Welcome to the Markets Weekly Update, the column committed to delivering essential investing insights for the week and key events that could move markets in the week ahead.

Macro Matters

Inflation falls 0.1% in June from prior month

CPI in the United States fell for a third straight month to 3.0% in June from 3.3% in May of 2024. Core consumer prices in the US increased by 3.3% in June of 2024 over the same month in the previous year, down from 3.4% in May.

Compared to the previous month, the CPI unexpectedly declined 0.1%, following a flat reading in May and compared to expectations of a 0.1% rise. Core CPI monthly rate edged down to 0.1% from 0.2%, below expectations of 0.2%.

Powell cautions that maintaining elevated interest rates for too long might hurt the economy.

Federal Reserve Chair Jerome Powell on Tuesday expressed concern that holding interest rates too high for too long could jeopardize economic growth.

“Reducing policy restraint too late or too little could unduly weaken economic activity and employment,” Powell said in remarks for appearances this week on Capitol Hill.

Markets expect the Fed to begin cutting rates in September and likely following up with another quarter percentage point reduction by the end of the year. FOMC members at their June meeting, however, indicated just one cut.

After the benign inflation report, the CME Fed Funds futures markets spiked to pricing in a 95% probability that the Fed will cut in September.

Gold surges past $2400 as june cpi reveals declining inflation.

The gold market responded positively to CPI report. Spot gold is currently trading at $2,413.92, representing a substantial daily gain of $42.79 or 1.8%. Gold futures for August delivery also saw significant increases, reaching $2,421.90 as of 5:20 PM ET, up $42.20 or 1.77%. The August contract touched an intraday high of $2,430.40.

Smart Money Flow

Small caps outperformed Large caps by 4.5% Thursday, a 6 standard deviation event and the 2nd biggest outperformance on record .

Seasonality analysis suggests that the second half of July can be a relatively weak time for U.S. stocks in years with a presidential election.

In June, BofA saw US$12bn into EM equity funds (after 3 months of flat flows) but almost all inflows were directed into China ETFs.

Top Corporate News

Tesla shares close down 8% after report of robotaxi unveiling delay.

Tesla shares closed down about 8% on Thursday after Bloomberg reported that the electric vehicle maker is delaying the unveiling of its Robotaxi by two months.

After previously announcing that it would introduce its robotaxi on Aug. 8, Tesla has pushed the launch back to October to give teams working on the project more time to build prototypes, according to Bloomberg, which cited people familiar with the decision.

Tsmc’s second quarter results may fuel its $420 billion rally as ai demand soars.

The world’s biggest contract chipmaker will probably report a 29% increase in second-quarter net income on , 18th July, according to the median estimate of analysts surveyed by Bloomberg. More importantly, analysts from JPMorgan Chase & Co. to Morgan Stanley expect it to also raise its full-year sales guidance, justifying another round of valuation expansion.

Delta Stock Leads Airline Retreat After Delivering Q2 Miss, Soft Guidance.

Delta Air Lines reported an 11.9% decline in earnings to $2.36 per share adjusted, just missing FactSet views of $2.37 per share. Adjusted revenue rose 5.4% to $15.41 billion, marking a record for the June-ending quarter. However, Delta's sales results fell short of estimates for $15.45 billion in revenue. Delta Air Lines guided Q3 earnings between $1.70 to $2 per share, compared to $2.03 per share last year.

Upcoming Economic Data

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