Morning Reads


Todays Open Interest Change



The Federal Reserve pushed interest rates to a 22-year high on Wednesday, with another 25 bps move that'll bring its key rate to 5.25%-5.50%. It's not enough for the central bank to declare victory on historic inflation just yet, but it sure looks like markets are charting their next steps, with the CPI now down to 3% (from a high of over 9% seen last summer). Not much changed in the new FOMC statement, and while Fed Chair Jay Powell did continue to voice caution in the accompanying press conference, he did shift his tone especially with regards to the outlook for the U.S. economy.

Turning the corner: "The staff [economists from the central bank] now has a noticeable slowdown in growth starting later this year in the forecast, but given the resilience of the economy recently, they are no longer forecasting a recession... My base case is that we will be able to achieve inflation moving back to our target without the kind of really significant downturn that results in high levels of job losses that we've seen in some past, many past instances... The Federal Funds Rate is at a restrictive level now, so if we see inflation coming down, credibly, sustainably, then we don't need to be at a restrictive level anymore... You'd stop raising [rates] long before you got to 2% inflation and you'd start cutting before you got to 2% inflation, too."

Following the news, the Dow Jones Industrial Average (DJI) notched its 13th consecutive advance, marking its biggest winning streak since the 1980s, and if it closes higher today, it would be its longest positive run since 1897. The latest U.S. GDP number for the second quarter will also be published this morning at 8:30 AM ET. Expectations are for growth to have slowed to a 1.5% annualized rate vs. growth of 2.0% in Q1, though that's a far cry from many economic forecasts that initially predicted a deep recession to already have taken hold by the middle of 2023.

SA commentary: "The Fed appears to be on track for a soft landing," wrote analyst Komal Sarwar in a new article covering the Invesco NASDAQ 100 ETF (QQQM). "The current bull market is supported by strong economic fundamentals, corporate outlook, and investor sentiment, with sectors such as technology, consumer cyclical, and communications showing particularly strong results." The S&P 500 (SP500) has "gained about 4% since earnings season began almost two weeks ago, with 75% of companies outperforming expectations, according to FactSet data." (8 comments)

Meta rebound

Meta Platforms (META) jumped 8% AH on Wednesday after posting Q2 earnings that easily beat expectations. The report echoed an online advertising recovery signaled by rival Alphabet (GOOGGOOGL) and Meta guided for Q3 revenue above estimates. As with other tech companies, Meta's earnings call focused largely on AI, and while CEO Mark Zuckerberg previously said 2023 would be a "year of efficiency," overall expenses in Q2 grew 10%. Investing Group Leader Livy Investment Research said the results continue to show the company's progress in turning a corner, though Growth at a Good Price believes Meta may not rapidly catch up with its steep valuation. (52 comments)

Russian roulette

With Urals crude (URDB:COM) trading at or above $60 for more than two weeks, the U.S. government will likely reach out to Western allies to remind them to adhere to the price cap on Russian oil exports by ship. Enforcement will likely take place quietly out of fear that harsh public measures could upend energy markets. Compounding worries in the West, Moscow is increasingly relying on smaller trading firms to export crude to Asia, and while this does not violate sanctions, it could hinder tracking Russian oil transactions. Elsewhere, NATO will boost surveillance in the Black Sea region, including with maritime patrol aircraft, amid escalating tensions after Russia pulled out of a key grain deal. (1 comment)

Freight in focus

Yellow Corporation (YELL) dropped 26% to $0.76/share before the bell as the beleaguered trucker could file for bankruptcy protection this week. It follows a cash crunch that forced Yellow to miss union payments and a hemorrhaging of customers as a union dispute forced it to limit pick-ups. The exodus could drive up pricing in the trucking sector, which is already facing low freight rates and weak demand. Yellow's customers include large retailers such as Home Depot (HD) and Walmart (WMT) and others that have paused cargo shipments out of fear that goods could be lost if the company goes bankrupt. (1 comment)

Today's Markets

In Asia, Japan +0.8%. Hong Kong +1.5%. China -0.2%. India -0.7%.
In Europe, at midday, London +0.2%. Paris +1.4%. Frankfurt +0.9%.
Futures at 7:00, Dow +0.1%. S&P +0.6%. Nasdaq +1.2%. Crude +0.8% to $79.43. Gold +0.3% to $1,976.10. Bitcoin +1% to $29,482.
Ten-year Treasury Yield +2 bps to 3.87%.

Today's Economic Calendar

8:30 Durable Goods
8:30 International Trade in Goods (Advance)
8:30 Retail Inventories (Advance)
8:30 Wholesale Inventories (Advance)
8:30 GDP Q2
8:30 Initial Jobless Claims
10:00 Pending Home Sales
10:30 EIA Natural Gas Inventory
11:00 Kansas City Fed Mfg Survey
1:00 PM Results of $35B, 7-Year Note Auction
4:30 PM Fed Balance Sheet

Companies reporting earnings today »

What else is happening...

Amazon (AMZN) could face antitrust lawsuit from FTC next week.

Justice Dept, EPA investigate telecom firms over lead cables.

Boeing (BA) hits 52-week high after reporting narrower loss.

XPeng (XPEV) soars as Volkswagen (OTCPK:VLKAFbuys in.

Coca-Cola (KO) rallies amid strong Q2 show, guidance hike.

Union Pacific (UNP) jumps 10% after naming new CEO.

Chipotle (CMG) slides on rare comparable sales miss.

Insider watch: Salesforce (CRM) top executives sell stock.

Mastercard (MA) to end marijuana purchases on debit cards.

Amazon (AMZN): 'Thousands' of AWS clients trying out new AI tools.

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.

More Posts by UPB: View All | Private Twitter Feed: Access Now! (For Diamond Members)