6/30/2023 5:16:44 PM
Stock market trading in June came to a close with a bang, as the FOMO trade drove the S&P to a fresh one-year high, and the Nasdaq had its best first half of the year in the index’s 52-year history. Inflation data was mostly in line with expectations or lower, while consumer sentiment readings were generally positive, allowing the risk-on trade to proceed without hesitation. Some business and manufacturing data was on the weaker side, notably the German June IFO survey hitting its lowest since last November.
The abortive coup in Russia this past weekend didn’t seem to faze markets as the ‘internal matter’ was apparently resolved without bloodshed. A rare public gathering of central bank chiefs from the Fed, ECB, BOE and BOJ confirmed that they largely agree that the inflation fight is far from over and more tightening is to be expected, while they all await the full transmission of the rapid tightening that has already occurred over the last year. Despite the hawkish tone of the central bankers, market participants continued to make bets that the policy turn could come quicker. Even the White House chief economic advisor Brainard, freshly off her FOMC stint, suggested there is reason to believe inflation can get to near the 2% target before the 2024 elections next November. Despite the regional bank turmoil earlier this year, the annual Fed bank stress tests rubber stamped the nation’s biggest banks as safe again, allowing a number of them to pursue dividend and share buyback increases.
On Friday, Bitcoin swooned below $30K, following a report that the SEC has told exchanges that recent spot bitcoin ETF filings are “inadequate” and would have to be refiled with more information. Crude futures were modestly higher on the week following a big drawdown in weekly DOE crude stocks data. For the week, the S&P gained 2.4%, the DJIA rose 2%, and the Nasdaq added 2.2%.
Some big corporate names across several sectors reported shaky quarterly numbers and guidance this week. Micron cuts its PC unit volume expectations for the current fiscal year and warned that reduced wafer starts will continue well into calendar 2024. General Mills announced mixed results and warned that consumers are 'increasingly cautious about their financial future.’ Walgreens shares got booted to a 52-week low after it missed on bottom line expectations, citing challenging consumer and macroeconomic conditions, and lower COVID-19 vaccine and testing volumes. By contrast, Delta Airlines soared on strong quarterly results and raised guidance, saying the carrier is seeing no signs of demand letting up. Troubled regional bank PacWest got some positive feedback after announcing it would unload additional loan portfolios worth several billion dollars.
In deals news, Overstock shares surged after it won the auction for the IP of Bed Bath & Beyond, and immediately announced it would rebrand to the newly acquired name. During the week there were signs of green shoots in the commercial real estate market with a lot of dealmaker getting done. Prologis acquired a $3.1B industrial logistics property portfolio from Blackstone, while SL Green sold a nearly 50% interest in a 1.8M sq. ft. Park Avenue office property to a US affiliate of Japanese firm Mori Trust Co.
SUN 6/25
(RU) WAGNER CHIEF PRIGOZHIN: CONFIRMS WAGNER IS RETURNING ITS CONVOYS TO BASES TO AVOID BLOODSHED; Kremlin confirms Belarus Pres Lukashenko mediated a deal with Wagner chief Prigozhin, who will not be criminally charged
(DE) Germany's right-wing AfD party has won its first-ever district election for local governing post in Eastern Germany's town Sonneberg - press
(CN) China Foreign Ministry: China supports Russia in maintaining national stability - statement
MON 6/26
(CN) China May smartphone shipments 25.2M, +22.6% y/y; May YTD smartphone shipments 108M -0.7% y/y - CAICT
AML.UK Partners with Lucid on ultra-luxury high performance electric vehicles; Aston Martin to issue 28.4M new shares to Lucid with up to $323M in cash payments
(DE) GERMANY JUN IFO BUSINESS CLIMATE SURVEY: 88.5 V 90.6E (lowest since Nov 2022)
PACW Ares Management acquires $3.5B lender finance portfolio from PacWest
PACW Discloses entered into a purchase agreement to sell a portfolio of Lender Finance loans for $2.0B – filing
