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Morning Briefing for August 10, 2023

Market Overview

Stock Futures & Consumer Price Index (CPI)

Stock futures indicate a higher open, driven by ongoing buy-the-dip interest and optimism surrounding the upcoming release of the July Consumer Price Index (CPI) at 8:30 a.m. ET. The market’s general tone may shift as investors process the CPI report’s implications for the Fed’s next monetary policy decision.

Gains in Key Areas

Supporting the market further are gains in mega-cap stocks and positive price action in Walt Disney (DIS) following its earnings report.

Global Relations: U.S. & China

The Biden administration’s confirmation of new investment restrictions on Chinese semiconductors and advanced technology has ruffled feathers. China’s Commerce Ministry has expressed severe concern over these impending changes.

Treasury Insights

Ahead of the CPI report, Treasuries have remained fairly steady. The 2-year note yield has dropped by one basis point to 4.79%, and the 10-year note yield is down similarly to 3.99%.

Global Market Indicators

U.S. equity futures are in line with global stocks before the critical U.S. inflation data that could define the Federal Reserve’s next steps. European travel and luxury companies are soaring after China lifted travel restrictions, and S&P 500 futures have added 0.5%.

Economic Data to Watch

  • 8:30 a.m. ET: Weekly Initial Claims (Expected: 230,000; Prior: 227,000) and Continuing Claims (Prior: 1.700 million).
  • 10:30 a.m. ET: Weekly natural gas inventories (Prior: +14 bcf).
  • 2:00 p.m. ET: July Treasury Budget (Prior: -$227.80 billion).

Corporate Highlights

Earnings Roundup

The earnings season continues to deliver notable outcomes:

  • Walt Disney (DIS): Positive earnings, Disney+ Core subscribers up 1% qtr/qtr.
  • Alibaba (BABA): Strong performance, beating revenue expectations.
  • Wynn Resorts (WYNN): Surpassing earnings expectations.
  • YETI Holdings (YETI): Earnings beat, missed on revenue; raised FY23 guidance.
  • Plug Power (PLUG): Missed earnings but beat on revenue.
  • Illumina (LMN): Revenue and earnings beat, yet guidance for FY23 falls below consensus.

M&A Activity

  • Capri Holdings (CPRI): Tapestry (TPR) confirms agreement to acquire Capri Holdings for $57.00 per share in cash, with an approximate total enterprise value of $8.5 billion.

Other Corporate Highlights

  • CyberArk (CYBR), Bristol-Myers (BMY): Beating earnings and revenue expectations.
  • Kenvue (KVUE): Set to join S&P 500, upon completion of an exchange offer by Johnson & Johnson (JNJ).
  • Wolverine (WWW): EPS in line, guides FY23 EPS and revenue below consensus.

Commodity & Currency Insights

Oil Prices

Oil is trading near its highest level in almost nine months, with West Texas Intermediate futures above $84 a barrel, following a 3% increase over the previous two sessions.

Currency Movement

The dollar has weakened, and treasuries have risen, with the 10-year yield falling below 4%. Demand for U.S. debt remains strong, despite recent concerns over investor resistance.

European Luxury Market Boost

China’s lifting of group travel bans is a boon for European luxury-goods sales, with major brands such as LVMH and Hermes International seeing at least a 2% increase.

Final Thoughts

Investors are keenly eyeing the upcoming CPI report, along with additional economic data, to gauge the market’s direction. The favorable response to earnings reports, investment restrictions on Chinese technology, and the dynamics in commodities and currencies will continue to shape the market landscape. Careful monitoring of these factors will provide insights for potential opportunities and challenges in the trading day ahead.




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