this week’s loss to $2.74, or 3.8%, week while the U.S. Dollar Index rose 0.5% to 102.91, gaining 0.6% for the week.

Worth reading again what fueled the recent rally…

When Markets Get Short Behind the Curve

Global stocks have continued to climb the wall of worry in 2023, with what has become a series of saves from the brink of economic disaster in a political episode worthy of the best Monty Python minds. The end result has left many investors over insured at times as we have been focusing on with option saturation, short bets and long only investors out of the market. The latter in a rising market essentially makes them short. This background is not new we have seen it many times over the last 20 to 30 years. The difference here is the sheer weight of money in the system and the introduction of shorter dated options and so many playing it.

Speculators and hedge funds have put on the largest short positions in the S&P 500 since 2007 according to Bespoke Investment Group using CFTC data n measured as a percentage of open futures-market interest.

At the same time, they have bet long on the Nasdaq-100, with net bullish plays in recent weeks nearing the highest levels since late last year, remember that. Markets go where the most pain is. The move, in a world where averaging your position is seen as trading has fueled larger positions. Anyone understand the martingale principle?

Fed Assets expanded $364 billion over three weeks in March in banking crisis liquidity operations (the market has a short memory that was only 8 weeks ago and helped create bigger shorts out there). Assets remain about $45 billion above the March 1st level. FHLB assets expanded an unprecedented $317 billion during Q1 ($802bn over 4 quarters). Indicative of the liquidity surge, money market fund assets inflated $384 billion in the five weeks beginning March 8th. In affect we got a massive boost a surge in financial sector Credit with those FHLB money market borrowings to finance its massive banking liquidity support operations.

On top of that money fund assets were up another $31 billion last week, despite risk embracement and record equity fund inflows. These factors have not been grasped by many. Again, why we say watch Bonds and Foreign Exchange they will tell you the answers first. Now throw on top the artificial intelligence mania with record amounts of money flowing into tech stocks. Tech funds attracting an all-time high of $8.5 billion in the week through May 31, according to EPFR Global data.

The defense of the shorts is that disaster is coming any minute or the S&P500 would be down if it wasn’t for tech Mega caps. Shares of the 10 largest companies in the S&P 500 climbed 8.9%, while the other 490 fell 4.3%, according to Bespoke. The index as a whole was just up 0.2%.

That’s all well and good the trouble it is up, and substantially and the cost of carry is around 6-12% not 0-2% from last year. Trading from the short side is about timing, recognition and as they say strike like a cobra. The demise of the Californian and New York Regional Banks was a prime example, they were on the radar and once the cracks appeared, go hard, go fast.

Where are the Shorts Trapped at? (Becomes the Longs After Wave C’s or 3’s)

There is two ways of looking at this the bears and the dribblers out there argue it all has to come down. The rationale being the S&P 500 is up 12% this year, however it would be negative without the contribution of seven big tech companies. The argument is should any of those plunges then we are back to bringing it all down. The problem is it has gone up, look at the AAPL and NVDA for just two names.

This move has crept up on many, to the extent the S&P 500’s is over the traditional measurement of a new bull market typically measured as a 20% gain from a significant low. The index above 4292.438 got that 20% move. That ended the longest bear market since 1948. The DAX and CAC40 have seen all-time highs recently also.

Global Debt Monitor

Highlights Unprecedented and Ongoing Surge in Global Debt

Last week, the Institute of International Finance (IIF) released their Q1 2023 Global Debt Monitor (GDM), highlighting the unprecedented – and ongoing – surge in global debt.

GDM Highlights:

• “The global debt stock grew by $8.3 trillion to a near-record $305 trillion in Q123; the combination of high debt levels and rising interest rates has pushed up debt service costs, prompting concerns about leverage in the financial system.”
• “Total debt of emerging markets hit a fresh record high of over $100 trillion (or 250% of GDP) – up from $75 trillion in 2019.”
• “At close to $305 trillion, global debt is now $45 trillion higher than its pre-pandemic level and is expected to continue increasing rapidly.”
• “Rise of private debt markets: Non-bank financial institutions (NBFLs) continue to gain prominence in global credit intermediation. The so-called ‘shadow banks’ now account for more than 14% of financial markets, with the majority of growth stemming from a rapid expansion of U.S. investment and private debt markets.”
• “The Size of Private Debt Markets Surpassed $2.1 Trillion in 2022, Up From Less Than $0.1 Trillion in 2007.”

From the end of Q3 2019 through Q1 2023, Total Global Debt jumped $52.3 TN, or 20.7%, to $305 TN.

Over this period, “Mature” economy debt expanded 13.4%, while “Emerging” economy debt surged 38.9%. It’s worth nothing that in the “Emerging” category, “Household” debt surged 41.7%, “Non-Financial Corporate” 35.1%, and “Government” 55.7%. Since 2016, total global debt-to-GDP has surged from 210% to 360%. Global financial conditions remain loose. When they inevitably tighten, be prepared for serious dislocation.

How is the Consumer Hanging?

The US relies on services for up to 90% of GDP. it relies on the consumer who is being battered by the California and New York regional bank debacle. On top of that is cumbersome if not ignorant politicians, with no clear regard for main street the evidence suggests in their behavior.

For a clearer look with earnings reports from Nike (NYSE:NKE), the footwear and sports apparel giant. Consumer staples sector, General Mills (GIS) and McCormick & Co. (MKC), National Beverage (FIZZ), Constellation Brands (NYSE:STZ), Rite Aid (RAD), Carnival (NYSE:CCL) and Walgreens Boots Alliance (NASDAQ:WBA).

Key retailers all gave a cautionary note with tightened household budgets continue to hit demand for big-ticket items and curb discretionary spending.

We get more data to help us gage the consumer: Weekly MBA Mortgage, Weekly Initial and Continuing jobless claims. April S&P Case-Shiller Home Price Index; June Consumer Confidence and May New Home Sales May Pending Home Sales May Personal Income, Personal Spending (prior 0.8%), PCE Prices; final June University of Michigan Consumer Sentiment

Where is the fear?

We got some movement this past week out of the tight range in markets but as we can see from the VIX chart it quickly reverted back after the initial breaks. We are aware of built-up energy ahead of key central bank decisions from this week and potential fundamentals to set-up rate hikes or not. There is discontent globally with central Banks.

With optionality dominating markets along with quant funds, algorithms, systematic trading and automated trading volatility has collapsed as has been focused on at KnovaWave. The S&P 500 has moved less than 1% in either direction for 36 of the last 46 sessions, according to Dow Jones Market Data, the quietest 46-day stretch since December 2021. This in a period of a regional bank crisis and debt ceiling crisis. These systems have no emotion and trade accordingly.

