Macro: Sandcastle economics
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Morning Brew July 19 2023
Erik Schafhauser
Senior Relationship Manager
Summary: UK Consumer Prices up at 8:00, Tesla tonight
Good Morning,
Strong bank earnings pulled the Dow to the longest positive streak in two years. Morgan Stanley gained 6.45% and Charles Schwab 12.6%. Technology was boosted by Microsoft. Microsoft will charge more for access to AI tools in Office. The S&P 500 gaining 0.7% to 4,554 and Nasdaq 100 rising 0.8%.
Tech stocks remain in bubble territory and need to increase earnings massively to justify the valuation. Tesla`s PE is 86 and Nvidia 246 acc to Refinitiv
Lower retail sales did not spark any big moves yesterday but dovish central bank comments from outside the US (where we have the Blackout ahead of the FOMC) move markets. German yields fall on comments by ECB's Knot, a usual hawk, a hike in July was a necessity but that hikes beyond July not a certainty - Inflation may have hit a plateau. Japan's Nikkei rose to a two-week high on dovish comments by Bank of Japan Governor Kazuo Ueda who stated his resolve to maintain ultra-loose monetary policy.
The USD Index holds below the 100, EURUSD 1.1226, GBPUSD 1.3020 and USDJPY breached the 139 on Ueda. Gold and Silver remain interesting – Gold has broken the 1963 and needs to tackle the 1980 for more upside,. Silver broke above 25 USD per once and is struggling with the long term trendline going back to 2010.
Semiconductor equipment maker ASML reported net profit of 1.9 billion euros slightly ahead of analyst expectations at.82 billion this morning,
Russia launched a further air attack on the Ukranian port of Odesa, it wat seems to be an attempt to block grain exports. WTI rose over 2% while Brent was up 1.4% driven by worries over Russian supply
In Germany, former Wirecard executive Jan Marsalek reappeared with a letter to the court after hiding for 3 years. – rekindling interest in the case
Today we are watching the UK CPI at 8:00 for guidance ont eh BoE`s rate policy. The expectation is 8.2%. EU Inflation data will be released at 11:00 expected at 5.5% , before market opens Goldman Sachs will report earnings and the big one is Tesla after the bell.
Trade carefully
Wednesday July 19
UK CPI, EU HICP, US Housing Starts,
Earnings: Tesla, ASML, Netflix, IBM, Elevance Health, Goldman Sachs
Thursday July 20
China Loan Prime Rate, US Initial Jobless claims, US Consumer Confidence
Earnings: TSMC, Johnson & Johnson, SAP, Blackstone, CSX, ABB, Freeport-McMoran
Friday July 21
Japan CPI, UK Retail Sales
Earnings. American Express, Schlumberger
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