July 31, 2023

Gas Prices Hit 8-Month High as Oil Prices Keep Rising

The ‘X’ Logo Officially Replaces Twitter's Famous Bird on Mobile. The icon on the mobile app changed to an “X” late Friday night in the latest phase of a sweeping rebrand that the site’s owner Elon Musk announced earlier this month. The transition from Twitter to X reflects Musk’s vision to turn the platform into what he has called an “everything app.”

Meta is Rebooting Horizon Worlds. Meta is overhauling its Horizon Worlds virtual reality app to include more video games as the social platform struggles to find a big audience. In an effort to make Horizon Worlds more compelling, Meta now has an in-house studio dubbed Ouro Interactive that’s focused on making first-party virtual reality games.

Procter & Gamble Reports Slight Sales Rise Driven by Price Increases. Procter & Gamble exceeded Wall Street's earnings and revenue projections in the latest quarter, primarily due to price hikes on products like Crest toothpaste and Pampers diapers. However, the company's fiscal 2024 sales outlook fell short of expectations.
Biogen to Acquire Reata Pharmaceuticals in $7.3 Billion Deal. Biogen announced its acquisition of Reata Pharmaceuticals for $7.3 billion, adding to its portfolio of treatments for neuromuscular and rare diseases at a nearly 59% premium to Reata's previous closing price.

Gas Prices Hit 8-Month High as Oil Prices Keep Rising. Gas prices in the United States averaged $3.75 per gallon nationally on Saturday, their highest level in eight months amid rising global oil prices. Some of the reasons why the market is suddenly swinging up the upside are the end of the Strategic Petroleum Reserve releases and OPEC’s oil cuts.

The average interest rate on US credit card balances has moved up to 20.7%. With data going back to 1994, that's the highest rate we've ever seen. Source.
Zillow has gone full-blown housing bull. Zillow expects U.S. home prices to rise 6.3% between June 2023 and June 2024. Among the 200 largest housing markets, Zillow thinks 48 markets will see a jump of 7.0% or greater. Source.
There's a bifurcation in consumer sentiment amongst the wealthiest group and the bottom tercile. The top tercile's sentiment is soaring while the lower income is going down. Historically, they've moved in tandem. Source.
The swap-adjusted yield gap between JGBs and USTs just got much wider, meaning that the Japanese will certainly not be buying USTs and if energy prices rise (Japan continues to pay for energy in US$) the odds of BoJ selling USTs are going up. Source.
The 30-year Treasury is on the cusp of breaking out and racing to a new high. Stocks have mispriced rate risk and the re-tightening of financial conditions. Once the long end of the yield curve breaks out of this trading range of the last few months, the ERP will start to contract as financial conditions tigthen. This week may carry the data needed to make that happen. Source.

The beauty of the stock market lies in its numbers, not its noise. The charts speak louder than the headlines.

Steve Burns

The Real Estate Market Is Experiencing An "In-Between State". With fewer homes selling due to high prices and mortgage rates, it's leading to increased days on the market. However, the pace of home sales is gradually picking up, and there are expectations that homes might sell faster than a year ago by fall, indicating a move towards a balanced market.

Personal Income Increased $69.5 Billion In June. That's according to estimates released by the Bureau of Economic Analysis. Disposable personal income (DPI), personal income less personal current taxes, increased $67.5 billion (0.3 percent) and personal consumption expenditures (PCE) increased $100.4 billion (0.5 percent).

Old Homes Are Selling For More Than New Ones. Axios reports that the median existing single-family home was going for $416,000 last month, while the median price tag for just-built ones was $600 lower. With mortgage rates still hovering around 7%, homeowners are holding onto homes financed at low rates, squeezing the supply and keeping prices at nosebleed levels.
Demand for Intel's AI Accelerators Is Exploding. The bulk of this soaring demand is being driven by the Gaudi2 AI chip. The company is currently shipping Gaudi2 at volume, and Amazon Web Services offers Gaudi instances. A specialized chip like Gaudi2 can compete on the total cost of ownership and efficiency, given that it's tailor-made for AI training workloads.

Economic Landscape is Defying Traditional Expectations. Unconventional fiscal stimulus measures offsetting Fed rate hikes and tighter policies are preventing an immediate economic slowdown. Industrial-focused fiscal policies, like the infrastructure and chips acts, have significant knock-on effects in the private sector, shaping an unconventional economic landscape. Source(2:48)
Wall Street Strategists Still Cautious. Wall Street strategists are holding a cautious equity view with the most bearish outlook for the S&P 500 in history. Despite some price targets being revised higher, earnings revisions are seen as a lagging indicator over prices, showing a correlation between falling prices and subsequent downgrades in earnings forecasts. Source(49:32)

The ECB Raises Interest Rates Back To Record High The European Central Bank raised interest rates by a quarter of a percentage point yesterday. It was the ECB’s ninth consecutive rate hike, but the central bank signaled that it might take a pause when it meets next in September. Eurozone inflation was 5.5 percent in June, which is down considerably from double digits last year. Source(0:51)
Market Stability Faces Downside Risks Ahead. The stable market with natural positive biases due to various factors like earnings and inflation is now experiencing reduced short interest and more balanced Delta one exposure, potentially leading to downside risks. Despite ongoing volume compression causing temporary upward squeezes, the withdrawal of liquidity and changes in macro factors may create windows of weakness, as observed in recent weeks. Source(13:44)