Driving quant funds is a self-reinforcing dynamic, when market volatility drops, they add which causes those funds that have paid higher volatility to cover and hence we get the churn. At the end of March, quant-focused hedge funds held about $1.13 trillion in assets, according to research firm HFR, hovering just below last year’s record high. That represents about 29% of all hedge-fund assets.

To break out of this requires a continuing break in a major down, or up move to ignite delta chasing or covering.

So-called vol-control and risk-parity funds, which tend to automatically load up on riskier assets during calmer periods, ramped up equity exposure, according to the Deutsche Bank data, available through May 18. Other quants, such as trend-following CTAs, or commodity trading advisers, have similarly piled in.

The dominance of quants has helped explain previous periods of calm trading, including long stretches in 2017 and 2018. Those periods were punctured by rapid selloffs, including the 2018 selloff dubbed “Volmageddon” when the dynamics exerting calm on the market suddenly went away. Some warn a repeat could be ahead.

Caitlin McCabe WSJ

A point well made over at Scotiabank we follow over the past month which helps explain price action. There is a difference between marking down risk appetite within functioning markets—which is happening—versus widespread market dysfunction that can be destabilizing or lead to outright dysfunction—which is not happening to this point.

Talking about manic behavior it is not hard to argue the punter is overwhelming and influencing markets like no other time, well until the next time.

When the VIX is highly reactive, VIX related products can serve as potentially effective hedging tools, when the VIX is not very reactive, traditional hedging techniques may be a better choice.

The VOLX`s underlying instrument is the Mini VIX™ Future. The CBOE Volatility Index (VIX) is an up-to-the-minute market estimate of expected volatility. The VIX is calculated using a formula to derive expected volatility by averaging the weighted prices of out-of-the-money puts and calls (options) on the S&P 500.

Ahead:

Eyes will be on top macroeconomic reports that will emphasize the health of the US and global economies. Eyes and ears will be on central bankers given the market turmoil and the hiking of rates.

It will be a busy week in the US,

How Hot is the American Economy?

More Macro and Micro data points, some highlights include:

• Monday: $42 bln 2-yr Treasury note auction results
• Tuesday: US new home sales, durable goods, Conference Board consumer confidence
• Wednesday: US wholesale inventories, goods trade balance, Weekly MBA Mortgage, weekly oil inventories
• Thursday: US Final Q1GDP report, Weekly Initial and Continuing jobless claims, and weekly natural gas inventories.
• Friday: US May PCE deflator M/M: 0.1%e v 0.4% prior;; core PCE deflator M/M: 0.3%e v 0.4% prior, personal income and spending, University of Michigan consumer sentiment

Swirling greed and know it all came home to roost. FOMO (fear of missing out) and TINA (there is no alternative) ended how they always do.

Earnings season continues with earnings from technology and retail companies including

Nike (NYSE:NKE), Micron Technology (NASDAQ:MU), Nano Dimension (NNDM) General Mills (GIS) McCormick & Co. (MKC), National Beverage (FIZZ), MSC Industrial Direct (MSM), Paychex (PAYX), Constellation Brands (NYSE:STZ), Rite Aid (RAD), Carnival (NYSE:CCL) and Walgreens Boots Alliance (NASDAQ:WBA).

Click here to see the Full Week Ahead List Below

A reminder in these markets don’t get married to a view, leave biased partisan opinions at the door and find a leader. Right now, NVDA is giving us a good indicator of crowd behavior. Note the divergence and convergence with it and other instruments. Be proactive.

Worth repeating again in the low VIX environment.

Well, 2008 redux didn’t happen in the last few months, so the Fed moves have worked for now, much to Xi and Putin’s chagrin.

The doomsayers may be right, but we are seeing constant surprises to that theory. For example, early signs that the US housing market slump is finding a base are emerging, pending home sales having risen for a third month and to a 6-month high. we will keep an eye on consumer sentiment and business activity. We are far from being out of the woods, remember the market is not the economy. Saying that we got quite the distorted job picture per our main job stories which wee reprise below. Are we simply taking some air out or is the beginning of the great meltdown?

What we continue to notice is how this market is still being treated by ‘experts’ as those in the past, hence the volatility and extreme in bulls/bears. Understanding crowd behavior is essential in these markets. The moves have caught analysts and strategists by surprise with the uber bear running amok in the past few weeks. Typical thinking is this from Morgan Stanley strategists a month ago; “Given the events of the past few weeks, we think … equity markets are at greater risk of pricing in much lower estimates”, noting that earnings estimates were 15-20% too high even “before the recent banking events.”

What non-traders are failing to grasp is this market with so many variables is not trading as they expect and they are constantly wrong. S&P 500 earnings for the first quarter are estimated to have fallen 5% from 2022, followed by an expected 3.9% drop in the second quarter, Refinitiv data shows. During recessions, however, earnings tumble at a 24% annual rate on average, according to Ned Davis Research. However how important is that in such a chaotic market? There is the answer structure your thinking around game theory or even chaos theory.

So how Screwed are We?

• The banking system is on much greater Credit risk than mortgage risks were offloaded during the 2008 mortgage finance Bubble. At $25.6 TN, Banking System Assets ended 2022 almost double the 2007 level.
• Financial Sector debt growth jumped to a 9.66% rate last year, the strongest since 2007’s 13.50% Z.1 data showed. Now we are looking at this given the quick demise of regional banks and the concerns of the commercial structure. Why? we simple note a jump in Financial Sector borrowings signals a surge in risk intermediation. Is this fateful late-cycle intermediation gong to haunt the financial sector and economy when the Bubble bursts.
• If it doesn’t burst well, we circle back to the popular view that Financial Sector debt included in analysis would be “double counting” borrowings already included elsewhere (i.e. mortgage and business). The swift end to backs, the shocking management out there and geopolitical cold war out there has us ready to expect the unexpected and aware of moves to mitigate by Central banks as we saw a few weeks ago.
• GSE Assets expanded an unprecedented $2.094 TN, or 29.4%, over the past three years to a record $9.224 TN. FHLB Assets surged $524 billion, or 72%, in 2022, with indications for Q1 growth upwards of (yes) $400 billion.
• FHLB plays a pivotal role, last year prolonging the lending boom and last month stabilizing bank liquidity.

The Credit cycle downturn is coming to the surface.

We have the reflective destabilizing Monetary Disorder. Take a peek at China and the markets collective cognitive dissonance to the property market there, the shadow banking as just one example. Have a look around the world. The hope is the collective mass continues to evolve and survive, while each time the destruction is evident in massive disproportion shifts of wealth and attempts of mind, if not physical control of the masses. Dial that back and try and get in the minds of those trying to right the ship and the market components that matter, not what the dribblers think matter.

