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Breakfast Bites - Tue Aug 22, 2023

Rise and shine everyone.

We got a bit of a relief rally yesterday. According to GS, yesterday was the best day for SPX vs SPW (S&P Equal Weight) since June 22 given narrow breadth with NVDA, MSFT, TSLA and AAPL comprising ~80% of the SPX move higher.

US Equities are trading higher this morning while yields make a slight pullback. The Yield Curve inverts marginally to -0.68%. Gold is trading higher; Crude Oil, USD Index and Bitcoin are all lower.

We have existing home sales data coming out in the US today and a couple of Fed Speakers.

We had a whole host of retail earnings this morning. Overall, we’re seeing quite a few revenue misses coming out of these companies. While inventory levels are better leading to slightly more stable margins, the top line remains weak with the decline in inflation and demand.

The highlights of the week still remain NVDA earnings on Wednesday after market close and Jackson Hole on Friday.

Asia and Australia

  • Asia equities ended mostly higher Tuesday after a positive session overnight on Wall Street. Hong Kong rose in its afternoon session to end around 1% higher, mainland bourses also pared morning losses. Japan strong all day, modest gains for Australia, South Korea, Taiwan.

  • Asia bond prices fell again Tuesday morning sending yields to multi-week or even multi-year highs. Japan 10Y yield hits over 9-year high!

  • SoftBank's Arm Holdings filed for biggest US IPO since 2021 Monday with roadshow scheduled to begin first week of September, pricing second week, in what could be windfall for SoftBank. They are looking to raise $10B. If the ARM IPO goes through at their expected valuation of ~$64B, the raise will be the 3rd largest tech IPO in history. Very ambitious given that they lost about $30B in 2022.

  • Yuan has more room to depreciate to about 7.5 despite Beijing's pushback

  • BOJ underlying inflation metrics strengthened further to new highs in July. Trimmed mean rose 3.3% y/y following 3.0% in July, surpassing the prior peak of 3.1% in May.

Europe, Middle East, Africa

  • European equity markets higher. Follows mostly higher levels in Asia. Basic resources, real estate and tech advance; media, telecom and food/beverage lag.

  • BHP posts lowest profit in three years, raises capex and cuts dividend

  • British Pound has peaked and will come under renewed pressure, says HSBC

  • CEO of Australia LNG producer Woodside Energy, O'Neill, said EU gas price volatility "irrational" but also a clear sign of tight market

  • Italy may seek funds for next budget from gambling sector and banks

The Americas

  • Zoom smashed earnings rallying +7% after hours on the beat.

  • Lowe's beats by $0.09, reports revs in-line; reaffirms FY24 EPS guidance, revs guidance. They saw a strong spring recovery and Pro and online sales growth, partially offsetting lumber deflation and lower DIY discretionary demand.

  • Not a great set of earnings for Dick’s Sporting Goods this morning missing EPS, Revenue and margin estimates. This doesn’t bode well for Foot Locker who reports tomorrow.

  • BJ's Wholesale beats by $0.07, misses on revs; guides FY24 EPS in-line

  • Medtronic beats by $0.09, beats on revs; raises FY24 EPS and organic revenue growth guidance

  • American Airlines confirms new collective bargaining agreement with its mainline pilots represented by the Allied Pilots Association; provides CASM guidance. The increase is reported to be about 46% higher.


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


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