Morning Reads


Todays Open Interest Change



Stocks are beginning August with some major gains, with the benchmark S&P 500 Index (SP500) soaring 20% so far in 2023. That's the best seven months to start a year since 1997, with markets expecting the Fed to soon turn the corner on its fight against inflation. The tech rebound and AI frenzy have helped to further underpin the big gains, with the Nasdaq Composite (COMP.IND) ahead by 37% to record its best first seven months to a year since 1975, while the Dow Jones Industrial Average (DJI) has also been on a serious winning streak since early July.

Coming up: One of the biggest weeks of earnings season is on tap, with 170 S&P 500 companies, including four DJIA components, scheduled to publish Q2 results. Among those reporting will be tech giants Apple (AAPL) and Amazon (AMZN), as well as healthcare juggernauts Merck (MRK) and Pfizer (PFE), industrial powerhouse Caterpillar (CAT), energy players like BP (BP) and ConocoPhillips (COP), and consumer plays AB InBev (BUD) and Starbucks (SBUX). General market direction could be disconnected from the Q2 earnings season at this point, but some of the numbers have been coming in better than expected.

"EPS beats: almost half way through the season and 81% of firms have beaten estimates on EPS, the highest figure since 3Q21 or the past seven quarters," Societe Generale wrote in a research note, outlining seven stats to know about earnings season so far. Inflation has been another major topic that's been guiding the markets. This week's WSB survey on the Fed's fight is still open and the results are coming in fast, with already 1,350 respondents to the poll.

Throwing in the towel: Morgan Stanley strategist Mike Wilson, who has been bearish on equities through the 2023 rally, now sees a late-cycle rally driven by monetary policy. "In our view, the positive policy impact has been supported by a very strong fiscal impulse, a still supportive global liquidity backdrop and optimism that the Fed can now transition to easier monetary policy given the falling inflation data. These developments fostered a robust rally [in 2019] that was driven almost exclusively by multiple and not earnings, as has been the case this year." (32 comments)

EV pivot

Reports suggest that Exxon Mobil (XOM) is in early-stage talks with automakers including Tesla (TSLA), Ford (F) and Volkswagen (OTCPK:VWAGY) for supplying lithium for electric vehicles. Albemarle (ALB) is said to be among the lithium producers in discussions with the energy giant, helping boost the former company's shares. Previously, Exxon was said to be planning to build one of the world's largest lithium processing facilities in Arkansas and has so far partnered with Tetra Technologies (TTI) to develop more than 6.1K lithium-rich acres in the state. Talking about the investment, Investing Group Leader JR Research noted that Exxon's moves could open up a high-margin growth opportunity to mitigate the structural decline in its oil and gas business. (67 comments)

Tighter credit

Given a more uncertain economic outlook, U.S. banks tightened lending standards across loan categories during Q2 and plan to further toughen up conditions this year. Respondents to the Fed's Senior Loan Officer Opinion Survey (SLOOS) reported tighter standards and weaker demand for commercial and industrial loans, as well as commercial real estate loan categories. Demand also weakened in residential real estate, home equity lines of credit, auto and other consumer loans, but demand was unchanged for loans linked to credit cards. ING's James Knightley said the report "makes it more likely that the Fed won't need to hike rates further as further credit contraction will naturally take the heat out of the economy." (1 comment)

Last hurdle

The U.K.'s antitrust regulator is seeking public input on whether it should clear Microsoft's (MSFT) $69B acquisition of Activision Blizzard (ATVI), raising the odds of the biggest-ever gaming deal crossing its last regulatory hurdle. This follows Microsoft's submission of a "material change of circumstance" to the Competition and Markets Authority based on its licensing deal with Sony (SONY) and other factors. The CMA said while such submissions are "very rare," it will consider Microsoft's arguments. Public comments should reach the CMA by August 4 - after which it will issue its final order by the end of the month - while the deadline for closing the merger had been extended to October 18. (3 comments)

Today's Markets

In Asia, Japan +0.8%. Hong Kong -0.3%. China flat. India -0.1%.
In Europe, at midday, London -0.1%. Paris -0.7%. Frankfurt -0.8%.
Futures at 7:00, Dow -0.1%. S&P -0.2%. Nasdaq -0.2%. Crude -0.3% to $81.55. Gold -0.8% to $1,994.00. Bitcoin -1.6% to $28,904.
Ten-year Treasury Yield +2 bps to 3.97%.

Today's Economic Calendar

9:45 PMI Manufacturing Index
10:00 ISM Manufacturing Index
10:00 Construction Spending
10:00 Job Openings and Labor Turnover Survey

Companies reporting earnings today »

What else is happening...

SoFi (SOFI) Q2 revenue beats consensus on higher loan originations.

'Barbie,' 'Oppenheimer' continue rule with strong second weekend.

Texas power use hits another record as heatwave bakes the state.

Disney (DIS) gains with former execs Mayer, Staggs back in fold.

Uber (UBER) preview: Mobility tailwinds expected to boost results.

CVS Health (CVS) to shed 5K jobs as part of cost-cutting efforts.

On the move: Tupperware (TUP) cements meme stock status.

Pfizer (PFE) Q2 sales likely to drop as COVID jab demand wanes.

Palantir (PLTR) pops on heavy volume, leads AI-focused stocks higher.

Archer Aviation (ACHR) inks $142M in new contracts with U.S. Air Force.

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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