Bill Gross preaching Value over Growth… https://williamhgross.com/wp-content/uploads/2020/07/The-Real-Deal-BG-IO-July-2020.pdf

Crude oil and Brent with a bid today but have yet to do any technical damage sideways choppy trade continues .OPEC+ ministerial meeting tomorrow may provide a few tape bombs expectations are for an announcement for Increase in production as they ease production quotas.

 Earnings Results (from Bloomberg)

 JPM (stock +1.5%)

• trading revenue Surged 79%=Good for wall street
• Money set aside for Loan Losses expected $9.15B actual $10.47B=bad for Main Street

Wells Fargo (stock -5%)

• First quarterly loss since 2008
• Cut Dividend to 10 cents from 51 cents expected 20 cents
• Loan loss provision $9.5B expected $4.86B
• “our view of the length and severity of economic downturn has deteriorated considerably from assumption last quarter

Citi: Earnings look okay

• Fixed Income trading a beat $5.60 B vs $4.59B
• Loan Loss provisions $7.9 vs expected $7.66
• “Combined with cost cuts, it helped the
  bank salvage a $1.3 billion profit — albeit one that was 73%
  lower than a year earlier — as the lender braced for a wave of
  potential defaults amid lockdowns on commerce”

Delta: we will just leave to one line

Delta posts second-quarter net loss of $5.7 billion, biggest in more than a decade, driven by coronavirus – CNBC

US covid deaths:

California Closing Indoor dining and bars and shifted Schools to Online learning for Fall as reopening attempt falters

• Bloomberg headline Virus officially slowing US recovery based on High frequency data points
• Face covering compulsory in all shops in England starting 7-24
• Japan saying a new state of Emergency is Possible if infections increase further

News: (itc markets and Mizuho)

• The U.K. is poised to ban Huawei Technologies Co. from its next generation mobile networks under a two-step plan to protect critical systems from security threats, a person familiar with the matter said – Bloomberg
• Foreign investors dumped a net 17.4 billion yuan of China stocks Tuesday, the most ever. The previous record was 14.7 billion yuan set on March 13…. Shanghai Stocks -.8%, CSi 300 -.95%
• GER Jul ZEW Expectations: 59.3 vs 60.0 cons; Current Situation -80.9 -63.0 cons
• -German ZEW: After poor Q2 expect a gradual increase in GDP for H2 and early 2021
• Solid demand at BTP auctions overnight
• China trade data better than expected on both imports and exports
• China Foreign MIn: Will apply sanctions on Lockheed Martin
• Chinese companies purchased 4.03 million tons of #soybeans from the #US in June, according to the American Soybean Association. The purchases show efforts on #China’s part to implement the phase one #TradeDeal: expert
• U.S. said Chinas Claims to South China sea are unlawful
• Small business optimism index beat

 Markets:

 Outside of U.S. Stocks lower Stoxx -1.2%<dax -1.1% Mib -.8% Sectors travel and leisure -2.85% tech -2.7% Spoos higher by slimmest of margins. Dollar blah Watching euro for a break of 1.114 Gold lower, Copper and silver as well but just a bit Bunds higher along with treasuries One of these days Spoos will move lower with all the bad news.

US home construction ETF,remember that Lumber Futures are trading at ~1 year highs

Morgan Stanley BBB downgrade basket crappy companies hanging in there

Momentum long etf made up of 50 most liquid tech Companies and 5 day moving average line buy every dip below MA?

