Morning Brew July 27 2021

Good Morning

Markets feel too calm in relation to the news

The Dow Jones Industrial Average and S&P 500 both advanced 0.6%, rising to 48,186 and 6,824 respectively, while the Nasdaq Composite climbed 0.8% to 22,822. Amazon announced its artificial intelligence services within its cloud-computing division are generating over $15 billion in annualized revenue, leading to a 5.6% increase in Amazon's stock. Applied Digital dropped 8% due to higher losses, whereas Constellation surged 8.5% on stronger than expected sales.

The GER40 is steady at 23,900. SAP has experienced a dramatic decline, losing 50% from its February 25 high of 283 and trading below 140 as of yesterday. Trading volumes are low, reaching only 80% of typical levels as traders and investors wait for signals about future market direction. In the U.S., GDP and PCE reports indicated the economy expanded slower than anticipated in the fourth quarter while consumer prices remain high.

China's CPI and PPI results were mixed: the PPI slightly exceeded expectations, but CPI stayed marginally below forecasts.

Currency markets show the USD Index at 98.85, EURUSD at 1.1690, GBPUSD at 1.3420, and USDJPY at 159.22. Gold and Silver have increased, sitting at 47,860 and 76 respectively. Bitcoin stands at 72,000. US Crude trades at 98.35, above Wednesday's low of 91 yet still well below previous highs near 120. Trump commented that Iran was doing "a very poor job" of ensuring oil passes through the strait, adding, "That is not the agreement we have!"

US inflation data and developments in the Middle East are expected to drive market sentiment. A past topic has resurfaced: Melania Trump responded to allegations regarding ties to Jeffrey Epstein. Although this is largely tabloid news, it may influence Donald Trump's actions.

Later today, we await German and US inflation figures alongside Canadian employment data, with the US CPI being especially crucial—it is forecast at 3.3%, and core CPI at 2.7%. The war in Iran started before month end of March, therefore the Core CPI is lower than the CPI - Energy is excluded in the Core. 

Prepare for sharp market movements driven by headlines, and review your positions ahead of the weekend, given ongoing peace negotiations in the Middle East scheduled to continue. Next week marks the beginning of earnings season, with Goldman Sachs reporting on Monday.

Today's data releases include: German Inflation at 8:00, US CPI at 14:30, Canadian Labor Data at 14:30, and University of Michigan sentiment at 16:00.