Earnings season starts with a bang

00:00:00: Hi, and welcome to Swiss Codes.

00:00:02: daily market talk is Wednesday.

00:00:04: Fifteenth of July.

00:00:05: the sun is shining bright again across global financial markets.

00:00:09: since yesterday's data show that US inflation is more than expected by analysts bank earnings came in as good as it gets.

00:00:17: As said JP Morgan CEO Jamie Diamond an ASML also reported sweet results this morning but digging deeper you find out.

00:00:25: so I will dive into The ongoing disconnect between financial markets, the pricing out there and underlying economic fundamentals.

00:00:34: I like to rest of So.

00:00:53: we have many things to discuss today from earnings to economic data.

00:00:56: so I will start with the big picture and gently dive in.

00:01:00: In The Big Picture, US inflation came in softer than expected yesterday but not only... ...the monthly figure printed a negative number that must be negative in six years indeed!

00:01:11: The bigger explanatory factor was the fall in energy prices.

00:01:15: unsurprisingly.

00:01:16: As I mentioned, yesterday's episode U.S.

00:01:19: current fell around twenty-five percent in June pulling US gasoline prices down by about ten per cent and that latter was very visible in yesterdays' CPI data.

00:01:30: Looking at year of figures headline inflation sank from four point two to three and a half percent well lower than three point eight percent expected by analysts while core is from two point nine to two point six percent year over a year also notably lower than the two point eight percent penciled in by analysts.

00:01:50: In fact, the core CPI figure for the US fell through pre-Iran war levels.

00:01:55: To my surprise data tamed the hawkish fed expectations leading into very sharp pullback at the short end of U.S.

00:02:02: yield curve.

00:02:05: that best captures Federal Reserve's rate expectation ten basis points yesterday after the data funds futures today, or pricing the possibility of a September rate hike at around sixty percent and that's also down from seventy seven percent.

00:02:22: That will be saw before the CPI data release in the US yesterday.

00:02:26: but because fall in U.S inflation figures was mainly due to sharp pullback in energy prices The inflation relief we saw yesterday will probably not last long.

00:02:38: today.

00:02:39: The US president walked back his latest and probably one of the most absurd proposals.

00:02:44: he had to try a twenty percent fee on all ships transiting the Strait of Hormuz.

00:02:49: remember we did math yesterday it would be around thirty to thirty four million US dollars fee per oil tanker and totally against international law as well yet.

00:02:59: The strikes in the region, in the Middle East region continue...the energy infrastructure across Gulf is being damaged and oil and gas prices are up.

00:03:08: as a reaction!

00:03:09: U.S.

00:03:09: Credit Council days rebound near the eighty dollar per barrel level.

00:03:13: brand trades near eight or five per barrel this morning.

00:03:17: Natural gas in Nye makes it stable below three dollars, yet the European TTF futures are up by more than thirty percent since June because Europeans are dependent on Middle East gas then US.

00:03:29: So in summary good news from the U.S inflation front is unlikely to last unless we see a de-escalation of the middle east tensions and that's why I was very surprised with such positive market reaction.

00:03:43: On top, the Fed Chair came and washed himself.

00:03:46: rightfully downplayed the latest inflation data.

00:03:49: And said loud and clear that there will be no tolerance for high-inflation in the United States!

00:03:56: Overall June inflation data offered a brief painkiller for financial markets?

00:04:01: Sure it helped masking symptoms but disease is still... their inflation is still under pressure and oil prices will remain central to inflation dynamics, hence central bank expectations.

00:04:13: Besides all that, Kevin Warsh also said he doesn't want be in a bailout business if anything with the markets went wrong whether it's with crypto or AI trade although the Fed would provide support whatever I think time will tell.

00:04:29: So this morning US futures are in the positive territory at at a lower start in Europe or probably bothered by the rebound that we see and energy prices.

00:04:40: The divergence between US and Europe also seems to be mostly coming from the technology shocks, that outperform again today with Korean Cosby Index adding another seven point seventy percent as I'm talking here this morning As ASML results came in sweet this morning With higher than expected forecast for the third quarter and fiscal year sales investors will react throughout the day because we also have the whisper numbers and sometimes the tech investors are not necessarily convinced with strong numbers.

00:05:11: Over in China, the mood is cheerful as well amid a set of mixed economic data showing it's softer than expected.

00:05:17: second quarter GDP growth in China further falling investment and property prices but-buts!

00:05:23: The latter was coupled with relatively stronger retail sales and stronger industrial production earlier this week are also exploding thanks to a booming demand for AI hardware and cheaper tokens.

00:05:40: According the latest news, deep-sea Chinese version of Chatchapati is now looking go public as early quarter for their trading division.

00:06:05: Amid all this high stock volatility and a great, great IPO!

00:06:09: Yes I'm talking about SpaceX's IPO mainly that by the way sees his stock price going straight down as investors realize at company must spend loads on their expense to maybe achieve a great dream.

00:06:23: but together back to banks.

00:06:25: US biggest banks made it record U.S.

00:06:30: dollars profit in the second quarter of this year and said that consumers remain inflation worries.

00:06:38: And that's true not only for the wealthier segment, says JPMCFO but broadly across banks customer base.

00:06:45: and CEO Jamie Dimon said it is getting close to as good at its gets because funny enough The numbers printed yesterday in these earnings reports are full contrast with exploding percentage of credit card balances.

00:06:59: ninety plus days delinquent according to latest data here letters by past thirteen percent this highest level since two thousand and eleven.

00:07:09: It seems that the biggest bank customer base isn't quite main street enough to reveal the dust that's quietly building up under the rug, but good news is strong bank results did trigger a positive market reaction.

00:07:22: Investco KBW Bank ETF rose one percent in yesterdays trading session all-time high level accompanying the big banks profits.

00:07:32: The financials have been outperforming their S&P five hundred since June, mind you on going rotation from highly valued and volatile technology could continue to benefit the banks elsewhere while things didn't go well.

00:07:45: for IBM For example this stock tank more than twenty five percent in yesterday's trading session.

00:07:50: that was apparently the worst a loss since nineteen sixty eight after the company acknowledged they misread AI wise by not anticipating the magnitude of the K-Pax reprioritization and by being distracted with cyber security needs.

00:08:08: Money meanwhile flew into chips, equipment makers to tokens leaving software behind.

00:08:14: The good news is that IBM's misery yesterday didn't echo through wider software stocks.

00:08:20: iShares expanded technology software ETF actually eat out a one percent gain despite huge fall in IBM stock price, hinting that the stress level among software investors is easing today.

00:08:33: Leaving this sector with plenty of room to recover further and good earnings could help them rebound given how severely industry sold off between last September through April.

00:08:45: Zooming out again, today the US bill released latest PPI data.

00:08:49: The headline figure is expected to have come down from six and a half percent to six point two per cent year over a year while core PPI may have risen from four point nine to five point two percent.

00:09:01: either way these numbers are far too high compared to the Federal Reserve's two-percent inflation target and could very well in my opinion bring investors back out to a much greater reality of rising Middle East tensions and a conflict far from being settled.

00:09:21: So this is all for today, I'm Ipeko Skardishkaya And thank you for joining me!

00:09:26: Thank you to all your beautiful and supportive comments!

00:09:30: This episode of Market Talk has been helpful so please do not hesitate to leave your comments, reactions or questions below.

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