Here’s a thought, knowing about the power of cognitive dissonance does not necessarily protect you from its effects. Traders are only too aware of this eureka moment when you grasp it. Why some of the best trades you ever do, are the ones you don’t. In option parlance, being delta neutral sometimes is the best trade.

Key this coming week will be the commencement of the next round of such indicators that will test whether these gains were one-offs or something that is sustainable. The key will be the extent to which downside risks to the US economy have been reduced enough to influence global central banks, and how markets react.

Some things never change, when you think Greed is Good

Annualizing the New York Fed’s Q4 household borrowing data, Credit card debt expanded at a 26% pace and total debt at a 9.5% rate during the quarter. The Fed’s aggressive tightening cycle has had little affect on loose financial conditions.

Where to from here? It’s also okay to acknowledge and process any difficult emotions or experiences that you may have had during the past year. Looking back on the past year with perspective can help you to gain a greater understanding of what you have been through and how you have coped. I hope that you are able to find ways to manage any challenges that come your way and that you continue to feel fine moving forward. Embrace the chaos that is headed your way in 2023!

China; Behind the Iron Curtain

A big shift in 2022, China’s population is now falling and below that of India. China’s population fell for the first time since 1961 as births have steadily fallen in recent years despite the removal of the “one child policy”. The stalling working age population and its likely decline ahead means that potential growth in China is down from around 10% or so in the 2000s to around 4-5% now.

Growth in China’s metric of system Credit growth, Aggregate Financing, dropped to $175 billion, down significantly from March’s $773 billion and only 61% of estimates. It was also the weakest monthly growth since last October.

“China is warning domestic brokerages not to spread information that compromises national security, reinforcing a campaign that has roiled consulting firms and providers of financial data.”

• June 20 – Bloomberg: “Chinese policymakers are facing growing calls for economic stimulus, this time from several prominent state media and top government advisers. The country’s three main state-run securities newspapers ran front-page articles… saying the central bank is likely to ease monetary policy further, citing well-known economists. Separately, Xinhua News Agency reported that Wang Huning, the No. 4 official in China’s ruling Communist Party, held a meeting… with representatives of other Chinese political parties to discuss policy suggestions on reviving consumption.”
• June 21 – Bloomberg: “China has begun a fresh round of nationwide inspections to work out how much money local governments’ owe, according to people familiar with the matter, a sign that authorities are preparing to take concrete steps to tackle a key financial risk. Local officials will be pressed to come clean about their so-called hidden debt as national leaders attempt to get a fuller picture of liabilities across all levels of government, the people said…”

The Market Tripod of Destruction.

• Firstly, financial asset overvaluation has swung way past any sound underlying economic wealth structure.
• Secondly over-leverage in crowded bets.
• Thirdly we have greed enthused, as always in these cycles, risk engineering, transfer and management that ignores or understands bifurcation and contagion outcomes.

Leverage has become toxic, a development that if not addressed will have deep and with far-reaching sequels. It’s not too farfetched to suggest that the markets are on the verge of a rupture that would be difficult to contain. Should the crisis of confidence dynamics that hit Britain feed into other markets a powerful global contagion could be unleashed. The markets are dislocated, and financial stability is at risk. A sobering thought is the UK is just the initial first world pension system in this cycle facing the harsh reality of a steep devaluation of assets and the prospect of widespread insolvencies and debilitating negative sentiment.

Inflation Matters

• US Producer Price Inflation Moderates Further in May, +1.1% versus +2.3% in April
• Consumer Inflation in May Eases, Core CPI Stays Elevated as Real Earnings Fall
• Robust Increase in Real Spending with Core PCE Inflation at Persistently High Levels in April

Inflation with Henry Kaufman

Kaufman is the legendary chief economist and head of bond market research at Salomon Brothers is someone who knows Inflation.  Henry Kaufman in an interview with Bloomberg’s Erik Schatzker Jan 14, 2022:

 “I don’t think this Federal Reserve and this leadership has the stamina to act decisively. They’ll act incrementally. In order to turn the market around to a more non-inflationary attitude, you have to shock the market. You can’t raise interest rates bit-by-bit.”

“The longer the Fed takes to tackle a high rate of inflation, the more inflationary psychology is embedded in the private sector — and the more it will have to shock the system.”

“‘It’s dangerous to use the word transitory,’ Kaufman said. ‘The minute you say transitory, it means you’re willing to tolerate some inflation.’ That, he said, undermines the Fed’s role of maintaining economic and financial stability to achieve ‘reasonable non-inflationary growth.’”

Independence – Never Take It for Granted Traders

“In aggregate, the market goes from order to disorder, and on that journey little pockets of order can form, including in commodities, bonds, stocks, currencies that circle back and reorder disorder. Then there is us the market player that reflects through order and disorder in an ever-evolving loop towards independence. It all starts with gravity and ends with equilibrium and back we go.” KnovaWave “The rules of market flux”

The Fed has kicked off its first real tightening campaign since 1994, with securities markets already at the brink of illiquidity and dislocation. Markets could soon be screaming for assurances of the Fed’s “buyer of last resort” liquidity backstop, while the Fed is prepared to begin withdrawing liquidity by selling Treasuries and MBS.

Another important aspect is the Fed doesn’t Control corporate pricing or wage decisions. Let us be clear geopolitical, climate change developments and what an out of depth, politically motivated administration are outside the Fed’s sphere of influence. There has been over $5.1 Trillion new “money” in 126 weeks, it’s a reasonable conclusion the Fed has lost control of Inflation.

We need to grasp all the risks to be wary off and received plenty of flak from it. We always talk here about expect the unexpected and now that is front and center, gage the market’s reaction, the market is always right and that’s why we focused on the crowd psychology aspect over the past few weeks.

“We have a market trying to interpret the Fed who is trying to find out how they can interpret their long-only portfolio at a risk parity where rates cannot rise.”

– MoneyNeverSleeps

Cboe Daily Market Statistics

Our weekly reminder for risk. The downside is clear with the absence of moral hazard from repeated Federal Reserve market bailouts in an environment of some would say obscene liquidity pumps. Pure greed is the other part, not wanting to miss out on fees. The obvious question is, how deeply ingrained is this attitude through the markets? How do we ween the markets off this continuous dip feed? At this point the Central Banks have kicked that answer down the road.

