We’ve Got the Beat

Even the Go Go’s can’t help companies this earnings season, with record high expectations that mgmt. teams will have to beat to keep investors happy. Right now, mgmt. teams are in their quiet period, so Our Lips Are Sealed.

Retail investors are loving 24-hr stock trading, which is making Wall Street nervous about potential trouble after dark, in particular over-sized moves, short-term speculation, and added pressure on non-US markets. (You’re welcome, fans of The Go Go’s…I’ve got one more for you…)

Today the Supreme Court will rule on if DJT is immune from criminal charges over attempts to overturn the 2020 election. Will he get a vacation from the charges? In any case, post-debate, MS is pitching yield curve steepeners as a bet on the possibility of a Trump victory, as they expect his policies may slow growth and quicken inflation. The yield discount of 10-year notes over two-year securities shrank the most since Jan last week.

Boeing is buying back Spirit AeroSystems in an all-stock deal that values the supplier at $4.7bn. Chewy popped 29% after Roaring Kitty disclosed a large (6.6%) passive position. Robinhood bought AI-driven research platform Pluto Cap.

Remember when interest rate futures spiked in Mexico? BBG has a piece out, explaining it was due to Brazilian hedge funds. They had bought a lot of Mexican assets before the election, and when the peso moved the wrong way, things started happening. They had piled into bets on a decline in rates, so when they tried to unwind on the back of the peso move, they drove rates higher, making it even messier.

China tightened the mgmt of rare earths, reasserting public ownership of the minerals and stating that gov agencies will control mining and smelting, plus they will establish a product tracing system starting Oct 1. (Imagine that here?) Also, China’s manufacturing activity expanded in Jun to its highest level in 3 yrs, per the private Caixin survey, diverging again with official data that reflected weakness. Are they playing at something here?

Australian inflation is still high, but it is moving in fits in starts lower…like that in the US and CAN. In Japan, the BOJ’s Tankan survey confirmed confidence from their largest manufacturers, which BBG is saying will give them confidence to hike rates.

In the EZ, stocks are up along with the euro as the French elections came in. There is a smaller chance of far-right policies being affected. The spread between French and German 10-year bonds narrowed to a two-week low. France’s CAC 40 moved up, along with French banks/lenders. The second round of voting in France happens on Jul 7th. Sounds like there could be gridlock in that country for decision-making, deficit fixing, and EU integration.