Breakfast Bites - Fri Jul 21, 2023

Rise and shine everyone and Happy Friday!

Today is Options Expiration or OpEx (all my life I thought OpEx was operating expenses!) Moving on, today will be the largest July OpEx ever, with $2.3T of notional expiring.

The Economic Calendar is quiet today. Earnings are also quiet today with just a few important names - Amex and Roper Technologies are two I’m watching.

Markets are sure to be volatile in the US with OpEx so, I think we need a quiet day on the other two fronts!

US Equity Futures are trading marginally higher, after yesterday’s steep decline. Oil and Gas are both looking bullish. Gold is lower while Bitcoin is flat. The USD Index is higher with the long end of the curve lower. The Yield Curve remains at -1%.

Asia and Australia

Asian equities finished mixed Friday in a polarized trading day. Japan's Nikkei closed lower but its Topix remained flat. Taipei sharply lower on TSMC's poor guidance and investment delay, South Korea finished a few points higher. India lower as Infosys dragged, profit takers entered after six consecutive record highs.
BOJ officials say they see little need to address side effects of its yield curve control programme for now although said they will continue to discuss issue. Core CPI rose 3.3% y/y in June, in line with consensus, following 3.2% in the previous month. Ex-fresh food & energy inflation edged down to 4.2% from 4.3% (post-1981 high), also as expected.
Exports from South Korea in first 20 days of July fell 15.2% y/y as slump in semiconductor sales continued.
Dalian Wanda Commercial Management Group (DWCM) sparks volatile trading in China dollar junk bonds over whether it will repay a $400M bond that matures Sunday. DWCM told creditors that firm expects to complete an undisclosed asset disposal and use proceeds for repayment due 23-Jul. DWCM is a Chinese real estate giant and defaulting on their bonds shows severe distress in the Chinese Property market, something we’ve been discussing for a while.

Europe, Middle East, Africa

European equity markets mostly higher.
UK Retail Sales number came in positive MoM rising 0.7%. This is the 3rd consecutive month of positive data. The YoY change still remains negative at -1% but improved from -2.3% last month. Better weather and summer sales seems to have driven the improvement.
A Bloomberg survey of economists showed most economists think the ECB is unlikely to keep interest rate at their peak for an extended period, as the economy slows.
The Gfk UK consumer confidence index record its largest drop in sentiment in over a year, down 6 points to -30 in July
Retail sales in the United Kingdom rose by 0.7 percent from the previous month in June 2023, picking up from a downwardly revised 0.1 percent increase in the prior month and surpassing market expectations of 0.2 percent. This was the third straight month of growth in retail trade and the steepest pace in the sequence, boosted by summer sales and the impact of good weather, with increases seen in most sectors, including food, non-food and non-store retailing.

The Americas

Apple iPhone 15 Pro and Pro Max screen issues could lead to shortages at September launch
Google and OpenAI pledge to promote safety and transparency in AI development
Blackstone becomes first private-equity firm to have $1T under management
AAII bullish sentiment jumped to 51.4% in week-ended 19-Jul from 41.0% in prior week. Marked highest reading since late-April 2021 and longest above-average streak since a 13-week stretch from February to May 2021.
The Conference Board US LEI (Leading Economic Index) declined yet again by 0.7% in June 2023 following a decline of 0.6% in May. The LEI provides an early indication of significant turning points in the business cycle and where the economy is heading in the near term and his flashing a recession signal for a while now.

Calendars

(news taken from Reuters, FT, Bloomberg; Calendar from Benzinga Pro)