[Platinum Insights] (7.19.23)

Good morning. 

U.S. stock index futures crept higher on Wednesday with all eyes on second-quarter results from Tesla and Goldman Sachs, a day after upbeat bank earnings helped the Dow post its longest winning streak in two years. 

“Banks in general had very low expectations but the ones reporting (on Tuesday) largely beat these expectations,” said Kim Forrest, chief investment officer at Bokeh Capital Partners. M&T Bank, Citizens Financial, US Bancorp, Zions Bancorp and Discover Financial also report on Wednesday. 

Tesla slipped 0.3% ahead of results expected after the bell. Its strategy to boost sales through price cuts is likely to have powered its strongest revenue growth in five quarters while dragging down margins to a three-year low in the April-June period. 

Shares of Microsoft edged 0.6% higher, a day after the Windows-maker hit an all-time high on announcing it would charge more to access new artificial intelligence features in its Office software. 

Applications to start new U.S. businesses surged to the highest level in two years in June, despite high interest rates and uncertain economic outlook, according to a Commerce Department report released on Monday. 

WTI crude futures steadied around $76 a barrel. Gold held above $1,970 an ounce while the US 30-year Treasury note steadied at 3.75%.  

Wheat futures in the US extended their rally to the $6.9 per bushel level in July, its highest in three weeks, amid deepening concerns about low supply. Soybean futures rose past $15 per bushel, the highest in three months due to concerns about crop yields in the United States and increased demand from China. Corn futures rose to above $5.05 per bushel, rebounding sharply from the two-and-a-half-year low of $4.76 touched on July 12th amid threats to supply and higher demand for biofuels.

Activision Blizzard said on Wednesday it has extended the deadline for the close of its $69 billion takeover by Microsoft to Oct. 18 as the companies work to secure approval from the United Kingdom’s antitrust authority. 

The “Call of Duty” publisher said the companies also agreed to increase the deal termination fee to $3.5 billion from $3 billion if it does not close by Aug. 29. The fee will further rise to $4.5 billion after Sept. 15. 

The two U.S. companies originally agreed to close the deal by July 18, but U.S. regulatory efforts to block the takeover and Britain’s push to restructure it have delayed the close.

Building permits in the United States dropped by 3.7 percent to a seasonally adjusted annual rate of 1.44 million in June 2023, down from the seven-month high of 1.496 million recorded in May and falling short of market expectations of 1.49 million, according to a preliminary estimate.  

Housing starts in the US declined by 8% month-over-month to a seasonally adjusted annualized rate of 1.434 million in June 2023, below market expectations of 1.48 million. Single-family housing starts, which account for the bulk of homebuilding, dropped by 7% to 935 thousand and starts in buildings with five units or more went down by 11.6% to 482 thousand. 

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) in the US fell by 20bps to 6.87% in the week ended July 14th, 2023, from 7.07% the week before which was the highest level since November.

Have a great day!