Macro Matters

US Q2 GDP Expanded by a Robust 2.8% Rate, Significantly Surpassing Expectations

Real GDP increased at an annual rate of 2.8 percent in the second quarter of 2024. Economists polled by Dow Jones anticipated a 2.1% growth rate following a 1.4% rise in the first quarter.

Bureau of Economic Analysis noted that, compared to the first quarter, the acceleration in real GDP in the second quarter primarily reflected an upturn in private inventory investment and an acceleration in consumer spending.

US PCE Inflation Slows to 2.5% in Jun, But Core PCE Unchanged at 2.6%

The annual PCE inflation rate in the US decreased to 2.5% in June 2024 from 2.6% in May, in line with market forecasts. On a monthly basis, the PCE price index rose 0.1% mom in June, matched expectations.

The core PCE inflation gauge for the US economy was unchanged at 2.6% in June 2024, the same as in May and above market forecasts of 2.5%. On a monthly basis, core PCE prices rose by 0.2% in June, accelerating from 0.1% in May and above market estimates of 0.1%.

US New Home Sales Fell to a Seven-Month Low in June

Sales of new single-family houses in the United States fell 0.6% month-over-month to a seasonally adjusted annualized rate of 617K in June 2024, as high prices and mortgage rates continued to weigh on buyers' affordability. It is the lowest reading in seven months and well below forecasts of 640K.

The median price of new houses sold in the period was $417,300, while the average sales price was $487,200, lower than $417,600 and $507,800 a year earlier, respectively. Meanwhile, there were 476K new homes listed for sale during the period, representing about 9.3 months of supply at the latest sales rate.

Exhibit: United States New Home Sales, Trading Economics

US Mortgage Rates Climb Slightly, Holding Near a Four-Month Low

Mortgage rates in the US increased slightly, with the average for a 30-year fixed loan rising to 6.78% from 6.77% last week, according to Freddie Mac. Despite being down from recent highs, elevated borrowing costs continue to deter house hunters amid record-high prices. Sales of previously owned homes fell for the fourth consecutive month in June, and new-home purchases also declined. Consequently, listings are staying on the market longer, and more sellers are reducing their asking prices.

Smart Money Flow

S&P 500's earnings beat rate is still healthy at nearly 79%, but the revenue beat rate is currently at its lowest since the fourth quarter of 2016.

Hedge funds have increased their long dollar positions in recent months reflecting their relative optimism on the US economy and likely tighter monetary policy ahead.

Yield Curve Steepens Once Recession Begins.

Copper Sinks Below $9,000 Threshold as Metals Selloff Deepens

Copper prices fell below $9,000 a ton for the first time since early April due to a global stock market selloff and rising pessimism about demand in China. The industrial metal is down about 20% since its mid-May peak, as initial bullish bets on tightening supply and increased usage have shifted to concerns about rising inventories and weak conditions in China's spot market. Additionally, a selloff in global technology stocks has cast doubt on the strength of the artificial intelligence industry, which investors had expected to drive a surge in copper usage for data centers and power infrastructure.

Top Corporate News

Alphabet Margin Fears, Youtube Slowdown Eclipse AI Boost

In the second quarter, Alphabet's capital expenditure rose to $13.2 billion, exceeding expectations as it invested heavily in AI and competed with Microsoft. Despite cost-cutting measures, such as layoffs, analysts noted that higher seasonal hiring and the earlier-than-usual Pixel launch could impact third-quarter margins. Additionally, YouTube faces tough year-on-year comparisons and competition from Amazon.com in the online ad video market.

Musk Says Tesla Board to Discuss $5 Billion xAI Investment

Elon Musk announced that Tesla Inc.'s board will discuss a potential $5 billion investment in his AI startup, xAI. Earlier this week, Musk conducted a poll on X, where over two-thirds of respondents supported the idea. Following the favorable public response, Musk stated on Thursday that Tesla would consider the investment. He also noted that Tesla board approval and a shareholder vote would be required before proceeding.

Ford Falls Most in 15 Years as Warranty Costs Erode Profit

Ford Motor Co. shares plummeted 18% on Thursday, their worst drop in over 15 years, following a significant earnings miss due to an $800 million surge in warranty repair costs for older vehicles. Ford reported adjusted earnings per share of 47 cents, falling short of the 67-cent average estimate from analysts surveyed by Bloomberg. This decline wiped out the company's 2024 gains, leaving the stock down more than 8% for the year.

Visa's Revenue Miss Prompts Caution on Wall Street

Visa's underwhelming third-quarter revenue led several brokerages to cut their price targets on the stock, raising concerns about slowing customer spending and impacting the broader U.S. payments industry. The disappointing results highlight industry challenges, as inflation and high borrowing costs cause customers to reduce purchases, and wage growth slows.

No Sign Microsoft Plans to Limit Crowdstrike Access to Windows After Outage, Source Says

There is no sign Microsoft Corp plans to limit Crowdstrike's access to the Windows operating system, a person familiar with the issue said, after a global tech outage caused by the cybersecurity software product caused many computers running Windows to crash.

Upcoming Economic Data

Disclaimer: This presentation is for informational and educational use only and is not a recommendation or endorsement of any particular investment or investment strategy. Investment information provided in this content is general in nature, strictly for illustrative purposes, and may not be appropriate for all investors. It is provided without respect to individual investors’ financial sophistication, financial situation, investment objectives, investing time horizon, or risk tolerance. You should consider the appropriateness of this information having regard to your relevant personal circumstances before making any investment decisions. Past investment performance does not indicate or guarantee future success. Returns will vary, and all investments carry risks, including loss of principal.

Moomoo is a financial information and trading app offered by Moomoo Technologies Inc. In the U.S., investment products and services on Moomoo are offered by Moomoo Financial Inc., Member FINRA/SIPC.