[Platinum Insights] (7.28.23)

Good morning. 

The Dow snapped its longest winning streak since 1987 as U.S. Treasury yields pressured stocks lower after news that the Bank of Japan will allow long-term interest rates to rise. 

“The biggest impact you would expect to see would be in the bond markets obviously, and this would be selling of U.S. Treasuries as Japanese investors moved to repatriate funds back home instead,” said Stuart Cole, chief macro economist at Equity Capital. “This effectively means we could see upwards pressure on yields globally, and that is not great news for stocks.” 

On the economic front, the Fed’s preferred inflation gauge “the personal consumption expenditures (PCE) price index” for June are due this morning. Intel Corporation climbed over +7% in pre-market trading after the semiconductor giant reported stronger-than-expected Q2 results and issued upbeat Q3 guidance. 

Meta Platforms Inc climbed over +4% after the social media platform operator posted better-than-expected Q2 results and provided upbeat Q3 revenue guidance.  

On the bearish side, eBay Inc tumbled more than -10% after the e-commerce platform’s Q3 earnings guidance missed analyst estimates. 

Also, Chipotle Mexican Grill Inc dropped over -9% after the fast-casual restaurant operator’s Q2 comparable sales fell short of expectations. Second-quarter earnings season continues, with investors awaiting new reports from major global companies, including Exxon Mobil, Procter & Gamble, Aon, and Colgate-Palmolive. Analysts expect corporate earnings from S&P 500 companies to fall 6.8% from a year ago in Q2. 

Personal spending in current dollars in the United States rose by 0.5 percent in June of 2023, surpassing market expectations of a 0.4 percent expansion and accelerating from the upwardly revised 0.2 percent increase in the previous month. The data reflected $52.1 billion in spending of services, while goods spending totaled $49.1 billion. source: U.S. Bureau of Economic Analysis 

Personal income in the United States rose by 0.3 percent from a month earlier in June 2023, easing from a 0.5 percent increase in May and missing market expectations of a 0.5 percent advance. Compensation of employees increased by 0.5 percent, driven by a 0.6 percent growth in wages and salaries and a 0.4 percent rise in other costs. By contrast, personal income receipts on assets dropped 0.2 percent, driven by a 1.2 percent decline in personal dividend income. source: U.S. Bureau of Economic Analysis

The University of Michigan consumer sentiment for the US was revised lower to 71.6 in July of 2023, from a preliminary of 72.6. It was the highest reading since October 2021 due to the continued slowdown in inflation along with stability in labor markets. The gauge for expectations was revised down to 68.3 from 69.4 and the current conditions subindex was revised lower to 76.6 from 77.5. Meanwhile, inflation expectations for the year were unchanged at 3.4% and the 5-year outlook was revised down to 3% from 3.1%. source: University of Michigan

Shares of Enphase Energy slumped nearly 11% on Friday, after the solar inverter maker’s third-quarter revenue target fell well short of analyst estimates due to weak demand. 

Biogen agreed to buy rare disease drugmaker Reata Pharmaceuticals for nearly $6.5 billion, the first large acquisition under new CEO Christopher Viehbacher as he seeks to return the drugmaker to growth. Centene Corp on Friday raised its full-year earnings forecast on expectations that premium collections will be higher this year from its government-backed Medicaid plans and commercial health insurance business.

WTI crude futures eased below $80 per barrel. Gold held below $1,960 an ounce while the yield on the US 10-year Treasury note rose to nearly 4%, as strong US data reinforced the view that Fed may be forced to continue with its tightening campaign. 

See you later today on the Platinum Channel Zoom call! Have a great weekend!