August 1, 2023

US Stocks Notch Longest Monthly Winning Streak in Two Years

📰 News Organizations

  • US Stocks Notch Longest Monthly Winning Streak in Two Years. The S&P 500 is up more than 19% in 2023 as investors seize on falling inflation and resilient growth. 80% of the companies in the S&P 500 have topped analysts’ consensus earnings estimates, according to FactSet. That is above the five-year average of 77%.

  • Walmart Buys Tiger Global’s Flipkart Stake for $1.4 Billion. The move represents Walmart’s bet on the retailer and helps the money manager provide distributions to investors at a time when accessing liquidity is tough. VC firm Accel also sold its 1% stake to Walmart.

  • Oil Prices On Track For Largest Monthly Gain In Over A Year. The front-month WTI futures and Brent gained 14.1% and 13.5% in July, respectively. This is due to expectations that the market will move into deficit in the second half, aided by supply cuts by OPEC and its allies.

  • Trucking Giant Yellow Shuts Down Operations. Despite having more than 12,000 trucks moving freight for Walmart, Home Depot, and smaller businesses, the 99-year-old company struggled to provide consistent service for customers and profits for investors.

  • Robinhood Rival eToro Agrees $120 Million Share Sale At Discounted Valuation. EToro offered early employees and angel investors a chance to sell their shares to some of its institutional investors totaling $120 million, giving the company a slightly lower valuation.

  • Birkenstock Owner Plans September IP0 at $8 Billion Value. The private equity firm backed by luxury French fashion house LVMH is working with Goldman Sachs Group Inc. and JPMorgan Chase & Co. on a potential listing of Birkenstock in the US in September.

  • Apple, Amazon, Starbucks to Report in Packed Earnings Week. Starbucks will report on Tuesday, Shopify and Yum! Brands on Wednesday, and Apple and Amazon on Thursday, giving insight into how much consumers have been purchasing online and how much consumers are willing to pay for higher prices.

🐦 Twitter

  • Corporate bonds now yield only 0.12% above the Fed Funds rate. The lowest level since 2007, preceding the Global Financial Crisis. Every time credit spreads were at historically suppressed levels, a hard landing scenario followed. Source.

  • Japan is the largest holder of U.S. Treasuries. With the yen falling and oil prices surging, JGBs will come under intense selling pressure. This will put more downward pressure on the yen and upward pressure on already high Japanese inflation. Japan will dump its Treasuries. Source.

  • At 440GW, the amount of new renewable electricity generation capacity (mainly solar) added this year will, for the first time, apparently be greater than the total global nuclear generation capacity (413 GW). Source.

  • The land market is on fire again, per 55% of the 78 land brokers just surveyed. This is the hottest the market has been in 15 months, & comparable to the market strength from 2018 through early 2020, as shown below. Source.

  • The median sales price of a home in the US is now 560% of the median household income. In 2008, it was 360% of the median household income. This is the least affordable housing market in history. Source.

  • Home affordability is poor, but prices can still rise because there’s such little supply. Homeowners have locked-in low rates that keep them from moving. “This implies that monetary policy may stay tighter for longer since inflation sensitivity is lower:” Morgan Stanley. Source.

When money inflates in supply, employers have the benefit of the status quo, and wage earners have the burden of work to negotiate higher nominal wages to keep up. When money deflates in supply, wage earners gain the benefit of the status quo in negotiations.

Lyn Alden

📓 Online Publications

  • Banks reported Tighter Standards, Weaker Demand for All Loan Types. Commercial and industrial loans, as well as residential real estate loans, as well as auto and other consumer loans, experienced tighter standards and reduced demand. Credit card loans were unchanged.

  • Salesforce Seeks to Patent AI-Based Skimmer. The company is seeking to patent an AI-based "collaborative reading assistance tool." Salesforce's tool breaks down documents in a way that allows a user to choose exactly how much time they want to spend reading or what they want answered.

  • Blackstone is Retooling its Real Estate Investment Strategy. Blackstone is looking to retool its massive investment in commercial real estate over the past couple of years. The firm plans to spend up to $8 billion to build new data centers for tech giants.

🎧 Podcasts

  • The Jobs Report Comes Out Friday. This report will gauge the economy's performance after sixteen months of interest rate increases. Economists anticipate around 200,000 jobs added, which suggests a slight cooling of the economy. On the other hand, a hot report will mean more rate hikes. Source(22:13)

  • The Extreme Heat Is Reshaping Economies. A whole range of industries are trying to figure out how to adapt and change the way they do business. The hot weather is affecting productivity, especially for industries that rely on physical labor, like construction and agriculture. Source(6:18)

  • China Deals With Months of Sluggish Growth. The country has not rebounded from pandemic lockdowns the way a lot of people expected it to. China’s top leadership announced at this month’s politburo policymaking meeting that they’re going to step up measures to boost the economy. Source(3:57)

  • Mastercard Demands Shutdown of Marijuana Purchases on Its Debit Cards. Most banks in the country do not service cannabis companies. This decision is considered another setback for the cannabis industry, which faces a challenging relationship with the U.S. financial system. Source(6:20)