Weekly Market Morning (July 14) Trump Was Shot, Inflation Slows & Apple Reaches $3.5 Trillion Valuation

Economic Reports

The annual inflation rate in the US fell for a third straight month to 3% in June. Energy costs rose at a slower pace and inflation eased for shelter and transportation. Also, food inflation edged up. Compared to May, the CPI unexpectedly declined 0.1%, the first fall since May 2020 which probably led the Fed to a rate cut in September. 

The number of people claiming unemployment benefits reached a new 5-week low, and below market expectations. The claim count was considerably below the elevated levels from June (Labor market is cooling a bit).

Factory gate prices in the US increased 0.2% MOM in June, following an upward reading in May and above forecasts of 0.1%. The jump in PPI appears to be an unwelcome development for the US economy and Fed which tried to fight over high inflation.

The Michigan consumer sentiment for the US fell for a fourth straight month to 66 (the lowest since November). Nearly half of consumers are still concerned about high prices and economic uncertainty persisting as an upcoming election looms.

US Election

Donald Trump was shot in the ear during a campaign rally in Pennsylvania on Saturday (assassination attempt). Trump’s campaign said he was fine after the incident. 

History: In the past, Reagan went up in the polls after his assassination attempt. 

The market reaction function to a Trump presidency has been characterized by a stronger U.S. dollar and a steepening of the U.S. Treasuries. So, we might observe some of that this coming week if this incident affected the election forecast.

Earning Reports

JPMorgan Chase (JMP) reported a significant increase in its revenue for the quarter ended June 2024. Other big banks Wells Fargo (WFC) and Citigroup Inc (C) also posted better than expected earnings and revenue. But, net interest income fell short of implications and banks showed they are expecting macroeconomic conditions to worsen. 

All three banks reported trading revenue went up. But stocks of all three fell as higher interest rates and elevated deposit costs shrink consumer banking margins. Altogether, banks warned of stress among the lower income consumer segment. Banks are expecting worsening credit conditions by setting aside more finds for future loan losses.

By reporting a $3.05 billion provision for credit losses, JPMorgan clearly showed it expects more defaults and therefore, rough times ahead for the US economy. But its latest quarter has reflected quite a healthy consumer, despite some weakness in the lower income segment.

As you can see below, by breaking the up-ward trend line in 1-Day or lower time frames, the JPM price can decline to support levels.

Indices

The S&P 500 index rose almost 0.9% last week, trading near records, despite mixed inflation data and bank earnings. The S&P 500 is now up 2.8% in July and 18% this year.

From a technical point of view, S&P 500 is overbought in RSI daily. Also, this index is reaching the 61.8% of Fibonacci extension (5675) which is a strong resistance for S&P 500. By reaching this zone, the price could decline to support level.

The Dow Jones touched a record high on Friday as this year’s lagging stocks gained favor on optimism that the U.S. Federal Reserve will begin easing monetary policy in September (while big lender banks fell after reporting mixed results).

Technically, If DJI could break strong resistance of 40,000, then the price probably rises till 40,430.

Stocks

Sectors Weekly Performance:

Source: Finviz

The real estate sector had the largest percentage gain this week (up 4.4%) followed by a 3.9% increase in utilities. Other sectors up by at least 2% each included materials, health care, industrials and financials.

Stocks Weekly Performance:

Heat map source: Finviz

As we anticipated in our last market mornings, Advanced Micro Devices (AMD) broke its resistance and has gained 6% profit last week. Also, Tesla (TSLA) was up to $271 (hit given target) and then declined to $233 but after all closed the weekly bar with +0.2%.

Since April 19, Apple (AAPL) has added a whopping $952 billion, or more than the entire valuation of EV maker Tesla. Apple Intelligence helped spark a run in the share price. Investors hope that this bet on the novel tech could help drive iPhone sales higher in the autumn quarter. Apple stock became the world’s first company to climb above a $3.5 trillion valuation. In the span of three months, the company has increased its market cap by more than 30%.

As shown below, Apple is bullish and has no static resistance in front of trend. However, there is a 100% Fibonacci resistance zone in the $240 (There could be a barrier for the price’s uptrend).

Commodity

Energies and Metals Weekly Performance:

Source: Finviz

The soft CPI data boosted gold thanks to correlation between inflation and bullion. And lower interest rates could lead to higher gold prices. This is because when borrowing costs go down, dollar deposits yield less. Against this backdrop, the precious commodity is set to close out the third straight winning week.

Bonds

U.S. former President Donald Trump’s shot raises his odds of winning back the White House, and trades betting on his victory will increase this coming week. This can affect the U.S. treasuries.

10-year treasury bonds are bearish since we heard about expecting a rate cut by the Fed. However, it reached a supporting level which can retrace the price till the down-ward trend-line.

Crypto

Crypto Currencies Weekly Performance:

Source: quantifycrypto

The German government (which sold its hoard of more than $2 billion in Bitcoin) on Friday claimed they are potentially ending their sales. The government reported now has a zero balance of Bitcoin in its main account.

Also, Bloomberg citing JPMorgan data reported that spot Bitcoin ETFs received $882 million in the week ending July 11, with an average daily inflow of $175 million. This is the most inflows since the period ended May 23.

Both above facts are fundamentally bullish signals for bitcoin.

Also, the price of the largest Donald Trump meme coin MAGA (TRUMP) surged more than 50% following an assassination attempt on the former President Trump.

Next Week’s Outlook

Economic Events

Next week, speeches by several Fed officials, including Chair Powell, are highly anticipated. Economic data releases in the US will include retail sales, industrial production, business inventories, building permits, and housing starts. 

Earning Events 

Next week, the earnings season will kick into high gear with reports from companies like Goldman Sachs, BlackRock, UnitedHealth, Bank of America, Morgan Stanley, Charles Schwab, J&J and Netflix.