MARKET WRAPS
Watch For:
University of Michigan Preliminary Consumer Survey for July; Earnings From JPMorgan Chase; Citigroup; Wells Fargo; BlackRock; UnitedHealth
Today's Top Headlines/Must Reads:
- The Real Fed Debate This Month: What Would Prompt a Rate Hike This Fall
- If You Find the Economy Confusing, Don't Worry: It Is
- Bob Iger Isn't Having Much Fun
- Microsoft Email Hack Shows Greater Sophistication, Skill of China's Cyberspies
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Opening Call:
The stock rally looked set to pause, with futures edging lower on Friday as investors awaited a batch of Wall Street bank earnings.
Earnings season comes as optimism about the economy has powered indexes higher.
Meanwhile, the economy has proved resilient to higher interest rates, boosting hopes that the Federal Reserve can tame inflation without causing a recession.
"U.S. data has undoubtedly been encouraging, and the Federal Reserve's likelihood of staging a soft landing improves with every data point demonstrating resilient growth and falling inflation," UBS said.
Overseas indexes were little changed. In Asia, the Hang Seng index edged up 0.3% while the Nikkei 225 index weakened 0.1%. In Europe, the Stoxx 600 index was close to flat.
Pre-Market Movers
Coinbase shares surged after Ripple won a partial victory in a federal court ruling that augurs well for Coinbase's own legal issues.
U.S.-listed shares of Ericsson were tumbling 8.4% after the company reported second-quarter adjusted operating profit that fell 62% from a year earlier on a sharp decline in networking-equipment sales.
ADRs of Nokia fell 9.2% after the company cut its 2023 sales forecast. Nokia cut its sales outlook and narrowed its margin guidance, citing a weaker demand outlook in the second half of the year.
Roivant Sciences jumped 10% in premarket trading after The Wall Street Journal reported the company was in talks to sell an experimental drug for treatment of ulcerative colitis and Crohn's disease to Roche in a deal that could be valued at more than $7 billion.
Forex:
The dollar recovered modestly from sharp falls but the DXY dollar index still traded just below the key 100 level in early European trade.
"Today might represent the first test of whether the selloff against the dollar can take a break or whether it will continue," UniCredit said.
Dollar falls were limited as the Fed's Christopher Waller said he favors two more rate rises this year.
The euro and the pound could drop from overstretched levels against the dollar, ING said.
A bleak dollar outlook should limit falls, however, as weakening inflation dents U.S. interest-rate prospects, it said.
ING's models show EUR/USD--which earlier hit a 15-month high of 1.1245, according to FactSet--is around 2.0% overvalued, "a clear signal that the move has exceeded what can be explained by market factors," while sterling faces even clearer downside risks.
EUR/USD--which last trades at 1.1234--could fall towards 1.1170-80 "in the currently highly volatile environment," while GBP/USD could drop to 1.3050-70, ING added.
Read GBP/USD Likely to Extend Gains Toward 1.3335, Charts Show
Read China Exporters Unlikely to Be Hoarding USD in 'Shadow Reserves', ANZ Says
Energy:
Oil prices declined in Europe, but were set for their third weekly gain, as positive economic signals in the U.S. and supply challenges lifted prices.
Oil has broken out of its range as data has shown price pressures easing, boosting hopes that the Fed will be able to eventually halt its rate increases.
Russian oil exports have been trending lower while supply disruptions in both Libya and Nigeria have renewed concerns about a tightening oil market, ING said.
Metals:
Base metal prices slipped in early London trading, as weak demand from China continued to bite.
"For base metals, we expect prices will remain under pressure in response to the global economic slowdown and China's service-led recovery," BMI said.
However, LME inventories have recently fallen to 41,400 tons for copper and 273,000 tons for aluminum from year-to-date highs of 96,600 tons and 505,300 tons, respectively, BMI said.
"Expectations of more stimulus from the Mainland Chinese government present upside risks to base metal prices."
Read Gold Likely to Find Support in the Medium Term
TODAY'S TOP HEADLINES
Tucker Carlson Is Creating a New Media Company
Former Fox News host Tucker Carlson and former White House adviser Neil Patel are seeking to raise funds to start a new media company that would potentially use Twitter as its backbone, according to people familiar with the matter.
The new company would be anchored by longer versions of the free videos that Carlson has been posting regularly on Twitter since shortly after his departure from Fox News, but would ultimately be driven by subscriptions, some of the people said.
