Breakfast Bites - Wed Aug 30, 2023

Rise and shine everyone.

The major economic update today is the ADP employment numbers and German Inflation numbers that’s set to be released at 8am ET. We’re seeing some of the regional German inflation numbers pouring in with a mixed picture - 4 of 6 regions are marginally higher. These inflation numbers lead into the Eurozone numbers tomorrow and will be an important factor to consider before the ECB’s September rate decision.

We also have the US GDP second estimate which we will be watching for any revisions and later tonight the official Chinese PMI numbers are to be released.

A few important earnings after the close - Salesforce, Crowdstrike and Chewy. Nothing of note BMO.

US Equity Futures are largely flat this morning after a surge yesterday with the SPX closing +1.45% and the Nasdaq-100 closing +2.15%. The US Dollar Index and Gold are also flat; Bitcoin is lower; Oil is higher; Yields are higher at the long end with the Yield Curve at +0.77%.

Asia and Australia

Asian equities ended mostly higher Wednesday. Strong read through from US equities was the main catalyst but a late sell off in Hong Kong spoiled what had been another positive day for the Hang Seng; mainland China markets also dipped into the close but stayed positive.
The monthly Consumer Price Index (CPI) indicator in Australia increased by 4.9% in the year to July 2023, slowing from a 5.4% gain in June and below the market consensus of a 5.2% rise. This was the lowest inflation rate since February 2022, mainly due to a slowdown in housing and food prices. - Australian stocks closed higher on the news.
Brick-and-Mortar consumption continues to fall in China. Nikkei reported notable acceleration in store closures among Chinese retailers. Highlighted GOME announced closing 90% of their locations and Yonghui Superstores (601933.CH) in 2022 cut 20~40% of its stores vs 2019.
China's largest banks are preparing to cut interest rates on existing mortgages of CNY38.6T ($5.3T) and deposits.
Chinese property developer, Country Garden seeks 40-Day grace period to avert default.
ICBC reaches near record low valuation as margins plummet - ICBC is the World’s largest bank by Asset Size as of 2022 end.
BOJ board member Tamura says realization of inflation target on the horizon. Signals chance of tweaking policy early next year.

Europe, Middle East, Africa

European equity markets lower after giving back early gains. Banks, Basic Resources and Insurance lead; Utilities, Consumer Products/Services and Technology lag.
Spanish inflation firmer for the second month in a row, coming in at 2.6% y/y, in line with forecasts, and compared with prior 2.3%.
The European Commission's Eurozone economic sentiment indicator weakened in August to 93.3 versus consensus 93.7 and prior 94.5, which is the fifth consecutive softer reading.
BoE mortgage approval data highlighted weak trends in UK housing market with net approvals fell to 49,400 in July from 54,600 in June.

The Americas

July JOLTS job openings of 8.827M well below consensus for 9.478M and lowest since Mar-21. June print revised down to 9.165M (was 9.582M). Report also showed 1.51 job openings for every unemployed worker, lowest since Sep-21. - My view is that this number still needs to fall between 7M and 8M to make a difference to the labor market.
We also received Conference Board Consumer Confidence numbers yesterday - August Consumer Confidence of 106.1 was well below consensus for 116.0, down from last month's revised 114 (was 117.0). Assessments of the present situation dipped in August on receding optimism around employment conditions.
Walmart requests its 16,000 US pharmacists to take a wage cut and lessen hours worked in an effort to cut costs.
Apple confirms 12-Sep as date for expected launch of iPhone 15 models
OpenAI on pace to generate more than $1B in revenue over next 12 months
HP Inc. reduced its full-year cash flow and profit outlook, saying a rebound in the market for personal computers will take longer than expected.