As the North American session begins, the JPY is the strongest and the USD is the weakest. US stocks are getting hit lower with the Nasdaq leading.
Former Pres. Trump who is leading the presidential race, said he wanted a 10% tariff on all goods and 60% on Chinese goods. He also said Taiwan should be charged for defense saying that they control chip sales through Taiwan Semiconductor and that providing defense for a fee, is no different than an insurance policy. That got things going on fears of a global trade war. Taiwan Semiconductor will report earnings later this week, and their stock is currently down -5.41%. Chipmakers are lower with Nvidia down -3.98%, Qualcomm down -4.46%, and Advanced Micro down -4.49%. AS
Meanwhile Pres. Biden is also chirping about limiting supplies to China on national security concerns.
Also overnight:
- There was disappointment in British inflation after it remained steady last month, contrary to forecasts for a slight decline. Consumer prices rose 0.1% in June, with an annual increase of 2.0%, unchanged from May versus expectations of a drop to 1.9%. Core CPI, excluding volatile food and energy prices, also held steady at 3.5% annually, indicating strong underlying price pressures. As a result, rate futures now show investors see a roughly one in three chance of a rate cut in August, down from nearly 50-50 before the inflation data was released. European CPI final came in as expected at 2.9% for the core and 2.5% for the headline.
- Federal Reserve's John Williams stated that while the Fed is closer to cutting rates, it is not yet ready to do so; a rate cut might be appropriate in the coming months as more data provides confidence on inflation. He noted broad-based declines in inflation and emphasized that the labor market remains strong. Williams dismissed concerns about the difficulty of bringing inflation back to 2%, asserting that even with potential rate cuts, rates would still restrain economic activity. The recent three months of data are aligning with the Fed's disinflationary targets, and the current rate stance is deemed appropriate to achieve these goals.
Earnings this morning showed BEATS across the board, but J&J did project FY numbers:
Prologis Inc (PLD) Q2 2024 (USD):
- EPS: $0.92, expected $0.59 - BEAT
- Revenue: $2.01 billion, expected $1.87 billion - BEAT
US Bancorp (USB) Q2 2024 (USD):
- EPS: $0.97, expected $0.94 - BEAT
- Revenue: $6.87 billion, expected $6.79 billion - BEAT
Citizens Financial Group Inc (CFG) Q2 2024 (USD):
- EPS: $0.82, expected $0.79 - BEAT
- Revenue: $1.96 billion, expected $1.95 billion - BEAT
Johnson & Johnson (JNJ) Q2 2024 (USD): Shares are little changed.
- EPS: $2.83, expected $2.70 - BEAT
- Revenue: $22.44 billion, expected $22.31 billion - BEAT
- Downgrades FY adj. EPS guidance to $9.97-10.07, previously $10.57-10.72
A snapshot of the other markets as the North American session begins shows:
- Crude oil is trading higher $0.45 at $81.16 helped by a surprise drawdown of -4.4M barrels when the private inventory data was announced late yesterday. At this time yesterday, the price was at $82.14. Below is the data from the private inventory data.
- Gold is trading up $2.74 or 0.11% at $2471.37. At this time yesterday, the price was trading at $2439.20
- Silver is trading down $0.23 or -0.75% at $31.02. At this time yesterday, the price is trading at $30.81
- Bitcoin trading at $63,782. At this time yesterday, the price was trading at $63,782
- Ethereum is also trading sharply higher at $3418.40. At this time yesterday, the price was trading at $3418.40
In the premarket, the snapshot of the major indices are trading lower led by the NASDAQ. Yesterday, the Dow Industrial Average and S&P indices closed at a record high levels. The RUSSELL 2000 advanced by 3.5% for its second rise at or over 3.5% in four trading days
- Dow Industrial Average futures are implying a decline of -78.48 points. Yesterday, the Dow Industrial Average surged by 742.76 points or 1.85% at 40,954.49. That was the largest gain since June 2023
- S&P futures are implying a loss of -54.45 points. Yesterday, the S&P index closed higher by 36 points or 0.64% at 5667.21. That was a record high close.
- Nasdaq futures are implying a decline of -310.89 points. Yesterday, the index closed higher by 36.77 points or 0.20% at 18509.34.
- The Russell 2000 index rose by 76.65 points or 3.50% to 22363.67 yesterday as the flow of funds shift out of large caps and into the small-cap sector. Hopes that rates move lower are helping the sector.
European stock indices are trading lower:
- German DAX, -0.66%
- France CAC -0.60%
- UK FTSE 100, -0.15%
- Spain's Ibex, -0.23%
- Italy's FTSE MIB, -0.35% (delayed 10 minutes).
Shares in the Asian Pacific markets closed mixed.
- Japan's Nikkei 225, -0.43%
- China's Shanghai Composite Index, -0.45%
- Hong Kong's Hang Seng index, +0.06%
- Australia S&P/ASX index, +0.73%
Looking at the US debt market, yields are higher with a steeper your curve:
- 2-year yield 4.476%, +5.7 basis points. At this time yesterday, the yield was at 4.419%
- 5-year yield 4.116%, +4.2 basis points. At this time yesterday, the yield was at 4.082%
- 10-year yield 4.179%, +1.9 basis points. At this time yesterday, the yield was at 4.175%
- 30-year yield 4.381%, +0.8 basis points. At this time yesterday, the yield was at 4.403%
Looking at the treasury yield curve:
- The 2-10 year spread is at -29.7 basis points. At this time yesterday, the spread was at -24.6 basis points.
- The 2-30 year spread is -9.5 basis points. At this time yesterday, the spread was at -1.8 basis points after briefly moving into positive territory on Monday.
In the European debt market, yields are lower in the benchmark 10-year note sector:
