Morning Reads


Todays Open Interest Change



Modernizing an antiquated U.S. banking system, the Federal Reserve is about to launch a new instant-payments system that'll be available 24/7/365. "FedNow" will be initially supported by 57 organizations like Bank of New York Mellon (BK), JPMorgan Chase (JPM), Wells Fargo (WFC) and U.S. Bancorp (USB), but there are plans to onboard more lenders and credit unions in the near future. FedNow, which has been in the works since 2019, will also bring the U.S. in line with other countries that have had a similar service in place for years, such as Brazil, the EU, India and the U.K.

Explainer: Currently, it can take anywhere from a day to many days for cash payments to settle - in order to verify a transaction, account amounts, and clearing of the funds. Under FedNow, all these steps would happen instantaneously, complementing similar private-sector real-time payments systems like The Clearing House's RTP network. The central bank previously rolled out a "Fedwire" service, but that is mainly reserved for big corporate payments and is only operational during business hours. FedNow will help everyone from consumers to small businesses settle directly via central bank accounts, unlike closed peer-to-peer networks like Zelle (JPM) or Venmo (PYPL).

"PayPal is about to face serious competition at an infrastructure level it can't compete with," wrote SA analyst PropNotes in FedNow Makes PayPal A Value Trap. Meanwhile, John Mason forecasts the U.S. banking system will become smaller with fewer small and mid-sized banks due to technological advancements and new systems like FedNow. "Investment will be centered upon who is managing the transition the best," he declared in The New Era For Commercial Banking.

Concerns about overreach? FedNow does not give the central bank outright access to consumer bank accounts or the ability to control transactions. In theory, it could make it easier to do that, but the U.S. government already has the ability to turn on and off accounts or freeze assets. FedNow is also not intended to eliminate any form of payment, including cash, and there would probably be easier ways to go about that, such as the issuance of central bank digital currencies.

Lights, camera, disappointment

Netflix (NFLX) dropped over 8% AH on Wednesday on mixed earnings report and soft revenue guidance despite a ramp-up in new subscribers and a company pivot going according to plan. At the same time, Netflix may be in a better position than traditional studios in terms of the disruptive double strike in Hollywood, given different production timelines and a long content pipeline. With regards to its account-sharing plans, Netflix said the cancel reaction was low and it's seeing "healthy" conversion of borrower households into full-paying memberships. SA analyst Johnny Zhang also noted Netflix's long-term growth outlook and free cash flow profile are encouraging, and the stock's pullback can present a potential buying opportunity. (53 comments)

Heard on the call

Traders were also disenchanted with Tesla (TSLA) following Q2 results, though it took some time to drive in a specific direction. Shares were initially unchanged after the EV maker's numbers topped estimates, but the stock fell 4% after CEO Elon Musk hinted at more price cuts if market conditions become unstable. He also referenced a slight decrease in Q3 production and did not give a specific timeline on Cybertruck's launch, though Tesla is in early talks with other automakers to license full self-driving software, which could boost its margins. Investing Group Leader Jonathan Weber turned bearish on Tesla after the results due to the underlying margin picture, but many subscribers are hashing it out in the comments section. (124 comments)

Bargaining table

Ending a two-week standstill, the Teamsters Union will resume contract talks with UPS (UPS) next week to prevent a strike when the current contract expires at the end of the month. While the company has agreed to meet certain demands, the call for wage hikes for part-time workers remains contentious. The Teamsters represent more than half of the UPS workforce in the largest private-sector contract in North America. If a strike does happen, it would be felt broadly across the economy, with the shipping giant handling about 20M packages a day, or about a quarter of total parcel shipments in the U.S.

Today's Markets

In Asia, Japan -1.3%. Hong Kong -0.2%. China -0.9%. India +0.7%.
In Europe, at midday, London +0.7%. Paris +0.4%. Frankfurt +0.2%.
Futures at 7:00, Dow +0.1%. S&P -0.1%. Nasdaq -0.7%. Crude +0.4% to $75.60. Gold +0.1% to $1,983.10. Bitcoin +1% to $30,290.
Ten-year Treasury Yield +5 bps to 3.79%.

Today's Economic Calendar

8:30 Initial Jobless Claims
8:30 Philly Fed Business Outlook
10:00 Existing Home Sales
10:00 Leading Indicators
10:30 EIA Natural Gas Inventory
4:30 PM Fed Balance Sheet

Companies reporting earnings today »

What else is happening...

Bill banning stock trading by U.S. government officials introduced.

Microsoft (MSFT), Activision (ATVI) ask FTC to drop lawsuit.

Goldman Sachs' (GS) big Q2 miss clouded by writedowns.

Pfizer's (PFE) North Carolina plant damaged by tornado.

Discover Financial (DFS) slides after Q2 earnings miss.

Nasdaq (NDAQ) aborts launch of crypto custody service in U.S.

Taiwan Semiconductor (TSM) stock dips as FY outlook dimmed.

Apple (AAPL) gains after building ChatGPT-style bot for staff.

IBM (IBM) rises despite mixed Q2 results; FY outlook reaffirmed.

United Air (UAL) takes off after upping forecast; Q2 results top estimates.

Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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