PLD Confirms to acquire 14MSF Blackstone industrial portfolio in $3.1B cash deal
CCL Reports Q2 -$0.31 v -$0.35e, Rev $4.91B v $4.79Be; Bookings and customer deposits hitting all-time highs, clearly gaining momentum on an upward trajectory
(US) JUNE DALLAS FED MANUFACTURING ACTIVITY: -23.2 V -20.0E
LLY Data show Retatrutide shot gave patients at least 5% of body weight and an average of 24.2% at the highest dose - press
TUES 6/27
JD.UK AGM Update: There was further positive trading in all regions through May with overall growth in organic sales at 8% cc. Positive trends have continued through June in the Group's businesses in the UK, Europe and Asia Pacific, but were offset by 'some softening' in North America
UBS CEO: Credit Suisse integration is going very well; Sees the future as heading in the direction of blockchain; UBS is using AI to improve service for clients
(RU) Russia Security Service confirms to drop criminal cases over Wagner mutiny; Russia Defense Ministry said Wagner group is preparing to hand over heavy military equipment to Russia officials - press
WBA Reports Q3 $1.00 v $1.07e, Rev $35.4B v $33.9Be; Cuts FY23 guidance citing challenging consumer and macroeconomic conditions, and lower COVID-19 vaccine and testing volumes
DAL Raises FY23 EPS $6.00 v $5.63e (prior $5.00-6.00), Rev +17-20% (prior 15-20%), implies $53.8-55.2B v $55.3Be; Affirms FY24 targets
DAL Raises Q2 Rev $2.25-2.50 v $2.11e, Rev +17-18% y/y, operating margin 16% (prior $2.00-2.25, Rev +15-17% y/y, operating margin +14-16%)
SNX Reports Q2 $2.43 v $2.50e, Rev $14.1B v $14.4Be; Guides Q3 weak as industry continued to be impacted by post-pandemic declines in demand for PC ecosystem products
(CA) CANADA MAY CPI M/M: 0.4% V 0.4%E; Y/Y: 3.4% V 3.4%E
(US) MAY PRELIMINARY DURABLE GOODS ORDERS: +1.7% V -0.8%E; DURABLES (EX-TRANSPORTATION): 0.6% V 0.0%E
LEA Raises FY23 Rev $22.4-23.1B (prior $21.2-22.2B) v $22.1Be, adj EBITDA $1.61-1.74B (prior $1.48-1.68B) - PR ahead of Investor Day
(US) JUNE RICHMOND FED MANUFACTURING INDEX: -7 V -12E; New orders stays neg; Index for future local
(US) JUNE CONSUMER CONFIDENCE: 109.7 V 104.0E (highest since Jan 2022)
005930.KR Unveils foundry vision in the AI Era at Samsung Foundry Forum 2023; Details plans for the mass production of its 2nm process; Expects mass production of 1.4nm, called SF1.4, in 2027; Focusing on increasing its manufacturing capacity in the US
(US) US considers new curbs on AI chip exports to China; Could be announced in early July
WED 6/28
DSFIR.NL Reports prelim Q2 pro-forma adj EBITDA €400-420M citing weakening of the vitamin markets which further deteriorated during June (normally very strong month); Decided to accelerate a series of actions to restructure its vitamin business a
(US) Credit Suisse analysts suggest US recession might not hit until 2026; Expect US 3M-10Y yield curve will un-invert for the first time in June 2026 (prior expected Jan 2025)
2317.TW Chairman Liu: Apple not planning to move its supply chain out of mainland China - press
(DE) German Rhine river's low water levels of ~135-140cm (v 350cm in May and 115cm y/y) despite recent heavy rains said to be again preventing cargo vessels from sailing fully loaded - press
(IT) ITALY JUN PRELIMINARY CPI M/M: 0.0% V 0.3%E; Y/Y: 6.4% V 6.7%E (4th consecutive deceleration of annual pace which is lowest since Apr 2022)
GIS Reports Q4 $1.12 v $1.05e, Rev $5.03B v $5.18Be; Raises quarterly dividend 9.3% to $0.59 from $0.54 (indicated yield 2.92%); Notes its consumers are 'increasingly cautious about their financial future'
CP Canadian Pacific Kansas City, CSX Corp and Genesee & Wyoming Inc. reach agreement to create new direct connection and corridor linking Mexico, Texas and the US Southeast
(US) Sec of State Blinken: Seeing internal cracks emerge in Russia; Ukraine counteroffensive's major events will take place over the coming weeks and months
(US) Nevada reports May casino gaming Rev $1.29B, -0.8% y/y, Las Vegas strip Rev $716.0M, -2.1% y/y
(US) Fed Chair Powell: Policy hasn't been restrictive for very long; may not be restrictive enough; Would not take moving at consecutive meetings off the table; Significant probability we get a downturn but its not the most likely case - ECB Forum
