Hey Everyone 👋
Happy hump day! Only 2 more days to crush the week in the markets. Welcome to all the new subs, I appreciate you and hope you enjoy. To everyone that’s been here, this one’s for you. LET’S GO!
💥 Today’s price action was not very different from yesterday’s session as all major indexes went lower on the back of more sour news about the US economy, this time through the FOMC meeting minutes release. The minutes showed that the Fed is very divided on what’s the right approach to take into the next couple months regarding monetary policy. Why are they divided? Well the current situation is tricky. On one side we are still shy about 5.7 million jobs from before the pandemic and this is with 10 million job openings, which makes you wonder if the delta variant fears will further the underperformance. On the other hand, you have a consumer who has been locked inside for over a year and finally has the chance to go out and experience thanks to the vaccines. Well, the incredible demand in some pockets of goods & services like electronics and cars are not only driving prices like crazy but also indirectly rising because its creating a supply-chain constraint that is projected to exceed prior cycles in scale and has never been seen before. This article from (Reuters) lays it all neatly. We will potentially hear more definitive news from the Fed next week in Jackson Hole Economic Policy Symposium.
🌐 Cryptocurrency markets continue to lose volume but prices are holding nicely which is creating some consolidation here. This makes sense given the amount of institutional support that cryptocurrencies have received in the past few months with big banks like Goldman Sachs, JPMorgan and Bank of America investing or planning to invest in cryptocurrency offerings for their clients. As mentioned, Cryptos are usually more active towards end of week given the financial markets are closed over the weekend. Here’s an article on Bitcoin’s consolidation the past few months.
Tale of the Tape
As of 08/18/21 close.
U.S Markets
📈 Markets, Rates and Volatility (VIX) A 2nd consecutive down day in the markets today with the release of the fed minutes at 2:00 ET creating some volatility and finally sending markets into a spiral with all indexes dropping about -1% towards end of day. Particularly, the consumer discretionary sector which took a beating yesterday, was the only sector that was in the green today. On the flipside, Energy led the way down with a decline of -2% across the sector. U.S Fuel demand suddenly declined, sending a clear warning sign that demand might be slowing due to the delta variant. Rates failed to maintain the 1.3 level once again with a decline on par with the market sent it to the 1.25% area. Volatility (VIX) continued its rally towards the 20 price level and was able to close at 21.57, its highest in almost a month. With how on-edge the market is right now, more volatility needs to ease to avoid further selloffs.
Here’s a look on every sector in the S&P500 from SPDR.
⚠️ The Wall of Worry In this fast paced market, it is key to note the themes that seem to be impacting stock market performance so that we keep track of its progress and can inform ourselves to tactically adjust. In my opinion, these are the most important issues that are keeping volatility and market rotations in place.
Updates as of 08/18/21:
Inflation Sentiment: The minutes revealed that the Fed is concerned about not reacting soon enough to inflation but still split on how to tackle it.
Delta Variant Strain: Covid cases still on the rise across the U.S and causing disturbances in the markets globally.
Job Market Recovery: No relevant updates. Still 10 million jobs open. Next job reports are going to be extremely important for the Fed to asses next steps.
Fed Tapering: FOMC meeting minutes revealed that the Fed is looking into tapering this year. Most market participants anticipate November or December as the months of choice.
Peak Growth & Asset Prices: The minutes also showed that most fed officials are concerned on what the delta variant might do to the uncomplete recovery.
Check the Full U.S Economic Calendar (Here).
Earnings Today
👾 Nvidia The semiconductor company reported stellar Q2 Earnings with an incredible 68% Revenue growth Year over Year, an incredible feat for a company of that magnitude. Its strongest segments gaming and data, both grew at an incredible pace and are to continue as both gaming and data become more indispensable in everyday life. Crypto-related sales fell but that’s no issue for Nvidia, they have a plan for that. See more details from (NVDA). Big Nvidia fan.
🎯 Target Retail giant Target absolutely crushed Q2 earnings with sales and revenue increasing even when compared to 2020’s record increase. A true testament that Target shares the podium with the biggest retailers in the U.S . See more details from its press release.
Check the Full U.S Earnings Calendar (Here).
Corporate News
📱 iPhone retakes China When you thought that there couldn’t be more iPhones in the world, China iPhone shipments and sales surged almost 30% across the nation driven perhaps by the temporary surge in consumption but no matter what’s driving the surge, it is the right timing as Apple is going to roll a new model in the month of September. More details (Here).
💉 Booster Shots President Biden has announced that the U.S Government will be offering booster shot vaccines to those who have had the vaccine for more than 8 months. Starting September 20, health officials are expected to start administrating them to main sites. See details (Here).
Meme Headlines
Disclaimer: I am not a financial advisor. This is not a recommendation to buy or sell any security. When investing, always do your own research and asses your own risk.