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Another day, another record high. This is just the rhythm of the market we are in right now. Low volume because its the summer plus earnings season but also no sellers so what’s the price going to do? On the economic front, a very important metric for inflation: Core CPI MoM came in lower than expected which is the first sign in any economic reading that suggests inflation is temporary. Fed officials continue to be split on the timeline to gradually stop their $120B bond purchase program as the economy progresses but the job market still shows some pockets of weakness. Cryptomarkets continue to rally higher as the U.S Senators were unable to pass the crypto tax provision in the infrastructure bill which would have rattled the markets. After long debate, the clear winner is crypto because lawmakers are finally beginning to understand what’s at stake if they ban this revolutionary technology.
This tweet from Coinbase CEO says it all.
Headlines
🛢 White House weighs in on Oil President Biden announced early Wednesday that his plan to ask U.S producers and OPEC+ to raise oil supply is a long-term plan thus will not happen until the economy is more stable. Adding to this, U.S crude supply inventory unexpectedly, shifting oil’s sentiment into a positive groove. Crude futures are loving it with the price about to retake $70.
📉 Mortgage rates still going lower.. Mortgage applications continued to rise for a 2nd consecutive week driven by the 30yr mortgage rate staying below 3%. Refinancing also went higher but this time its highest since Feb 2021. Is it the right time to buy Real Estate again? More details (Here).
Without further delay, the tale of the tape:
Tale of the Tape
As of 08/11/21 close.
U.S Markets
📈 Markets, Rates and Volatility (VIX) The divergence continues with Energy, Financials and Industrials sectors leading the way for the SP500 & Dow into positive territory. On the other hand, Nasdaq continues to retreat due to Tech and now Healthcare underperformance. Both SP500 and DOW made new highs today driven by Financials strength in the past few days (4% up 5-day avg.) As mentioned in yesterday’s edition, Markets seem to stick with the rotation from value/defense to growth and vice versa depending on the type of day we’re having and the 10 yr rate’s direction. 10 Yr Rates continued its march higher in the pre market reaching a new monthly high of 1.37% but failed to maintain those levels and is now sitting at 1.34%. Volatility (VIX) finally stopped trying to retake 17 and is now sitting at the lowest end of 16. If volatility can continue to drop, the market will break more all time highs. Traders/Investors are sticking to the rotation narrative so given the many earnings scheduled for this week, cash will most probably be repositioned to gain exposure to these companies. Actually just yesterday, FactSet released a report that SP500 earnings growth for this quarter has been the highest in over 13 years, driven mostly by energy’s big upside. Expect market participants to follow the trend. Like I said earlier, only net buyers in this market.
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 08/11/21:
Inflation Sentiment: Signs of peak Inflation are starting to flourish with the CPI number coming in lower then expected. Much needed relief for the Fed as this is one of the first signs that inflation could truly be temporary.
Delta Variant Strain: The EIA came in with a positive note on oil reiterating that U.S demand will persist well into next months, offsetting any setbacks from the new variant.
Job Market Recovery: No updates.
Fed Tapering: Fed officials continue to go back and forth with Fed Barkin mentioning today that the U.S could take few more months to hit the taper benchmark. That adds another Fed official to the dovish side.
Peak Growth & Asset Prices: No updates.
Check the Full U.S Economic Calendar (Here).
Earnings Today
⚡️🚘 NIO Chinese EV maker reported Q2 EPS of -$0.03, $0.08 better than the analyst estimate of -$0.11. Revenue for the quarter came in at $1.31 billion versus the consensus estimate of $1.28 billion. The company issued guidance that is higher than what analysts estimate. sees Q3 2021 revenue of $1.38-1.49B, versus the consensus of $1.38B. Here’s a report on how to value them versus Tesla and Ford. (Here). From the company site (NIO).
🏢 Opendoor Online real estate platform reported stronger than expected earnings on a narrower loss. The company which engages in buying/selling homes directly with customers stated they sold over 3,481+ houses in Q3, a 41% increase from last quarter. More details (Here).
Check the Full U.S Earnings Calendar (Here).
Corporate News
⚽️💰What do La Liga, Goldman Sachs and CVC Capital Partners have in common? After a disastrous 2020, Spain’s biggest soccer league, La Liga is seeking funds from banks, specifically CVC and Goldman Sachs. Goldman is said to offer a syndicated loan of $1B to CVC which adds to a total of $2.7 in securitized loans that CVC will use to acquire rights for 10% of La Liga’s proceedings and some of its subsidiaries. Major clubs Real Madrid and Barcelona opposed the deal. Further details (Here).
🛳❄️ All aboard Norwegian Cruise After a lengthy 500 day suspension of operations, Norwegian cruises are back and their time off served to upgrade all the ships. The companies newest innovative ship Norwegian Encore set sail from Seattle on Aug. 7, 2021 for the first season of voyages to Alaska. More details (Here).
💉 Mandatory Vaccination Calls A multitude of companies, institutions and even organizations are now requiring mandatory vaccinations which seems to be continuing the trend here in the U.S. From the U.S Army, McDonalds to the New York Stock Exchange are among the names that have mentioned this.
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.