Part A – Stock Markets

Weekly Highlights – USA

Indices

• S&P500 fell 1.4% (up 13.3% y-t-d)
• Dow dropped 1.7% (up 1.8%).
• S&P 400 Midcaps reversed 2.5% lower (up 3.5%)
• Small cap Russell 2000 dropped 2.9% (up 3.4%).
• Nasdaq100 fell 1.3% (up 36.1%). The Semiconductors sank 4.5% (up 38.5%).

Sectors

• Utilities slumped 2.6% (down 8.6%).
• Banks sank 5.0% (down 23.1%)
• Broker/Dealers fell 3.2% (up 2.6%).
• Transports slipped 0.7% (up 9.7%).
• Semiconductors sank 4.5% (up 38.5%).
• Biotechs declined 1.6% (up 1.9%).
• With bullion down $37, the HUI gold equities index sank 4.8% (up 0.8%).

Biggest SPX Stock Winners and Losers Last Week

Global Stock Market Highlights

Highlights – Europe Stocks

Week/YTD

• U.K FTSE equities gained 1.1% (up 2.6% y-t-d).
• France’s CAC40 dropped 3.0% (up 10.7%).
• German DAX equities index was hit 3.2% (up 13.7%).
• Spain’s IBEX 35 equities index fell 2.4% (up 12.6%).
• Italy’s FTSE MIB index lost 2.3% (up 14.8%).

Germany’s benchmark Blue Chip DAX 30 index (Deutscher Aktienindex) expanded to 40 companies on 20 September, 2021 adding 10 new members to the German stock index from the MDAX which will be reduced from 60 to 50 members.

Highlights – Asia Stocks

Week/YTD

• Japan’s Nikkei Equities Index dropped 2.7% (up 25.6% y-t-d)
• South Korea’s Kospi index fell 2.1% (up 14.9%).
• India’s Sensex equities index dipped 0.6% (up 3.5%).
• China’s Shanghai Exchange Index slumped 2.3% (up 3.5%).

Highlights – Australian Stocks

• Australia’s S&P/ASX 200: -1.3% to 7099.2 Friday, lowest since 7091.3 on May 31. (-2.2% for the week)
• Energy stock off more than 4% and Woodside and Santos both -4% Friday
• Endeavour Group +5.20% AGL Energy +4.34%
• Lake Resources −37.89% Brainchip Holdings −13.75%

Highlights – Emerging Markets Stocks

Week/YTD 

• Brazil’s Bovespa index added 0.2% (up 8.4%),
• Mexico’s Bolsa index dropped 2.9% (up 10.1%).
• Turkey’s Borsa Istanbul National 100 index rallied 2.0% (up 1.3%).
• Russia’s MICEX equities index slipped 0.2% (up 29.8%).

Technical Analysis

S&P 500

Daily: The daily SPX closed again under the Key Spits roof under the 50% & August breakdown as it has coiled since the October Spit. We have energy and with a very low VIX it needs to get past the cloud twist to get through overhead otherwise this becomes a rising wedge. The market after spitting the 4100 and 38.2% retracement broke to capture the Tenkan. This underscores the power from the SPX spat of June & October lows with impulse through the tenkan and Kijun energized by the daily cloud twist that fueled this rally. The completive wave came off extreme fear and bear that ended with relief. Now we have sated much of the greed phase and short fear phase. We have completed that cycle and from here we measure the alternatives.

Tracing back from highs the fuel from the top of the channel after completing 3 waves off ATH, accelerated after broke the Tenkan through to the 4600 OI where it reversed with impulse back to Tenkan. Bulls, this is likely a (ii) of a 5. Bears this is 1-2 of (i) completive V of degree. We watch if this low was a (iii), (a) or C. We have to respect the number of alternatives of degree of 5. With such trends keep it simple resistance is Tenkan and Kijun and watch for ABC. From no fear to panic is the driving element.

On the downside the Kijun and those June lows now critical and is our trading Bear/Bull pivot in a high vol scenario. Watch each measured 3 wave move on the 240 & Murrey Math highlighted in the podcast. The prices pulled through the downward cloud pulled by the twist ‘helium contusion’ on the completive.

For fractal purposes, SPX completed 5 waves up where it reversed with impulse. Energy fueled from the power impulse down from +1/8 ATH spit of a spit fail. On the way down (just like up) it accelerated after it broke the Tenkan through the rejected Kijun and then through the median after tapping 8/8.

Weekly: The SPX closed over the cloud this week and with 8 sessions (weeks) above the Tenkan +1/8 we come into pivotal time, the VIX and outside events align with this. Eyes up traders! Key support is the 50wma Tenkan and +1/8. Power initially came from launching out of the sphere of influence as one would expect in a 3 or C. We had the Kijun spit also. Above is the channel and +2/8, above the weekly cloud is needed for cycle switching.

In the bigger picture we are playing out S&P 500 energy after it held the sphere of influence from Nov 2020 reversed higher after spitting the 38% and key lows. At the time we opined “We do have a weekly cloud twist; however, the energy is waning without sharp impulse.” We got the sharp impulse right to weekly Kijun. For major cycles we watch the S&P 500 over 4,231, the 50% retracement of losses from the Jan. 3 & June 16 close. Since 1950 there has never been a bear market rally that exceeded the 50% retracement then gone on to make new cycle lows. Is this time different, as we tested and spat those June lows?

On the way up each new high evolved after testing Tenkan key support on the way and we are now getting a retest as resistance. We reiterate this needs to be recovered for a resumption of the uptrend meanwhile the bear market plays out. Watch Tenkan this week and watch for Kijun reaction. Extensions are difficult to time, keep it simple.

THE KEY: Key for the impulse higher was the spit or retest of MM 8/8 and Tenkan San, which held with the previous highs and Tenkan.  To repeat “We look for 3 waves down and reactions to keep it simple with the alternatives in the daily.”  Keep an eye on the put/call ratio with recognition to the sheer size of contracts AND keep in mind the stimulus distortion. The spit per channel fractal and Adams rule launched back over the cloud where we were encased AND we are back testing it. Watch if a spit or clear break support as Chikou rebalances

A reminder that Apple Inc $AAPL, Microsoft Corp $MSFT, Amazon.com Inc $AMZN, Facebook Inc $FB, and Google-parent Alphabet Inc $GOOGL make up approximately 23% of the total weight of the S&P 500. With that comes gyrations that are an outsized impact on broader markets

NASDAQ 100

The down move saw Nasdaq spit the weekly Kijun and a 1-2 off tenkan we spat MM 5/8 after holding the key 61.8% Fib. We watch the Tenkan & Kijun confluence above, the breakup level and between the 38/50 Fibs. The Nasdaq is well behind the S&P pace with the weekly cloud and 50wma well above. Support the 61.8% retest.

