We'll Do It Live

Hold onto your coffee cups, 'cause we're kicking off the day with GREAT news! GDP soars to 2.4% in Q2 2023. This is up from 2% in Q1. The “for sure recession" is nowhere in sight - it vanished like a magician's trick!

Market

Prices as of 4 pm EST, 7/26/23

Macro

Sales of new single-family US homes fell 2.5% in June to 697k.

• The previous month’s sales were also revised down significantly from 763k to 715k.

• The median sales price fell 4% YoY to $415,400.

• Keeping the market tight is a shortage of inventory.

• In fact, according to John Burns, there are 600k more realtors in the US than there are homes for sale:

John Burns

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The Fed raised interest rates to the highest in 21 years yesterday.

• FOMC officials voted unanimously to hike by 25bps to 5.25-5.50.

• The move surprised exactly no one.

• At the presser, Powell stressed upcoming meetings would be “live” (i..e, no decisions have been made).

• He suggested that target inflation (2%) wouldn’t be reached until at least 2025.

• He also noted that staff are no longer predicting a recession as their base case.

NYT

Stocks

As we noted yesterday, the Fed’s rate increase was mostly priced in ahead of the official decision.

• If yesterday’s hike proves to be the last, what can we expect from stocks?

• The S&P has gained an average of 7.6% in the 12 months following the end of a rate hike cycle (chart).

• Zooming out further, the S&P has gained an average of 46.2% and 70.6% in the 3- and 5-year periods after the last hike.

@callieabost

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Global equities have seen back-to-back months of inflows for the first time since March 2022.

• Leading the way lately is the Dow, which has posted 13 straight sessions of gains—the longest streak since 1987.

• Also leading the way are retail investors whose demand for equities has been rising.

• In fact, retail investors are now buying more call options than institutions are (chart).

• Smart money is now playing catchup.

• Even so, equity allocations from both retail and institutional investors remain far from excessive, according to Barclays.

Barclays

Energy

Crude is up this morning following yesterday’s inventory draw.

• Crude inventories fell by 600k barrels (vs. 2.2 million expected).

• Cushing, gasoline, and distillates stocks also declined.

• Both WTI and Brent prices are at their highest since mid-April.

EIA/Zero Hedge

Earnings

Yesterday’s highlights:

Meta META: $2.98 EPS (vs. $2.91 expected), $32 billion in sales (vs. $31.12B expected).

• Meta saw growth across daily active users (DAUs), monthly active users (MAUs), and average revenue per user (ARPU).

• The company guided current quarter revenue above analysts’ estimates and suggests 15% YoY growth.

Boeing BA: -$0.82 (vs. -$0.88 expected), $19.75 billion in sales (vs. $18.45B expected).

• The jet maker posted better-than-expected cash flow and reiterated its guidance for the full year.

• It also plans to boost production to help meet booming travel demand.

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What we’re watching today:

• Mastercard MA

• AbbVie ABBV

• McDonald’s MCD

• Shell

• Linde LIN

• Comcast CMSA

• T-Mobile TMUS

• TotalEnergies TTE

• Intel INTC

• Honeywell HON

• S&P Global SPGI

• Bristol-Myers Squibb BMY

• Mondelez MDLZ

Top Headlines

• UK retail: Retail sales in the UK declined at their fastest pace in over a year.

• ECB decision: The European Central Bank is expected to raise rates by 25bps today.

• EV partnership: Several big automakers are teaming up to invest in building ~30k EV chargers throughout the US.

• Chinese EVs: China’s automakers are eyeing US markets for their cheap EVs.

• Chinese equities: Hedge funds are rushing into Chinese stocks after the politburo signaled stimulus ahead.

• Maps battle: Meta, Microsoft, and Amazon are teaming up to take on Apple and Google in maps.

• Unprofitable reality: Meta’s Reality Labs has lost more than $21 billion since the start of last year.

• Not cool: A group of hedge funds is seeking to intercept a ~$1 billion payout meant for opioid addiction victims.

Crypto

Prices as of 4 pm EST, 7/26/23

• Crypto bills: The US House Financial Services Committee voted in favor of 2 crypto-related bills.

• SBF charges: Prosecutors have dropped campaign finance charges against Sam Bankman-Fried.

• Rekt: Immunefi, Polygonn Labs, and Solana have jointly introduced “Rekt Test”, a baseline security standard for web3.

• Institutional interest: Bitcoin and Ether futures saw record participation from institutional investors in Q2.

• Compliance: Binance has exited Germany, the Netherlands, and Cyprus as it prepares to comply with new EU MiCA rules.

Deals

• Teams probe: Microsoft is facing an EU probe over unfair bundling of its Teams app with Office 365 packages.

• Bank M&A: JPMorgan will purchase $1.8 billion of mortgages to facilitate Banc of California’s PacWest purchase.

• Lifeline: Carlyle is providing iRobot with a $200 million loan to help keep it afloat during the review process of its acquisition by Amazon.

• Healthcare sale: The owners of the Plan-B pill are considering selling for over $4 billion.

• Private funding: Private capital fundraising in Asia Pacific is on track to hit a 10-year low in 2023.

Meme Of The Day