Stoxx 600 Sectors 15-19 higher today

US Leaders:

Earnings season a Win-Win for stocks? If earnings are bad blame virus,Most companies have guided expectations lower so the Bar for a beat is also much lower. Bunds -100, but US 10s little changed random Walk markets sure I can agree with that

Buy Stocks why fight the trend

Bullish News: Earnings optimism and vaccine news  crating Risk On Sentiment

• Pfizer and Biotech received fast track designation from the U.S. FDA for two Vaccine candidates’ BBG Both stocks higher pre market
• PepsiCo Starts Q2 earnings season with a beat “reporting stronger Than expected sales and earnings as consumer kept stocking up on snack food during pandemic”-BBG …. Revenue $16b vs F/C of $15.4B Earnings topped all analysts’ expectations
• Analog Devoices to buy rival maxim Integrated products for $20.9B thus created a larger rival to Texas Instruments
• PBOC injected cash via repo operations 50B yuan
• Apple Target Raised at Morgan Stanley on iPhone Trade-In 
  Program                                                  

Markets: 

Spoos +.7%,nas +.9%  Stoxx 50 +1.3% Dax +1.% MIB +.7% All 19 Stoxx 600 Sector higher led by basic resources +2% NKY closed +2.2% Shanghai back on the bid closed +1.77%,Kospi +1.7% Dollar sideways to lower Euro  bit higher, tight range though   I m watching for a break above 1.1400 to really apply some pressure on dollar. Yields higher in Europe led by Bunds +4 bps  treasuries showing higher yields as well. 30 year yields higher across Europe as well Germany +5BpsMetals bid  Silver +2%,plat +2.1% palladium +1% and copper +1.7%. close to two year highs  as  Worries  regarding production in Chile provide a bid along with Higher Chinese stocks. Someone sold a couple thousand corn futures on open yesterday evening  as beneficial rains fell over the weekend.  What Virus markets care little  for now regarding Bad news  But welcome the good,

Calendar:

 ECB,BOC  and BOJ meeting, Earnings and retail sales in US, EU summit next weekend. On Thursday China GDP  Plenty of Calendar to make this week a bit more exciting then last  lets hope true

 Via Mizuho- start of Q2 earnings season begins with the five largest banks
all reporting through the middle of the week. Tomorrow: JP Morgan, Citibank, Wells Fargo, Delta. Wednesday: UNH (#2 weight in DJIA @7.76%), IBM, Goldman Sachs (#5 weight in the DJIA @5.25%), USB. Thursday: JNJ (#5 weight in DJIA @3.80%), TSM, NFLX, Bank of America.

Oil Curve 2 years out Gold line today green one week ago No a good picture for bulls as curve telling markets ample supply

Below are the members of the KBW bank index this surprised me they are down year to date,and lower over the last month.We all can find reasons or theories as to why,low rates,Loan losses this doesn’t inspire much confidence in the economy

Below Grid expected fed funds rate through Jan 2022 Circled portion showing negative FF rate not too much of a surprise I guess but the Jan contract on its contract lows not exhibiting much confidence in the Economy

Chart from Bloomberg 60 day correlation SPX and Dollar lowest in 8 years or another way Inverse correlation is strongest in 8 years. Lower Dollar=Risk On

China:

 Shanghai Stocks closed +1.39% Csi 300 +1.4% 

 Alibaba surged 10% in Hong Kong to close at a record high of HK$261.60. That brings its market cap to nearly HK$5.614 trillion (US$720 billion), more than Facebook’s US$694.53 billion. QuantumCTek, a Chinese manufacturer and wholesaler of communications equipment, surges 1000% in its debut on STAR Market in Shanghai. QuantumCTec raised 723.6 mln yuan in the deal and its IPO was 2,839 times oversubscribed-Mizuho

The yuan trading below 7 handles stronger for the 6^th consecutive day trading at highest level since Mid-March

EEM Emerging markets ETF above the 200 d MA for a few days now trading at highest levels Since 2-20

Markets and Data

 Japanese data released  yesterday evening, Money supply and machine orders better   then expected caused a small bid in yen, 30 year JGB yield lower overnight by 1.6Bps touching a 1 month low. German trade data for May worse then expected but Old news Euro Above resistance 0f 1.1355 next up 1.1422  I would think Dollar would be lower  but stands Little changed. Strong Earnings from SAP, Stock +7% pushing Dax and European tech sector (+2%) Higher. Spoos steady Nasdaq +.3%, Gold steady   but a small bounce in the Q-Z spread after a big volume down day yesterday, after 8 straight declines. Copper f tailwinds from Chinas Stock market +1.6%, Silver +.7% and palladium +2.3. Nat Gas +3% and grains higher both due to Hot weather

