Musical Chairs

Economists are warning that there could be a growing risk to the US economy if the Fed waits too long to cut rates, per both BBG and CNBC. Basically, we’re in a game of musical chairs and need the Fed to insert more chairs into the game before the music stops.

Everyone is wondering whether the small cap party can continue. The Russell 2000's +12% gain over the past 5 trading sessions is its best run since Apr-2020, which was the pandemic stimulus party, per BBG. Just read a UBS note projecting it will. Data Trek via BTIG noted that the last 5 days’ return is well through 3 standard deviations, and nearly 4 SDs.

The "Trump trade train” left the station, got on a boat, and sailed away. Investors supersized returns (here’s lookin’ at you, small caps) for related trades in hope his policies will lift corporate profits, per Reuters.

Tech is getting hammered today. NVDA, AMD, Broadcom, ASML, Tokyo Electron, etc. The skinny is that there could be tougher restrictions on sales to China. Even though ASML reported strong orders, the gov said that they could implement the most severe trade restrictions to co’s like ASML and Tokyo Electron if they keep giving advanced tech to China.

US industrial production was up big in June. The +0.6% increase in production followed a +0.9% gain the mo before, which is the greatest 2-mo advance since late 2021. The consensus was 0.3%, so this was a big move.

I did not. Amazon Prime Day sales are notoriously based on bad deals…as Wirecutter explained. But that doesn’t seem to be stopping consumers. Adobe Analytics, per Reuters, says sales hit a record $14bn. But its marketing portal crashed last night, so we’ll see if that affected results.

Car repo’s are up +23%. Why? Folks are falling behind on payments. We’re talkin’ high interest rates, fewer coins in the pockets, and inflation all over the place… Repos started increasing last year, and now they’re at pre-pandemic levels, up +14% compared to 1H19.

Musk is moving the HQ for SpaceX from California to Texas, per BBG. One of my favorite times of day is when the Tesla employees finish work and roll out of the office nearby. It’s like a parade of cybertrucks (always with a dude driving) and weird wraps. One thing we’re not driving along with? Cathie Wood’s notion that Tesla’s autonomous taxi platform with drive a 10x in Tesla stock.

Wall Street printed its strongest quarter for investment banking in 2 years, with $8.2B in fees, per the FT. Equity trading revenues, in particular, were strong, as we noted with GS yesterday. They were up 18% y/y, more than 3x estimates, per BBG. BofA noted that it is investing more money and balance-sheet resources behind its trading business, but folks—usually you shouldn’t do that near a top.

Depends on whether you’re a manufacturer or a service provider in Japan. They are showing very different biz sentiments, per Reuters.

The largest global luxury fortunes lost $17bn with a B recently, given the French elections and a slowing market, per Reuters.