Recall ATH was after it broke and held the weekly Tenkan to see a spit of a spit fail which is completive of 5 of some degree with Chikou rebalancing. Watch Chikou for divergence for continuation or failure. Divergence with Russell also a clue.

Dow Jones

The Dow led the indices and closed above the weekly Tenkan after closing and testing last week. Prior test after the reaction off the June lows and sphere of influence. Support is the channel and Fibs. Tenkan and Kijun after the reaction empowered. Support is the channel and Fibs.

Russell 2000

The small cap Russell RUT bounced in double bottom off 1600 5/8 confluence which was the Nov 2020 breakup. Russell 2000 Resistance Tenkan and Kijun, note previous rejections. This is the index showing more of the fast money crowd and is trading like it. Needs to get traction in here for bulls. 7/8 & 8/8 support collapsed on the way down and is now major resistance.

Semiconductors

NVidia $NVDA

NVidia surged 90% in Q! 2023, and kept going after earnings. It has a textbook of KnovaWave methodology and rules from the 61.8% break and reverse through the sphere. NVDA accelerated after it broke the double top spheres at 5/8 giving is a near 4/8 move. A reminder that the dominance was in, The Philadelphia Semiconductor (SOX) Index returned 27.6% for the quarter, with the Nasdaq Computer Index up 25.7% and the NYSE Arca Technology Index gaining 26.1%. The Nasdaq100 (NDX) jumped 20.5%. NVDA took off after the breakup retest from May 2021. NVidia is a clear leader of SOX & SMH look for cues there and ABC failures for changes. NVDA never looked back after the Key Break (mauve) and Tenkan to a flat cloud and holding support the recent low at the 61.8% extension.

Apple $AAPL

Apple has consistently driven upwards after it held the sphere of influence after retesting 6/8 & break up. Kijun and Tenkan crossing and then the 50wma with the cloud twist have been magnetic. Apple & other mega-cap names dominant the major indices, and a plethora of funds that hold it as a core position. The Vanguard Mega-Cap Growth ETF (MGK) delta is important to watch.

A firm rejection at $175 at +2/8 triggered a waterfall down for Apple. On the way up Apple gently motored up to new ATH over the massive $160 then $170 thru to $180 gamma level on the way down these levels became key energy levels all the way to $132. Support held at the May break (just like NVDA) where from there it spat the cloud pulled by a flat Tenkan and Kijun as it rebalanced Chikou. The old channel break and MM 8/8 is now key. Remember the impact $AAPL has, at least short term on all the major indices.

ARKK ETF

The ARK Innovation ETF (ARKK) finally found some support at -1/8, 78% off highs and the 423.6% extension! The ARK Innovation ETF returned 29% for Q1 2023. The fund is filled with growth stocks and was the top-performing U.S. equity fund tracked by Morningstar in 2020, it has not been a pretty slide. For the quarter, Nasdaq Computer Index up 25.7% and the NYSE Arca Technology Index gaining 26.1%. The Nasdaq100 (NDX) jumped 20.5%.

The ARKK ETF trading clinically, tested triangle breakdown and failed off 50 WMA. Some work at support at 61.8% of whole move and then wrecked again. Clear crowd behavior, we saw ATH in NASDAQ & SPX, yet this couldn’t raise a bid – very telling negative divergence. $ARKK rebalanced Chikou at week’s end

ExxonMobil XOM

Part B: Bond Markets

Bond Watch

Treasuries

U.S. Treasuries showed solid gains across the curve to finish the week. Friday’s move was fueled by flash June Manufacturing and Services PMI readings from major economies. These came at the time major central banks including the Fed, BoC, RBA, SNB, ECB, and the Bank of England are threatening more rate hikes. This week’s underperformance in shorter tenors put additional pressure on the 2s10s spread, which compressed by seven basis points since last Friday to -101 bps.

U.S. Treasuries $12 billion 20-yr bond reopening met stellar demand, reflecting continued strong appetite for U.S. government debt. WTI crude oil widened this week’s loss to $2.74, or 3.8%, week while the U.S. Dollar Index rose 0.5% to 102.91, gaining 0.6% for the week.

Treasury Yield Watch

Friday/Week

• 2-yr: -5 bps to 4.75% (+4 bps for the week)
• 3-yr: -4 bps to 4.33% (+1 bp for the week)
• 5-yr: -5 bps to 4.00% (+1 bp for the week)
• 10-yr: -6 bps to 3.74% (-3 bps for the week)
• 30-yr: -5 bps to 3.82% (-4 bps for the week)

For our complete Weekly Fixed Interest Analysis and Outlook visit our Bond Traders Weekly Outlook:

Mortgage Market

• Freddie Mac 30-year fixed mortgage rates declined four bps to 6.63% (up 82bps y-o-y).
• Fifteen-year rates dipped four bps to 6.03% (up 111bps).
• Five-year hybrid ARM rates sank 31 bps to 6.12% (up 171bps).
• Bankrate’s survey of jumbo mortgage borrowing costs had 30-year fixed rates up six bps to 7.07% (up 118bps).

Part C: Commodities

Highlights

• The Bloomberg Commodities Index dropped 2.7% (down 9.3% y-t-d).
• Spot Gold lost 1.9% to $1,921 (up 5.3%).
• Silver sank 7.3% to $22.43 (up 6.4%).
• WTI crude dropped $2.62, or 3.7%, to $69.16 (down 13.8%).
• Gasoline sank 6.1% (up 2%)
• Natural Gas jumped 3.7% to $2.73 (down 39%).
• Copper declined 2.1% (unchanged).
• Wheat rallied 6.6% (down 7%),
• Corn declined 1.5% (down 7%).
• Bitcoin surged $4,460, or 17%, this week to $30,746 (up 86%).

Key Long Term Commodity Charts

Copper

Gold

China raised its gold holdings for a seventh straight month, by about 16 tons in May… Total stockpiles now sit at about 2,092 tons, after adding a total of 144 tons from November through last month according to data from the State Administration of Foreign Exchange.

Energy

For complete Oil and Natural Gas Coverage please visit our dedicated publications ‘Around the Barrel’ and ‘Into the Vortex.’ – Weekly Analysis and Outlook for Energy Traders and Investors

WTI Oil

Natural Gas

BDI Freight Index

For our complete Weekly Commodity Analysis and Outlook visit our Commodity Traders Weekly Outlook:

Charts and commentary via KnovaWave on:

• Grains: Wheat, Corn, Soybeans
• Metals: Copper, Aluminum
• Precious Metals: Gold Silver
• Lumber
• Oil and Natural gas are covered separately (see below)

Part D: Forex Markets

John Maynard Keynes, 1920: “There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction and does it in a manner which not one man in a million is able to diagnose.”

