July 5th Market Overview

July 5th Market Overview (no fluff)

Author

J.L. Bernstein
July 05, 2024

What a week! I hope everyone is looking forward to the weekend as much as I am. Lets dig in…

Executive Summary

  1. U.S. unemployment rate rises above 4%, potentially signaling a softening labor market ahead of the crucial Non-Farm Payrolls (NFP) report.

  2. German industrial production continues to falter, showing weakness in the Eurozone that could impact global markets.

  3. Tesla (TSLA) experiences a series of positive developments, but faces a setback in its India investment plans.

  4. Bitcoin dips below $55k, taking out over $170B in crypto market cap and pressuring related stocks.

Market Overview

SPY - $553
QQQ - $495
DIA - $392

U.S. markets are consolidating ahead of the NFP report. Oil continues to trade at $83.42, with positioning remaining very bullish. Gold positioning is bullish heading into the NFP report. The focus is primarily on the upcoming employment data and its potential impact on market direction.

Key Market Drivers

  • Non-Farm Payrolls report due today, with a median forecast of 200k jobs added

  • Unemployment rate, now above 4%, expected to be a crucial indicator

  • FOMC minutes reveal a continued “wait and see” policy approach

  • German industrial production declined 2.5% MoM, worse than expected, marking the third consecutive negative month

  • Bank of America EPFR data shows 11th straight week of inflows to equity funds, longest run since 2021

Stock Spotlight

  1. Tesla (TSLA): Multiple positive developments including Model Y eligibility for Chinese government purchases, progress on Texas Gigafactory supercomputer, and potential for lower EU duties. However, Tesla has potentially paused its India investment plans.

  2. Amazon (AMZN): Discounting its security robot Astro to focus on household robots.

  3. NIO: CFO resigns for personal reasons, Senior VP of Finance promoted to the position, potentially leading to temporary instability in financial decision-making.

Other Notable Company News

  • Rivian (RIVN): Chief Accounting Officer to resign effective July 27th.

  • Macy’s (M): Arkhouse Management and Brigade Capital raised their bid to $6.9B, offering $24.8/share, up from $24 in March.

  • Novo Nordisk (NVO): Deutsche Bank downplays concerns about semaglutide’s potential blindness side effects.

  • Broadcom (AVGO): Nancy Pelosi reported to have bought call options with $800 strike, expiring June 20, 2025.

  • Crypto-related stocks down as Bitcoin struggles, though traders still anticipate a recovery in miners.

Sector Watch

  • US Equity Funds: Bank of America’s EPFR data suggests the 11th straight week of inflows to equity funds, the longest run since 2021, with US large caps and tech seeing significant interest.

Bond Market

Goldman Sachs predicts developed markets’ central banks will cut policy rates by an average of 87 bps over the next 12 months.

Policy Watch

  • President Biden refutes reports of dropping out of the presidential race.

  • UK Labour Party wins election with a parliamentary majority, potentially bringing new policies that could influence the global market.

  • Germany plans extra 2024 budget with £11B in additional debt, aiming for economic stimulus.

    Happy Friday everyone!

    -JB

Note: This newsletter is intended for informational purposes only.