Your Weekly Digest of Market News and Analysis from the Editors
July 14, 2024
Notable market news this past week (14-Jul-24)
Here is the Skeptivest roundup of the latest market headlines for the week
🇺🇸 US CPI numbers give confidence of Fed rate cuts in Sep
US CPI cools: US CPI declined 0.1% from May, putting the 12-month rate at 3%, around its lowest level in more than three years. Core CPI, which excludes food and energy costs, cooled broadly in June to the slowest pace since 2021 thanks in part to a long-awaited slowdown in housing costs.
Meanwhile at the ECB: Meanwhile, the European Central Bank is anticipated to halt rate cuts as it evaluates the economic challenges and potential inflationary pressures facing the 20-nation euro zone.
🇨🇳 China’s trade surplus soars to highest since 1990
Strong exports: China's June exports grew by 8.6% yoy to US$307.8b. Semiconductor export grew by 21.6% while auto exports saw a strong performance of 18.9% yoy YTD. This shows China's pivot towards hi-tech manufacturing is starting to pay some dividends and some frontloading effect before auto tariffs from the EU and US come into play
Slow imports: June's import growth returned to negative levels, down to -2.3% yoy to US$208.8b. The continued drag from the property market is dragging down steel (-7.0%) and timber (-5.1%) imports. As China's domestic auto industry produces more competitive products, its auto imports (-13.9%) have also contracted sharply
Outlook: Heading towards the second half of the year, incoming tariffs and moderating growth in other global economies could start to weigh on China’s export growth and see a decline in export rates
☕️ Quick fire happenings to note
🌏 Global macro
Japan spent $22b to prop up yen: Japan likely stepped into currency markets for a third time this year to prop up the yen soon after US inflation figures came out this week. One of the main factors driving the weakness in the yen is the difference in interest rates between the US and Japan. That suggests that a rate hike by the BOJ or a rate cut by the Fed would help lift the yen
Biden's gaffes add to election uncertainty: Investors remain uncertain about the US election as President Joe Biden commits to the 2024 race despite making two significant errors at the NATO summit. He mistakenly introduced Ukrainian President Volodymyr Zelenskiy as Russian President Vladimir Putin and later referred to "Vice President Trump" when discussing Vice President Kamala Harris. These gaffes marred an otherwise confident performance on various complex issues.
AI worries: Investors are growing increasingly concerned that US technology megacaps are spending too much on artificial intelligence, according Goldman Sachs strategists. Companies that the strategists refer to as “hyperscalers” — including Amazon, Meta, Microsoft and Alphabet — have utilized about $357 billion for capital expenditure as well as research and development in the past year
Retail investors sticking around: In 2021, retail investors flocked to the stock market, driven by the allure of volatile “meme stocks” like GameStop and AMC. Fueled by pandemic relief checks and boredom, these traders invested heavily in shares promoted by internet gurus. Three years later, meme-stock fervor shows no signs of fading.
🏦 Individual stocks/companies
Apple avoids EU antitrust fines: Apple has avoided the threat of fines from EU regulators by agreeing to open up its mobile wallet technology to other providers free of charge for a decade. Apple Pay has grown to become the most dominant in EU, with the new access, players like PayPal, Google Pay and Samsung Pay might be able to better compete in EUc
JPM tops second quarter revenue estimates: JPM posted second-quarter profit and revenue that topped analysts’ expectations as investment banking fees surged 52% from a year earlier. Despite the strong performance, CEO Dimon noted that the firm is wary of potential future risks and multiple inflationary forces ahead including large fiscal deficits, infrastructure needs, restructuring of trade and remilitarization of the world
Boeing pleads guilty to fraud charges: Boeing agreed to plead guilty to a conspiracy fraud charge tied to the 737 Max crashes and agreed to pay a US$243.6m fine and for a third-party monitor to be installed to keep track of Boeing's compliance. The deal spares Boeing from a trial just as the plane maker is trying to turn a corner in its safety and manufacturing crises
Boston Celtics’ majority owner puts team up for sale: Boston Basketball Partners LLC, the ownership group behind the Boston Celtics, has put the team up for sale as the Celtics became the latest NBA champions. The valuation will likely be based off NBA’s Phoenix Sun $4b price tag in 2023 and the sale is expected to complete in early 2025
Audi strikes multiyear partnership with Inter Miami football club: Audi will be Inter Miami’s official premium automotive partner as the company aims to reach a growing soccer fan base in US. The partnership includes a fleet of vehicles, wrapped in Inter Miami CF's signature pink colour, as well as Audi test drive experiences, fan zone activations and stadium LED and other in-game content
🇸🇬 Singapore related
Azalea launches its latest PE-backed bonds Astrea 8: Azalea, a wholly owned subsidiary of Temasek has launched S$260m worth of Class A-1 Singdollar bonds will carry a fixed coupon of 4.35% a year, and US$50m worth of Class A-2 US dollar bonds, 6.35%. The placement tranche saw strong demand from institutions investors, with a combined order book more than S$1.2b, equivalent to a subscription rate of 2.6 times
Temasek posts 1.6% return in FY24: Temasek earns a small positive return as it recovered from a negative performance last year. US remains the largest destination for the firm’s capital and will continue to take a cautious approach to China as it decreased their holdings from 22% to 19%. It is also planning to increase its bets on India, which accounted for 7% of its portfolio.