(EU) ECB's Lagarde: If baseline stands we will likely hike in July; Not seeing enough tangible evidence of falling underlying inflation - panel comments from Sintra forum
(US) DOE CRUDE: -9.6M V -1ME; GASOLINE: +0.6M V 0ME; DISTILLATE: +0.1M V +0.5ME
UPS Teamsters union [~340K workers] asks UPS for best and final offer by Friday, June 30th; Notes strike is “imminent”
OSTK Plans to re-launch the Bed Bath & Beyond brand in Canada and US; Reports Q2 QTD Rev -20%s y/y citing 'highly competitive promotional and marketing environment within a challenging economic backdrop'
MU Exec: Cuts FY23 PC unit volume outlook down low-double digits y/y (prior 'down mid-single digits'); Expect reduced wafer starts will continue well into calendar 2024 - earnings call comments
(US) Fed bank stress test results: All 23 banks passed this year's stress tests; Collective losses would be at $541B in a severe recession scenario
THRS 6/29
(DE) GERMANY JUN CPI NORTH RHINE WESTPHALIA M/M: +0.3% V -0.2% PRIOR; Y/Y: 6.2% V 5.7% PRIOR
(US) Fed Chair Powell: Strong majority of Fed policymakers expect 2 or more rate hikes by year end; Have NOT taken consecutive moves off the table; Risk of overdoing tightening is NOT in balance yet - text release
(ES) SPAIN JUN PRELIMINARY CPI M/M: 0.6% V 0.3%E; Y/Y: 1.9% V 1.7%E (first EU state to get Y/Y pace below the 2% ECB target)
(UK) MAY MORTGAGE APPROVALS: 50.5K V 49.7KE
Reportedly WHO cancer research agency will issue report next month that will declare that artificial sweetener aspartame is a possible carcinogen - press
AMZN FTC plans to file far-reaching antitrust suit, its fourth, focused on Amazon's core online marketplace - financial press
(DE) GERMANY JUN PRELIMINARY CPI M/M: 0.3% V 0.2%E; Y/Y: 6.4% V 6.3%E
(US) Q1 FINAL GDP ANNUALIZED Q/Q: 2.0% V 1.4%E; PERSONAL CONSUMPTION: 4.2% V 3.8%E
(US) Q1 FINAL GDP PRICE INDEX: 4.1% V 4.2%E; CORE PCE Q/Q: 4.9% V 5.0%E
(US) White house economic advisor Brainard: Sees Inflation continuously improving in H2; Reason to believe we can get inflation near 2% before the 2024 election
(US) MAY PENDING HOME SALES M/M: -2.7% V -0.5%E; Y/Y: -20.8% V -20.5%E
(US) Reportedly US is close to approving long-range ATACMS to assist Ukraine in fight - WSJ
NKE Reports Q4 $0.66 v $0.67e, Rev $12.8B v $12.6Be
NKE Guides FY24 Rev growth in mid-single digits (v +6%e); gross margin growth 140-160 bps y/y; Notes strong consumer demand in North America; Chinese consumer confidence is rebounding - earnings call
(US) Fed releases factors affecting reserve balances (H.4.1): Discount window borrowing $3.21B v $3.21B w/w; Banks have borrowed $103.1B v $102.7B w/w from new BTFP facility [8th week of consecutive increase]
(JP) JAPAN JUN TOKYO CPI Y/Y: 3.1% V 3.4%E; CPI (EX-FRESH FOOD) Y/Y: 3.2% V 3.4%E
(CN) CHINA JUN MANUFACTURING PMI (GOVT OFFICIAL): 49.0 V 49.0E [3rd straight contraction]
(JP) Japan Fin Min Suzuki: Sees sudden and one-sided FX moves; Will respond appropriately [**Note: comments after USD/JPY rose above ¥145]
FRI 6/30
(UK) Q1 FINAL GDP Q/Q: 0.1% V 0.1%E; Y/Y: 0.2% V 0.2%E
(UK) JUN NATIONWIDE HOUSE PRICE INDEX M/M: +0.1% V -0.2%E; Y/Y: -3.5% V -4.0%E
DE) GERMANY JUN NET UNEMPLOYMENT CHANGE: +28.0K V +14.0KE; UNEMPLOYMENT CLAIMS RATE: 5.7% V 5.6%E
AAPL Rises to $190.80 during premarket session (1st company to hit $3T market cap mark)
(EU) EURO ZONE JUN CPI ESTIMATE Y/Y: 5.5% V 5.6%E; CPI CORE Y/Y: 5.4% V 5.5%E (1st acceleration in Core CPI pace in 3 months)
(EU) EURO ZONE MAY UNEMPLOYMENT RATE: 6.5% V 6.5%E
(CN) China June new home sales in key cities -25% y/y v +22% y/y prior - CRIC
D Cuts Q2 $0.44-0.50 v $0.65e (prior $0.58-0.68) citing estimated impact of historically mild weather, unplanned outages at the Millstone Power Station
(US) MAY PERSONAL INCOME: 0.4% V 0.3%E; PERSONAL SPENDING: 0.1% V 0.2%E
(US) MAY PCE DEFLATOR M/M: 0.1% V 0.1%E; Y/Y: 3.8% V 3.8%E
Reportedly SEC tells exchanges that recent spot bitcoin ETF filings are inadequate - press
(US) JUN CHICAGO PURCHASE MANAGER’S INDEX (PMI): 41.5 V 43.8E
(US) JUN FINAL UNIVERSITY OF MICHIGAN CONFIDENCE: 64.4 V 63.9E
(US) May Dallas Fed Trimmed Mean PCE (m/m) +3.2% v +4.3% prior
(US) Weekly Baker Hughes Rig Count: 674 v 682 prior (-1.2% w/w)