Highlights

• For the week, the U.S. Dollar Index gained 0.6% to 102.90 (down 0.6% y-t-d). 2022 gains were 8.2%
• For the week on the upside, the Brazilian real gained 0.8%, and the Canadian dollar increased 0.1%.
• On the downside, the South African rand declined 3.0%, the Australian dollar 2.8%, the South Korean won 2.5%, the Norwegian krone 2.4%, the New Zealand dollar 1.5%, the Japanese yen 1.3%, the Singapore dollar 1.1%, the British pound 0.8%, the Mexican peso 0.5%, the Swedish krona 0.5%, the euro 0.4%, and the Swiss franc 0.4%. The Chinese (onshore) renminbi declined 0.73% versus the dollar (down 3.91%).

For our complete Forex Weekly Analysis and Outlook visit our Forex Traders Weekly Outlook:

Charts and commentary via KnovaWave on the US Dollar, Euro, Japanese Yen, British Pound, Euro Pound, Swiss Franc, Canadian Dollar, Australian Dollar, New Zealand Dollar, Turkish Lira, Mexican Peso. Currency dynamics are complex. There are myriad facets to analyze and contemplate that influence all markets.

Cryptocurrencies

Bitcoin

Bitcoin continues to be plaything of levered speculators, this week we saw the markets turn against those short. An incredibly intense squeeze engulfed the Treasury market which flowed through to crypto. Intense squeeze dynamics also spurred a huge rally in crypto, with bitcoin surging a crazy 34%.

Where did this come from? Forced coverage from yield curve punts blowing up. Yen shorts and levered “carry trades” were at risk. JGB and European yields sank. Corporate spreads were blowing out, inflicting losses on levered corporate bond portfolios. Energy prices tanked. The favored (so called safe) financial stocks were collapsing, while the heavily shorted technology stocks rallied. For the week, the KBW Bank Index sank 14.6%, while the Nasdaq100 (NDX) jumped 5.8%.

It had been a churn following the FTX collapse. BTC had been stuck in the sphere of influence in continuation awaiting a catalyst, and it came. Continues to perform technically to perfection. Impulse begets impulse. To understand panic, understand greed. $BTC tested the top of a rising channel after the preceding sharp downturn which was the downside breakout of an earlier bearish flag, after breaking downside a H&S top and then down it went….

Recall Bitcoin exploded higher following it’s correction impulsively upon completing 5 waves up at +2/8. Each Tenkan and Kijun tap saw an explosive kiss of death until we completed 3 waves to around 28,000. From there we have seen extreme volatility.

Looking back Bitcoin put in a high of $63,000 around Coinbase, the largest US crypto exchange successfully went public which signaled profit-taking. The high over $68,000 came after the launch over the Bitcoin ETF. From that high we have 2 main alternatives a V of a 1 of a V. For bears it a completive five with impulse right to the 50wma – an incredible 26% fall in a Friday night session. That’s impulse!

Ethereum

On the Risk Radar

Fed Warnings on Possible Medium To Long Term Risks

 Geopolitical Tinderbox Radar

Economic and Geopolitical Watch

Banks

Major US Banks Deliver Mixed Results in Q1, 2023

America’s big money center banks kick of first quarter earnings next week. There will be extra attention on them with the recent banking turmoil. Guidance will be keenly watched for from the money center banks. Concerns are rising over the banking sector’s exposure to commercial real estate. JPMorgan Chase (JPM), Citigroup (C), PNC Financial Services Group, Inc. (PNC) and Wells Fargo (WFC) reporting Q1 results on Friday. We got a preview from JPMorgan CEO Dimon saying that banking system is strong and sound despite the banking crisis raising the odds of a recession, and that the crisis is not over yet.

Major banks kicking off earnings this quarter, including BlackRock (BLK), Citigroup (C), First Republic Bank (FRC), JPMorgan Chase (JPM) and Wells Fargo (WFC).

• Morgan Stanley Wealth Management Revenue Rose 11% While Investment Banking Revenue Fell 24%
• Goldman Sachs Revenues Miss, Discloses Losses in Marcus and Real Estate
• Bank of America Earnings Benefiting from Higher Interest Rates and Solid Loan Growth
• Wells Fargo Earnings Higher with Net Interest Income Up 45% on Higher Rates
• PNC Bank Earnings Beat Expectations but Lowered 2023 Revenue Guidance
• What Banking Crisis? JPMorgan Shrugs, Record Lending Income and Revenue
• Citigroup Personal Banking Revenue and Indian Exit Boost Earnings

The California and New York Regional Bank Collapse of 2023

So that went quick….. its all about the crisis that just kept holding off until it didn’t

Just when you thought it was safe:

Jay Powell’s FOMC Speech: “We are committed to learning the right lessons from this episode and will work to prevent events like these from happening again.”

“JPMorgan… agreed to acquire First Republic Bank in a government-led deal for the failed lender, putting to rest one of the biggest troubled banks remaining after turmoil engulfed the industry in March… ‘This is getting near the end of it, and hopefully this helps stabilize everything,’ JPMorgan Chief Executive Officer Jamie Dimon said on a call with journalists Monday. Regional banks that reported first-quarter results in recent weeks ‘actually had some pretty good results,’ the CEO said. ‘The American banking system is extraordinarily sound.’” May 1 – Bloomberg (Jenny Surane, Hannah Levitt and Katanga Johnson)

“The trio of bank failures since March has cast a pall over KPMG’s lucrative business as the largest auditor of the US banking sector. Questions over the quality of its work and independence have mounted in recent days, following the release of a Federal Reserve report into the collapse of Silicon Valley Bank and the forced sale of First Republic. The Big Four accounting firm was auditor to both banks, as well as to Signature… In all three cases, KPMG gave the banks’ financial statements a clean bill of health as recently as the end of February. ‘It’s a three-fer,’ said Francine McKenna, a former KPMG consultant who now lectures at the Wharton School… ‘It’s a dubious achievement . . . and we need tough action to back up tough talk from regulators.’” May 3 – Financial Times (Stephen Foley):

“The American Bankers Association on Thursday urged federal regulators to investigate a spate of significant short sales of publicly traded banking equities that it said were ‘disconnected from the underlying financial realities.’ In a letter to U.S. Securities and Exchange Commission Chair Gary Gensler, the lobby group said it had also observed ‘extensive social media engagement’ about the health of various banks that was out of step with general industry conditions.” May 4 – Reuters (Andrea Shalal)

Round One and Two

“The Federal Reserve on Sunday unveiled a new program to ensure banks can meet the needs of all their depositors amid escalating chances of bank runs following the abrupt collapse of two major banks in the space of 72 hours. The Bank Term Funding Program (BTFP) will offer loans with maturities of up to a year to banks, savings associations, credit unions and other eligible depository institutions. Here are some key elements of the Fed’s program: A key element of the program is acceptable loan collateral – including U.S. Treasuries and mortgage-backed securities among others – will be valued at ‘par’… Loans of up to a year in length will be available under the new facility… Interest rates will be the one-year overnight index swap (OIS) rate plus 10 bps and will be fixed for the term of the advance on the day the advance is made… The loan commitments made by the Fed’s 12 regional banks will be backstopped with $25 billion from the U.S. Treasury’s Exchange Stabilization Fund.”