Bob Iger Isn't Having Much Fun
Bob Iger is under pressure.
Eight months after his return to Disney, which was sold as a triumphant second act by a savior CEO, reality is proving a lot more troublesome.
Microsoft Email Hack Shows Greater Sophistication, Skill of China's Cyberspies
The hack of email accounts of senior U.S. officials including the commerce secretary is the latest feat from a network of Chinese state-backed hackers whose leap in sophistication has alarmed U.S. cybersecurity officials.
The espionage was aimed at a limited number of high-value U.S. government and corporate targets. Though the number of victims appeared to be small, the attack-and others unearthed in the last few months linked to China-demonstrated a new level of skill from Beijing's large hacker army, and prompted concerns that the extent of its infiltration into U.S. government and corporate networks is far greater than currently known.
FTC Continues Fight to Block Microsoft's $75 Billion Deal for Activision
The Federal Trade Commission started new legal efforts on Thursday to stop Microsoft from closing its $75 billion deal for Activision Blizzard, signaling it isn't backing down after losing a key ruling this week.
U.S. District Judge Jacqueline Scott Corley earlier this week rejected an FTC petition to stop the companies from completing the acquisition. On Thursday, the FTC asked a San Francisco federal appeals court to stay that decision while the agency appeals it. Microsoft and Activision could potentially close their merger if no court intervenes.
Robinhood's New Retirement Accounts Put a New Spin on 'You Only Live Once'
The phrase "you only live once" is usually taken to mean that life is short, so have fun and take big risks. But if you think about it, "YOLO" could easily mean the opposite: You only live once, so take precautions and don't screw it up.
Many investors probably associate Robinhood Markets with the first sentiment, after the online broker's surge of activity during the "meme stock" trading frenzy in early 2021 that to many exemplified the YOLO way of trading. But as Robinhood aims to mature and grow in a far less frothy environment, the now decade-old company may be increasingly associating itself with the latter interpretation as well.
Glynn's Take: New RBA Governor Enters Ring at Critical Time for Economy
SYDNEY-The appointment of Michele Bullock as the ninth governor of the Reserve Bank of Australia represents continuity for financial markets around the evolving narrative for monetary policy, but it will also bring her career background in financial stability to the fore with household budgets teetering near collapse due to soaring interest rates.
After a record 400-basis-point increase in the official cash rate in just over a year, the RBA's blunt policy instrument is battering low- to middle-income households in areas such as the outer suburbs of Sydney and Melbourne, with the amount of income now being devoted to mortgage repayments hitting record highs.
A Top Man of God in Iowa Wants Someone Other Than Trump
DES MOINES, Iowa-Bob Vander Plaats, a former high school accounting teacher who is arguably this state's most influential Christian conservative leader, knows the power of division.
That is why he wants lower performing Republican presidential candidates to exit the race later this summer or fall in hopes that a single, stronger challenger can emerge to keep Donald Trump from winning the Jan. 15 Iowa caucuses that start the 2024 nomination process.
Pentagon's Top General, Mark Milley, Calls for Faster Weapons Sales to Taiwan
TOKYO-American arms sales and deliveries of weaponry to Taiwan should be faster if the U.S. is to dissuade Beijing from taking military action against the island, the Pentagon's top general said Friday.
"I think that's probably something that needs to be improved," Army Gen. Mark Milley, chairman of the Joint Chiefs of Staff, told reporters in Tokyo. "The speed at which we, the United States, or other countries assist Taiwan in improving their defensive capabilities-I think that probably needs to be accelerated in the years to come."
No Reason to Delay Trump's Trial, Prosecutors Say
WASHINGTON-Donald Trump's criminal trial over his handling of classified documents after he left office should begin in December, Special Counsel Jack Smith said in a court filing Thursday, rejecting the former president's arguments that the proceedings should be delayed until after the 2024 election in which he is the Republican front-runner.
Trump pleaded not guilty last month in a Miami court to charges that he illegally retained and shared classified national-security documents after leaving the White House, including at his Florida Mar-a-Lago resort.
Write to ina.kreutz@wsj.com
TODAY IN CANADA
Earnings:
Nothing major scheduled
Economic Indicators (ET):
0830 May Monthly Survey of Manufacturing
Stocks to Watch:
(MORE TO FOLLOW) Dow Jones Newswires
07-14-23 0619ET
