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Morning Briefing: August 16th, 2023

Market Overview

The futures market today seems to be on a tightrope, with a lack of strong conviction among traders. This comes after the S&P 500 took a dip, closing below its 50-day moving average. As the day unfolds, all eyes are on the price action that will follow this significant move.

China’s Economic Concerns

The dragon isn’t breathing fire as it usually does. Concerns about China’s growth continue to loom large, especially after reports emerged that home prices in the country have taken a hit for the first time this year. This has added to the global apprehension about the stability of the world’s second-largest economy.

Earnings Highlights

  • Target (TGT): The retail giant’s stock is on an upward trajectory after their earnings report. Despite missing on revenue, they beat the estimates by $0.37. However, they’ve guided the Q3 EPS below consensus and have lowered their FY24 EPS and comp guidance.
  • TJX Companies (TJX): Another retailer making waves in the market, TJX’s stock is also trading higher post their earnings report. They managed to beat both on earnings by $0.08 and revenue.

Economic Data Insights

  • Mortgage Applications: The MBA Mortgage Applications Index has seen a 0.8% drop. Refinance applications have taken a more significant hit, falling by 2.0%, while purchase applications remained steady compared to last week.
  • Treasury Notes: The 2-yr Treasury note yield has decreased by three basis points, standing at 4.92%. Similarly, the 10-yr note yield is also down by three basis points, now at 4.18%.
  • Upcoming Data Releases:
  • 8:30 ET: Eyes will be on the July Housing Starts and Building Permits.
  • 9:15 ET: The July Industrial Production and Capacity Utilization data will be out.
  • 10:30 ET: The weekly crude oil inventories will be released.

Corporate News Roundup

  • Tesla (TSLA): The electric carmaker is making headlines again. They’ve slashed prices in China for the second time in a week, as reported by Bloomberg.
  • GE HealthCare (GEHC): The healthcare giant has been initiated with an ‘Overweight’ at Wells Fargo.
  • Coinbase Global (COIN): The crypto exchange has secured approval to introduce federally regulated crypto futures trading for eligible US customers.

US Equity Futures and Global Markets

US equity futures have been on a roller coaster, especially with the anticipation of the Federal Reserve releasing minutes from their last policy meeting. A significant selloff in Chinese assets has further deepened the global market’s volatility.

Shares of Target Corp. (TGT) have seen a surge in premarket US trading due to a robust profit rebound. On the other hand, Tesla Inc. (TSLA) has faced a decline after their recent price cuts in China.

Government bonds in both the US and Europe have shown strength, putting a pause on the recent losses. This shift is primarily due to concerns that interest rates might remain high for an extended period.

Final Thoughts

The global market is currently in a state of flux, with various factors influencing its direction. From China’s economic concerns to corporate earnings and economic data releases, traders and investors have a lot to digest. As Frank Sohlleder from ActivTrades puts it, the lack of a clear catalyst is giving more room for weak economic forecasts to impact the market. As the day progresses, it will be interesting to see how these factors play out and shape the market’s trajectory.




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