March 13 – Reuters (Dan Burns)

“Just hours after Wall Street opened for trading on Friday morning, US regulators had seized control of Silicon Valley Bank, which had imploded under the strain of depositors pulling out their money en masse. What at first seemed like the failure of a one-of-its-kind lender with deep ties to the technology industry quickly appeared as though it might spiral out of control. Within 48 hours, regulators were preparing a package of emergency measures to quell panic among depositors and prevent contagion in the rest of the banking system. For some working on the effort, it evoked memories of the response to the coronavirus pandemic in 2020 and the great financial crisis of 2008. By Sunday evening, the US government announced it would guarantee all deposits held at SVB and crypto lender Signature Bank, which was also shut down by regulators at the weekend. The Federal Reserve, meanwhile, launched a lending facility that would be available to lots of other banks in order to ensure depositors’ demands could be met.”

March 13 – Financial Times (Colby Smith, James Politi, Ortenca Aliaj and James Fontanella-Khan)

“The biggest banks in the U.S. swooped in to rescue First Republic Bank with a flood of cash totaling $30 billion, in an effort to stop a spreading panic following a pair of recent bank failures. JPMorgan…, Citigroup Inc., Bank of America Corp. and Wells Fargo are each making a $5 billion uninsured deposit into First Republic, the banks said… Morgan Stanley and Goldman Sachs… are kicking in $2.5 billion apiece, while five other banks are contributing $1 billion each. The bank’s executives came together in recent days to formulate the plan, discussing it with Treasury Secretary Janet Yellen and other officials and regulators in Washington, D.C…”

March 16 – Wall Street Journal (David Benoit, Dana Cimilluca, Ben Eisen, Rachel Louise Ensign and AnnaMaria Andriotis):

“Credit Suisse shares rebounded sharply on Thursday after the lender revealed plans to borrow up to SFr50bn ($54bn) from the Swiss central bank and buy back about SFr3bn of its debt in an attempt to boost liquidity and calm investors. The Swiss National Bank had said on Wednesday it was willing to provide a liquidity backstop following a plunge of as much as 30% in the troubled lender’s stock… In a statement on Thursday, Credit Suisse said it had taken the decision ‘to pre-emptively strengthen its liquidity’ by borrowing the funds from the Swiss central bank under a loan facility and short-term liquidity facility.”

March 16 – Financial Times (Joshua Frankli, Owen Walker and Laura Noonan)

The Week Ahead – Have a Trading Plan

What Macro and Micro Risks and Opportunities Lie Ahead this week

Global Watch

Next Week’s Risk Dashboard via Scotiabank

• Why US housing may be on a sustained rebound
• Canadian CPI could make or break BoC hike bets
• Canadian GDP to post mild growth
• BoC surveys to inform inflation expectations
• US PCE to follow CPI higher
• Eurozone CPI unlikely to sway the ECB’s next decision
• ECB’s Sintra conference
• Australian CPI may impact the RBA’s next decision
• China’s PMIs to inform downside risks
• BanRep likely to hold, too early to talk cuts
• Riksbank to hike by a minimum 25bps
• Other global macro readings

Central Bank Watch

Wednesday we get a policy panel with ECB’s Lagarde, Fed Chair Powell, BOJ’s Ueda and BOE’s Bailey at ECB bank forum in Sintra, Portugal.

Eyes and ears will be on central bankers. We have the backdrop of a more hawkish Fed Chair in the face of escalating systemic risk. How will this affect Fed policy given the massive treasury positions out there and the risk of uninsured funds? In this environment we get pivots daily. How much damage is the Federal Reserve willing to do in the guise of controlling inflation?

This Week’s Interest Rate Announcements (Time E.T.)

In the week ahead we get 2 central banks delivering policy decisions.

Thursday, June 29, 2023

• 03:30 Riksbank Interest Rate Decision

Friday, June 30, 2023

• 14:00 Banco de la Republica de Colombia Interest Rate Decision

For our complete Central Bank Analysis and Outlook visit our Central bank Watch:

Economic Data Watch

US Data Focus

• Monday: $42 bln 2-yr Treasury note auction results at 13:00 ET
• Tuesday: May Durable Orders (prior 1.1%) and Durable Orders -ex transportation (prior -0.2%) at 8:30 ET; April FHFA Housing Price Index (prior 0.6%) and April S&P Case-Shiller Home Price Index (prior -1.1%) at 9:00 ET; June Consumer Confidence (prior 102.3) and May New Home Sales (prior 683,000) at 10:00 ET; and $43 bln 5-yr Treasury note auction results at 13:00 ET
• Wednesday: Weekly MBA Mortgage Index (prior 0.5%) at 7:00 ET; May advance goods trade deficit (prior -$96.8 bln), May advance Retail Inventories (prior 0.2%), and May advance Wholesale Inventories (prior -0.2%) at 8:30 ET; weekly crude oil inventories (prior -3.83 mln) at 10:30 ET; and $35 bln 7-yr Treasury note auction results at 13:00 ET
• Thursday: Weekly Initial Claims (prior 264,000), Continuing Claims (prior 1.759 mln), Q1 GDP — third estimate (prior 1.3%), and Q1 GDP Deflator — third estimate (prior 4.2%) at 8:30 ET; May Pending Home Sales (prior 0.0%) at 10:00 ET; and weekly natural gas inventories (prior +95 bcf) at 10:30 ET
• Friday: May Personal Income (prior 0.4%), Personal Spending (prior 0.8%), PCE Prices (prior 0.4%), and Core PCE Prices (prior 0.4%) at 8:30 ET; final June University of Michigan Consumer Sentiment (prior 63.9) at 10:00 ET

Global Data Focus

• Austrian Chancellor Nehammer and Italian PM Meloni speak at Europa Forum Wachau
• French finance minister Le Maire and German economy minister Habeck meet in Berlin.

