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Todays Open Interest Change



Spheres of influence

A lot is riding on the G20 summit this year, especially with notable absences that include China's Xi Jinping and Russia's Vladimir Putin. President Biden will have an opportunity to make fresh inroads with many countries in the group (that account for more than 80% of global GDP) and reestablish the U.S. as the undisputed leader of the international system. Ahead of the conference, Congress has been asked for permission to lend $21B to IMF trust funds, with the U.S. still enjoying its special position there and at the World Bank, and keeping its hold on the institutions. See what happened at last year's G20 summit

Backdrop: The alternative to the G7, known as the BRICS (Brazil, Russia, India, China and South Africa), has been looking to expand its axis of power by recently inviting more nations to join the group. Countries being courted, such as Argentina and Saudi Arabia (and possibly Indonesia), are members of the G20 as well, setting up some interesting and unusual dynamics at this weekend's summit. The BRICS are also hoping to get many middle- to lower-income countries on board for membership, offering an alternative to the dominant Western economic model that has powered the globe since the end of WWII.

Biden's biggest objective at the G20 will be to boost the funding and reach of the World Bank and other development banks as a counterweight to emerging economies that have sought lending from Beijing. China's Belt and Road Initiative uses state-backed money for infrastructure projects all over the globe, giving it a presence and leverage in many new countries that are now tied to Chinese debt. The U.S. also plans to push for funding for new infrastructure projects and other partnerships after the BRICS declared their ultimate goal of "advancing the agenda of the Global South." Check out 'Rising Use Of Local Currencies In Cross-Border Payments' by SA analyst Otaviano Canuto

Tug of war: The bigger fear for the U.S. is should the BRICS be successful in creating a separate economic and financial system, the effects of sanctions will wane with the dollar no longer controlling the majority of transactions in international trade. Diplomacy has been conducted at the highest levels in 2023 to extend American power, including Janet Yellen's 10-day trip to Africa and re-engagement with Saudi Arabia after promises to make the kingdom a pariah. Immediately following his departure from the G20, President Biden is also set to travel to non-aligned Vietnam, which is quickly turning into a manufacturing powerhouse for American goods and an alternative to China.

Treading carefully

Apple (AAPL) is the latest pawn in the U.S.-China cold economic war, amid mounting fears that its Chinese business will be hit by a ban on iPhone use by government workers and homegrown competition. Apple lost nearly $200B in market cap since Beijing announced the ban - a move seen as retaliatory as the U.S. government had banned the use of certain Chinese products by government agencies, including TikTok and Huawei. The ban comes just days ahead of the iPhone 15 launch. However, Wedbush thinks the issue is way overblown, given the relatively small impact on the tech behemoth's sales. Another cause for concern is Huawei's new flagship smartphone, which Bank of America believes could help the Chinese firm regain market share and potentially pose downside risk to iPhone sales in the region - a view echoed by SA analyst Bill Maurer. (222 comments)

Strike in sight

The United Auto Workers said an offer by General Motors (GM) fell far short of its demands, as labor talks heated up with a strike deadline just one week away. UAW President Shawn Fain called the offer “insulting" and did not back down from the union's strike threat. GM's wage offer is slightly better than Ford's (F) - which was rejected by the union - but it relied on lump sum payments, instead of the annual pay hikes being demanded. The union is expected to make another offer in response to Ford's proposal, while Stellantis (STLA) will make a counterproposal by the end of the week. Wedbush said this is a potential nightmare situation for GM and Ford, although Investing Group Leader Envision Research believes the issue is only temporary. (59 comments)

More Fedspeak

Federal Reserve officials are signaling that the central bank will likely maintain interest rates at its meeting this month, although they all agree that more needs to be done in the fight against inflation. “The significantly lower inflation in recent months is encouraging," said Dallas Fed President Lorie Logan, but warned that this may not be low enough. New York Fed President John Williams agreed, saying the Fed will closely watch data to assess whether policy is restrictive enough. While the headline inflation rate has been at ~2.5% over the past couple of months, other measures that strip out volatile food and energy prices are still high. Other officials have also called for a patient, data-dependent approach, including Boston Fed's Susan Collins and Fed Governor Christopher Waller. (42 comments)

Today's Markets

In Asia, Japan -1.2%. Hong Kong closed. China -0.2%. India +0.5%.
In Europe, at midday, London -0.1%. Paris flat. Frankfurt -0.3%.
Futures at 7:00, Dow -0.1%. S&P -0.1%. Nasdaq -0.1%. Crude +0.5% to $87.34. Gold +0.2% to $1,947.20. Bitcoin +0.4% to $25,845.
Ten-year Treasury Yield -1 bp to 4.25%.

Today's Economic Calendar

10:00 Wholesale Inventories (Preliminary)
1:00 PM Baker Hughes Rig Count
3:00 PM Consumer Credit

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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