JPM is out with a solid piece this morning. My summary of their data: a lot of key companies are reporting earnings this week, so stay in your seat. Analysts cut consensus projections by a lot over the past few months, so the bar is low. Plus, growth data has been strong/expansionary, so companies most likely will beat consensus. Yet you might not see the big pops of 1Q, given the strong equity market YTD and the risk of Q&A/guidance. China has remained weak, global growth data has been slowing, inflation is moving down, and pricing is getting pressured—so the 2H23 set-up is not as rosy.
One company expected to go in the opposite direction on price? Apple. The co is asking suppliers to keep production roughly steady this year (85mm iPhone 15s) even though the market is softening, and it expects to raise price for the Pro models.
Per NOSO, Tesla sold more EVs in 1H23 than Volkswagen, BMW, Mercedes and Porsche combined. While s/w issues are delaying certain models and pressuring China sales, they’re doing just fine overall. They’re the top brand in Germany. In the US, the co started offering 84-mo auto loans.
The FT is out with a story about the challenged $1.4 trn US junk loan market. Companies are being hit with credit rating downgrades after interest rates jumped high and fast. They have a ton of floating-rate debt to address, so it’s no surprise that this past quarter’s number of downgrades (120) was the highest in 3 years.
CEOs of US chipmakers told the gov to study the impact of export restrictions and pause before enacting new ones, per BBG. The biggies—Intel, Nvidia, and Qualcomm are warning the gov that they won’t be able to keep up their leadership globally. They need Chinese customers, who represent 20-30% of biz. Their threat? They won’t need as much factory capacity in the US (aka jobs) if their target market shrinks.
US consulting firms (e.g., Bain, McKinsey) are having a tough time in China after security raids, per the FT.
The China Securities Journal says that China has sufficient room for monetary stimulus (including RRR and interest rate cut). The PBOC may implement another RRR cut in 3Q23 to drive demand.
PMIs in Germany and France were much lower than expected, with Germany’s index in contraction territory. In July, order inflows and output expectations are forecasting a worsening of the data. Per Reuters, the UK economy is close to stalling. Their services sector activity was weak.
Worldcoin, the digital identity/crypto project co-founded by OpenAI CEO Sam Altman popped to $3.58 on its trading debut, from $1.70. Because of regulations, the token is not available to trade here in the US.