Aug. 2 Markets Report: Fed and Loathing in the Global Economy
As recession alarms blare and commodities markets ail, the one thing that's certain is uncertainty.
Updated Aug 2, 2022
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- The U.S. GDP fell 0.2% last quarter (adjusted for inflation), making it the second quarter in a row that the U.S. economy shrank. This recession indicator was revealed just one day after the Fed hiked interest rates by 75 basis points, raising the federal funds rate to 2.5%.
- The Bureau of Economic Analysis reported that overall consumer spending jumped by 1.1% in June compared to 0.2% in May. This came as Americans absorb the rising costs of things like gasoline and groceries.
- Consumer goods prices in Spain increased by 10.8% year-over-year in July, according to data from Spain's National Statistics Institute. With electricity and food costs leading the inflation, this was Spain's fastest rise in prices since September 1984.
- Interest Rates: 2.5%
- Unemployment Rate: 3.6%
- GDP YoY: 1.6%
- CPI YoY: 9.1%
- Tensions between the U.S. and China rise over Speaker of the House Nancy Pelosi's tentative visit to Taiwan. A spokesman for the Chinese Foreign Ministry reiterated their opposition to Pelosi's Taiwan visit and stated that "the Chinese side will take firm and strong measures to safeguard our sovereignty and territorial integrity."
- A ship carrying 26,000 tons of corn left Odesa this morning, marking a success for the UN-brokered deal with Russia to ease their blockade of Ukraine's Black Sea ports.
- S&P Global and Fitch lowered their credit grade for Ukraine after the country requested to delay payments on its foreign debt. This reflects the lasting effect Russia's war against Ukraine is expected to have on the nation's finances.
Stocks & bonds
Stocks & bonds
Stock Market Performance
- Dow: 2.81%
- S&P: 4.24%%
- Nasdaq: 5.69%
- US3M: 2.388%
- US2Y: 2.903%
- US10Y: 2.632%
- US30Y: 2.973%
Money moves markets
- Exxon Mobil, Chevron, TotalEnergies, and Shell made a combined $51 billion last quarter. This marks record-breaking profits for four major oil companies while U.S. consumers deal with record-breaking prices at the gas pump.
- JetBlue announced that it would acquire Spirit Airlines for $33.50 per share, totaling $3.8 billion. If approved, the merger with Spirit will make JetBlue among the five largest U.S. airlines.
- AMD surpassed Intel by market capitalization last week, marking increased competitiveness between the two rival chip makers as well as within the broader computer hardware industry.
- Consumer staples: 1.16%
- Healthcare: 1.40%
- Consumer discretionary: 6.45%
- Energy: 6.36%
- The pace of real estate market growth slowed down as annual price appreciation fell from 19.3% to 17.3% in June according to real estate market analytics firm Black Knight. While housing inventory is 54% lower than it was from 2017-2019, the firm found that the supply of homes for sale is up 22% over the last two months.
- S&P Global estimates that 6.4% of China's outstanding mortgages risk default while Deutsch Bank puts that figure at 7% as the grinding halt of real estate construction causes Chinese homebuyers to boycott payments and property investments to drop by 9.4%. China's property crisis could spell a $350 billion loss for Chinese Banks due to their high exposure to loans for real estate projects.
Blue Chip Cryptos
Mainstream meets crypto
- A survey of 2,000 retail executives by Deloitte found that 75% of merchants are planning to accept cryptocurrency or stablecoins as payment over the next two years.
- According to a local newspaper Folha De S.Paulo, Santander Brazil CEO Mario Leao stated that the bank plans to offer bitcoin and cryptocurrency services to its clients. This statement from Brazil's third-largest private bank followed a revelation from the co-founder and CEO of the country's largest digital bank Nubank that it had reached one million cryptocurrency customers.
- Sports-oriented crypto project Chiliz announced that it'll invest €100 million in FC Barcelona's digital productions studio. This investment in Barça Studios comes 2.5 years after Chiliz first partnered with the Spanish football club to launch their official BAR fan token.
NFTs & Metaverse
NFTs & Metaverse
- Prices for CryptoPunk NFTs rallied after Tiffany & Co. launched the 'NFTiff' NFT collection. CryptoPunk holders who buy an NFTiff can redeem a custom-designed pendant and an NFT of the design.
- Prada is dropping its third Timecapsule NFT this Thursday which gives holders a chance to attend the brand's fashion show in September. You can get this year's Prada Timecapsule NFT with the purchase of a limited-edition Jeanne-Detallante-designed shirt.
Europe in distress
- Ukraine sent its first grain shipment from the Black Sea port of Odesa since Russia's blockade on the nation began. Grain prices dropped after the restarting of Ukrainian exports signaled Russia's easing of its stranglehold on the crucial food commodity.
- Energy costs in Europe spike to €500/MWh as the continent braces for shortages this winter after Russia cut off its natural gas supply in response to sanctions. European electricity futures indicate that prices could reach €1000/MWh by the first quarter of 2022.
- The European market is seeing a steep natural gas discount as it decouples from the price of Atlantic liquified natural gas (LNG). LNG prices could remain volatile as colder temperatures are expected to increase European energy demand.
- A recent dip in iron prices could soften vehicle inflation after car prices reached record heights in the first half of the year.
- Cotton prices are still high relative to pre-pandemic levels, indicating that the costs of apparel and cotton-heavy fabrics will continue to be volatile.
- A man reported to his local sheriff's office that over $500,000 worth of Pokémon cards were stolen from his South Carolina home, but a spokesperson for the Sheriff later disputed the figure and stated that the actual value of the stolen collectibles was around $200,000.
- The 42nd National Sports Collectors Convention that took place over the weekend in Atlantic City, NJ showcased the Diamondback Collection—50 of the most sought-after baseball cards like the infamous Honus Wagner T206. The collection includes 20 one-of-one cards that could each fetch seven to eight figures.
- Chrono24 told Bloomberg that their marketplace has been flooded with Patek Philippe and Rolex listings following the crypto crash. This may be an interesting if yet unexplored correlation between the luxury watch and crypto asset classes.
- Michael Malekzadeh, a sneaker reseller knowns as Zadeh Kicks, was charged with wire fraud, money laundering, and conspiracy to commit bank fraud by federal prosecutors after not delivering $70 million worth of sneakers.