  Less the optimistic comments regarding recovery from Fed and ECB Lagarde ,worries that bounce in Economic data is over   keeps a bid Treasuries yesterdays 10 year auction at record low yields  is just more evidence. News flow of late not optimist either

News:

• China SAFE Spox: decline in value of USD is one of the factors that has seen China increasing its FX reserves
• -BOJ’s Kuroda: won’t hesitate to ease further if its needed, economy is in a severe state & likely to remain so; Japan’s fin system is stable, he is watching impact of virus
• -BOJ report: cuts assessment of all 9 regions, all of Japan’s regional economies are worsening or in a severe state
• US daily virus cases (RTRS Tally): >60k, new record daily high
• Aus. Govt: advises Aus citizens in Hong Kong may be at increased risk of detention on vaguely defined national sec grounds, govt is advising against travel to HK
• US state with 40% of US population put reopening plans on hold-Goldman
• United extended its suspension of flights to and from HK-BBG
• Walgreens cutting 4k jobs
• US daily virus cases (RTRS Tally): >60k, new record daily high
• Texas: +9979 new cases to total of 220564, biggest daily rise; hospitalizations at record high of 9610

Charts Via Bloomberg… Markets looking for a catalyst

Worldwide stocks Mixed US higher ,Nasdaq +.4% Europe lower dax -.4% China higher, Again Shanghai +1.73%  CSi 300 +1.6% resulting  7^th consecutive higher close Currencies sideways… yuan a touch stronger vs USD  still no confident break of 7 handle something to watch  ..Spot Gold traded above $1800   for first time in 9 years it has been a struggle ..Aug. futures   $1815   Dec. $1842 Gold has stiff tailwinds and little headwinds  for further gains.. Bunds higher treasuries soft 10 year auction today   might be weigh on prices as concession are being priced in tight ranges overnight .

UK Fiscal Stimulus today:

• FT: Chancellor Sunak set to  announce £2b in funding for 1000s of job placements for 16-24 y olds ;       employers would be paid by the treasury to employ 16-24 yr olds for 25 hours a week for up to 6      months, will pay the entire cost of the minimum wage https://bit.ly/2AEdqy9
• -Telegraph: Chancellor Sunak is today expected to raise stamp duty threshold to £500k, the temp measure is expected to last between 6mths & 1 year https://bit.ly/2Cbu3BE  =A tax cut
•  UK will cut VAT for hospitality Tourism sector by 5%
• UK will give everyone 50% discount on eating out Mon-Wed

Overnight Headlines Via Forex live:

• US MBA mortgage applications w.e. 3 July +2.2% vs -1.8% prior
• EU’s Barnier: Useful discussion with UK’s Frost yesterday
• ECB’s de Guindos: Recent data suggests we can be more optimistic about growth
• Gold hits $1,800 for the first time since November 2011
• China says that it is to restrict visas for US officials over Tibet issue
• France’s Castex: There will not be another coronavirus lockdown like we had in March
• Tokyo reportedly finds 75 new coronavirus cases in latest update today
• ECB’s Lagarde: Financial markets have calmed down enormously
• Australia: ACT reports 3 new coronavirus cases, delays further easing of restrictions

US news:

• Some of trumps Aides discussing possibility to Undermine the Hong Kong Dollar peg  the plan would involve limiting access to USD funding  (BBG)  ….probably not a good idea as would destabilize all dollar pegs and start the process of losing faith in USD

• U.S. is imposing visa restrictions on Chinese officials involved in Tibet policy
• China increasingly critical of dollar’s monopoly… China’s criticism of the U.S. dollar’s monopoly is gaining momentum in the face of Washington’s multitrillion-dollar coronavirus stimulus and threats of financial sanctions-pro farmer

 Virus:

California: +10201 new cases, new daily high

-LA County: +4015 new cases, new daily high

-Texas: +10028 new cases, new daily high; hospitalizations +588 to 9286 a record high