• NATO: NATO Secretary General Stoltenberg meets Lithuanian President Nausėda in Vilnius
• OPEC/IEA:
• Canada: Canada CPI, GDP, Bank of Canada releases business outlook survey and survey of consumer expectations.
• Brazil:
• Mexico: International reserves, Trade, unemployment
• Europe: Germany IFO business climate, ECB forum in Sintra, Portugal, Italy CPI, Sweden rate decision, Spain CPI, Eurozone economic confidence, consumer confidence, Germany CPI, Eurozone June CPI, unemployment rate, France CPI, Germany unemployment, Italy unemployment
• Russia: Russia unemployment, industrial production
• Turkey: Turkey rate decision
• UK: GDP, BOE chief economist Pill on panel at ECB bank forum focused on macroeconomic forecasting., BOE’s policymaker, Tenreyro is a panelist at ECB forum in Sintra on “Monetary policy in the face of multiple supply shocks.”
• China: China industrial profits, China June manufacturing PMI: 49.0e v 48.8 prior, non-manufacturing PMI, balance of payments
• Japan: Bank of Japan summary of opinions, retail sales, Japan unemployment, industrial production, Tokyo CPI
• India: India fiscal deficit
• South Korea:
• Australia: Australia monthly CPI retail sales
• New Zealand: New Zealand PM visits China to meet with President Xi Jinping

US Stocks Watch Earnings and Event Watch

Earnings Highlights This Week:

• Monday includes Carnival (CCL)
• Tuesday includes Walgreens Boots Alliance (WBA) Korn Ferry (KFY), Schnitzer Steel (SCHN), TD Synnex (SNX), AeroVironment (AVAV), Jefferies (JEF), HUTCHMED (China) Limited (HCM), NovaGold Resources (NG), American Lithium (AMLI), LiveOne (LVO), Bassett Furniture Industries (BSET), Barnes & Noble Education (BNED), Akari Therapeutics (AKTX)
• Wednesday includes Micron Technology (MU) BlackBerry (BB), General Mills (GIS), H.B. Fuller Company (FUL), Worthington Industries (WOR), American Outdoor Brands (AOUT), Borqs Technologies (BRQS), IronNet (IRNT), IGC Pharma (IGC), Staffing 360 Solutions (STAF), National Beverage (FIZZ)
• Thursday includes Nike (NKE) Nano Dimension (NNDM), Paychex (PAYX) Rite Aid (RAD), McCormick & Company (MKC), MSC Industrial Direct (MSM), Acuity Brands (AYI), The Simply Good Foods Company (SMPL), Progress Software Corporation (PRGS), Lindsay Corporation (LNN), SMART Global Holdings (SGH), The Greenbrier Companies (GBX), Accolade (ACCD), Cybin (CYBN), GreenPower Motor Company (GP)
• Friday includes Constellation Brands (STZ) Pure Cycle Corporation (PCYO), Highway Holdings Limited (HIHO) and BitNile Metaverse (BNMV).

Investors (and algos) will focus on the conference calls and outlooks. Last quarter everyone expected the worse, we saw critical updates on production in coronavirus impacted regions and if there is extended halting of operations weighing on multi-nationals. 

Events

Notable conferences running during the week include:

Monday

• The four-day Snowflake (SNOW) Summit 2023. The summit will include a fireside chat on generative AI with Nvidia (NVDA) CEO Jensen Huang.
• Mission Produce (AVO) in-person Investor Day and Facilities Tour.
• Limoneira Company (LMNR) in-person Investor Day and Facilities Tour.

Tuesday

• The Jefferies Space Summit will include appearances by Terran Orbital (LLAP), MDA (MDA:CA), Sidus Space (SIDU), BlackSky Technology (BKSY), and Redwire (RDW).
• Delta Airlines (DAL) will webcast the company’s Investor Day presentation.
• Casey’s General Stores (CASY) will outline an updated three-year strategic plan at an investor event.
• The hearing will continue in the case over the FTC’s efforts to block Microsoft (MSFT) from acquiring Activision Blizzard (ATVI).

Wednesday

• China Mobile (CHL) CEO Yang Jie and China Telecom (OTCPK:CHJHF) CEO Ke Ruiwen will be two of the keynote speakers at MWC Shanghai 2023 Conference.
• MultiPlan Corporation (MPLN) analyst and investor day
• Federal Reserve Chairman Jerome Powell, European Central Bank President Christine Lagarde, and Bank of England Governor Andrew Bailey will participate in the ECB Forum on Central Banking.
• Taysha Gene Therapies (TSHA) will host a virtual R&D Day to discuss updates on TSHA-120.
• Roblox (RBLX) CFO Michael Guthrie and CTO Dan Sturman will participate in an AI discussion with Morgan Stanley.
• 4:30 p.m. The Federal Reserve will unveil the results of its annual stress tests on the 23 biggest U.S. lenders. The stress test is expected to cover crisis conditions such as the unemployment rate rising to 10% and a market shock to the trading books of the banks. Bank of America (BAC), Citigroup (C), JPMorgan (JPM), State Street (STT), Wells Fargo (WFC), and Goldman Sachs (GS) are some of the banks that will be in the spotlight.

Thursday

• AMC Entertainment (AMC) and AMC Preferred Equity units (APE) two-day settlement hearing takes place in Delaware’s Court of Chancery.
• Sanofi (SNY) will host investors and analysts for its Vaccines Investor Event in London.
• The California Public Utilities Commission will hold a hearing on commercial autonomous vehicles. Alphabet’s (GOOG) Waymo has applied for the CPUC permit that would allow the company to charge for driverless rides, and General Motors’ (GM) Cruise applied to expand its fleet and deploy 100 self-driving cars across the entire 7×7 of San Francisco.
• Gamida Cell Ltd. (GMDA) will host an Investor Day event.

Friday

• FDA action data arrives on BioMarin Pharmaceutical’s (BMRN) Biologics License Application for Roctavian.
• Last trading day of the quarter and first half of the year, which means some window dressing with fund managers could take place in terms of adding on popular names such as Amazon (AMZN), Alphabet (GOOG), Apple (AAPL), Tesla (TSLA), Microsoft (MSFT), Meta Platforms (META), and Nvidia (NVDA) to replace stocks on a losing streak that would show up on quarter-end holding reports.

Sovereign Rating Updates

• None scheduled.

IPO Wrap

US IPO Week Ahead:

Focus on yourself and what YOU CAN INFLUENCE, set your trading plan and goals in be set for 2022.

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