Morning Reads


Todays Open Interest Change



The mega rally on Wall Street in 2023 hasn't been the only thing that many economists and analysts have gotten wrong. The staggering drop in inflation has confounded many market watchers, with the Consumer Price Index falling to 3%, from a high of over 9% seen last summer, as well as the central bank's favored inflation gauge - the core personal consumption expenditures price index. Data on Friday showed the figure to have moderated on a M/M and Y/Y basis, inching closer to the Fed's key 2% target that is needed for stable prices in the U.S. economy.

Fool me once? Following an infamous "transitory" call from 2021, Jay Powell and Co. made a serious policy U-turn, ratcheting up rates from near zero to 5.5% in the span of 16 months. A technical recession ensued in the first half of 2022, but the U.S. economy has been resilient since then, with quarterly GDP recently growing at a 2.4% annualized rate, or almost a full percentage point stronger than the 1.5% expected. Inflation numbers have also routinely come in better than anticipated, prompting many investors to consider whether the central bank continues to be overly cautious in its fight against inflation to compensate for criticism that it had been late (really late) to the game.

"Inflation has moderated somewhat since the middle of last year, nonetheless the process of getting inflation back down to 2% has a long way to go," Powell said at his press conference last week. "We'd really want to be sure that inflation is coming down in a sustainable [way]. It's hard to make - I'm not going to try to make - a numerical assessment of when and where that would be. So we intend, again, to keep policy restrictive until we're confident that inflation is coming down sustainably."

What to watch: As mentioned previously, Powell did shift his tone especially with regards to the outlook for the U.S. economy, with Fed staff no longer predicting a recession. However, the debate still rages on over whether disinflation will be able to find a permanent footing, as well as the impact of additional rate hikes. "Some Fed officials are not yet convinced they've done enough - and don't want inflation to resurge on their watch," noted the American Institute For Economic Research. "If disinflation continues over the next few months, such a hike could prove devastating - not merely wiping out inflation, but economic growth and employment as well." Take the WSB survey.

58 MPG

Seeking to cut greenhouse gas emissions, the Biden administration has issued a proposal directing automakers to raise the fuel economy of their vehicles to a fleet-wide average of 58 miles per gallon by 2032. The proposed rules by the National Highway Traffic Safety Administration would be applicable starting in model year 2027, while new fuel efficiency standards for heavy-duty pickup trucks and vans would rise 10% annually. The NHTSA also said it would try to align regulations with the Environmental Protection Agency's proposed vehicle emissions reductions. Many U.S. automakers are already in the middle of electrifying their fleets, but any changes could impact the plans of Ford (F), General Motors (GM) and Stellantis (STLA). (357 comments)

War escalation

Ukrainian drones damaged two office buildings close to the Kremlin and a pig breeding complex on Sunday, marking the third such strike over the past week. While Ukrainian officials didn't acknowledge the attacks, President Volodymyr Zelenskyy said: "Gradually, the war is returning to the territory of Russia." Meanwhile, African leaders met with Vladimir Putin to discuss resuming the Black Sea grain deal in the wake of attacks on Ukrainian ports, though Russia seems to be preparing for an even bigger and longer war, in light of recent changes made to military conscription and the Kremlin's overflowing war chest. Former President Dmitry Medvedev also said Moscow would be forced to use a nuclear weapon if Kyiv's counteroffensive turned out to be successful. (14 comments)

Only Bitcoin

The SEC asked Coinbase Global (COIN) to halt trading in all cryptocurrencies except Bitcoin (BTC-USD) before suing the exchange in early June, according to the exchange's CEO Brian Armstrong. The request indicates the SEC's intent to expand its oversight of the crypto industry, at a time when U.S. regulatory authorities are still vying for control. "Delisting every asset other than BTC would've essentially meant the end of the crypto industry in the U.S.," Armstrong declared. Investing Group Leader Dilantha De Silva also highlighted the intensifying battle, saying, "The watchdog is very likely to come hard at Coinbase to establish its relevance, given that Coinbase argues the SEC does not have sufficient jurisdiction." (6 comments)

Today's Markets

In Asia, Japan +1.3%. Hong Kong +0.7%. China +0.5%. India +0.6%.
In Europe, at midday, London flat. Paris +0.7%. Frankfurt +0.2%.
Futures at 7:00, Dow +0.1%. S&P +0.1%. Nasdaq +0.1%. Crude +0.8% to $81.24. Gold -0.2% to $1,996.60. Bitcoin +0.3% to $29,387.
Ten-year Treasury Yield flat at 3.97%.

Today's Economic Calendar

9:45 Chicago PMI
10:30 Dallas Fed Manufacturing Survey

Companies reporting earnings today »

What else is happening...

Yellow (YELL) shuts down operations, plans to file for bankruptcy.

Walmart (WMT) pays $1.4B to raise stake in Indian e-commerce giant.

China manufacturing activity shrinks for fourth straight month in July.

Credit card delinquencies tick up, net charge-offs fall in June.

Disaster-prone areas turn haven for those seeking cheaper homes.

J&J's (JNJ) bankruptcy plan to handle talc lawsuits is rejected again.

Biogen (BIIB) to buy Reata (RETA) at enterprise value of $7.3B.

RSV treatment market to surge past $9B by 2029 from $1B today.

Assessing the impact of proposed Basel III endgame rules on banks.

What does Oddity Tech (ODD) signal about AI's future on Wall Street?

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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