Good Afternoon Squad 🗣
Happy hump day! Mid-week check in everyone, don’t forget to get those gains. Let’s get it!
💥 Today’s price action was very quiet as market participants usually take vacation this precise time of the year. Nevertheless, the path of least resistance seems to continue to be up with yesterday’s momentum carried on the SP500 and Nasdaq, both reaching all time highs. On the economic front, U.S Durable Goods came in softer then expected, which reinforces the choice of the Fed to not intervene in the markets come Jackson Hole meeting. it seems like market participants are grasping at the idea that the delta variant is cresting (peaking) after being very panicked just last week. The Economic Symposium which will be held over the weekend starting Friday. Markets expect the head of the Fed Jerome Powell to provide more commentary around the unemployment rate, his inflation target and expectations as inflation reports have been well above their 2% target for the past couple of months. Further, analysts expect the Fed to vaguely announce a possibility of taper by year end. Read more details from (Reuters). Positive news on the oil front with U.S Crude Oil & Gasoline inventories dropping more than expected, signaling that U.S demand continues to be very healthy despite the rapid spread of the Delta Variant. Oil has been up everyday since the announcement, lets see how long it can go.
🌐 Cryptocurrency markets are now consolidating with prices holding nicely after the weekend rally. it’s relatively quiet in this market too as everyone seems to be on pause waiting on the Fed meeting on Friday. The spotlight is all on NFT’s (non-fungible tokens) which are essentially items that you can create and own by coding and buy/sell it in the blockchain. Of course it runs deeper with collectibles, game tickets, pictures of a pet rock, all sorts of weird things people pay these days to try to flip some money. Just recently, a 12-year old kid who knows how to create NFT’s is on path to making 400k off his NFTs the past couple of months. Also, someone paid $1.3 million for a digital rock collection, yes I know wtf. Here’s a picture of the rock.
Tale of the Tape
As of 08/25/21 close.
U.S Markets
📈 Markets, Rates and Volatility (VIX) 3rd consecutive day rallying with markets today cheering on continued oil & gas demand, Mortgage applications picking up and what seems to be a peaking delta variant, at least in China as all regions reopened for business. The combination of these plus the lack of real volume in the market is a sentiment of risk-on across the board as we await Friday’s meeting. Both sides of the market (growth and value) have been rallying with Financials leading value and Consumer discretionary again leading growth. Most importantly, Rates traded heavily higher, almost returning to its monthly high of 1.35%. Volatility (VIX) chilled below 17 to 16.75, but given Friday’s meeting, the expected is a little bit of more volatility, we’ll have to see.
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 08/25/21:
Inflation Sentiment: Jackson Hole on Friday should provide more commentary around inflation.
Delta Variant Strain: 0% infection rate in China and a FDA approval of Pfizer in the US are showing signs of optimism.
Job Market Recovery: Jobless claims at 17-month low (345k), reflecting some optimism around jobs growth. Still 10 million jobs open. Next job reports are going to be extremely important.
Fed Tapering: Most market participants anticipate November or December as the months of choice to start, but it can be announced as early as September. Jackson Hole will potentially provide some insight into this.
Check the Full U.S Economic Calendar (Here).
Earnings Today
👨🏻💻 Salesforce The cloud relationship mgmt. giant reported great Q2 earnings beating both top and bottom lines. Salesforce was able to close the acquisition of Slack by quarter end and increased their forward earnings forecast. Read more from Salesforce Press Release.
☁️ Snowflake Data cloud company reported a nice beat in revenue but came short on EPS expectations. Most importantly, management raised their full year guidance even higher which has investors cheering. Stock is up over 4% AH. More details from Snowflake Press Release.
Check the Full U.S Earnings Calendar (Here).
Corporate News
🥊 Micron & Western Digital enter a bid fight Just after Micron announced it has put an offer to buy Kioxia, a Japanese multinational computer memory manufacturer originally part of Toshiba, Western Digital submitted a bid for $20B dollar. The combination will match Samsung’s size in the memory manufacturing business which could be seen as a threat to local regulators. More details (Here).
🤖 Microsoft 20$ Cybersecurity Bet Following Google’s announcement to invest $10 Billion into its cybersecurity infrastructure, Microsoft announced it too will be quadrupling its investments from $5 to $20 billion. The company met with the White House on Wednesday afternoon to discuss its project of cybersecurity for the future and pledged $150 million to assist the federal government in revamping its cybersecurity as well. More details (Here).
🔞 OnlyFans makes a U turn After just a few days of OnlyFans announcing they will ban all pornographic content, the CEO has come forth to revert the ban as creators took over social media to express their outrage. More 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.