Macrosynthesis

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Last Week's Recap

The US economy saw an increase of 209K jobs in the previous month, falling short of the predicted 225K, while the unemployment rate decreased to 3.6% with steady wage growth. Despite this, there's a nearly 95% probability of a 25 basis point hike in the federal funds rate this month, according to the Fed dot plots and investor odds.

China unveiled export restrictions on chipmaking metals gallium and germanium. The policy has been classified as retribution for Biden's export controls on semiconductor shipments to China. While there are other producers and means of producing these metals around the world, the policy shift looks more like a warning that China can cause a lot of damage to global supply chains given its involvement in essential ingredients for electronics.

The BRICS nations revealed already revealed plans about launching a gold-backed currency next month to take on the U.S. dollar's dominance. BRICS nations (Brazil, Russia, India, China, and South Africa) have also signed up 36 other countries in an effort to realign global economic power.

Over the course of the week, the Dow Jones, S&P 500, and Nasdaq declined by 1.7%, 0.9%, and 0.8%, respectively. The U.S. dollar also fell -1% on the BRICS currency news.

Wages Rise

In June 2023, average hourly earnings for all employees on private nonfarm payrolls increased by 12 cents, or 0.4%, reaching $33.58. This rise mirrors May's growth and slightly exceeds the market forecast of a 0.3% rise.

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Additionally, the average hourly earnings of private-sector production and nonsupervisory employees grew by 11 cents, or 0.4%, to $28.83 in June. Over the past year, average hourly earnings saw a 4.4% increase, maintaining May's pace and slightly surpassing market predictions of a 4.2% growth.

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The Week Ahead

The upcoming week will spotlight the US June Inflation report, complemented by speeches from various Fed officials.

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The second-quarter earnings season will also begin, featuring reports from prominent firms like Citigroup, JPMorgan Chase, Wells Fargo, Delta Air Lines, PepsiCo, BlackRock, and UnitedHealth Group.

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In between earnings season, the number of events can be a bit low for a few weeks. With earnings season returning, we'll be seeing many more events come through LevelFields.

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International monetary policy updates will come from the Bank of Canada, Reserve Bank of New Zealand, and South Korea's Central Bank. Additionally, June inflation data from China, Brazil, India, and Russia are slated for release. Other notable disclosures include China's trade data and new yuan loans.

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In the US, the main attention will be directed towards the CPI. The anticipated annual headline inflation may drop to 3.1% in June from 4% in May, while the core index is expected to decrease to 5% from 5.3%.

Commodity Movers

Crude Oil

• +2.87% (1-Day)
• +4.56% (1-Week)

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Coal  

• -3.56% (1-Day)
• +9.19% (1-Week)

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Orange Juice

• +2.96% (1-Day)
• +69.18% (1-Year)

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Natural Gas

• -1.93% (1-Day)
• -8.56% (1-Week)

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Last Week's Top Events

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Noteworthy Events  

Is Twitter the New MySpace?

META rolled out a Twitter competitor called Threads and signed up 70 million users in the first few days following launch. That's about 1/5th the number of users on Twitter...signed in a few days.

It seems the constant policy shifts at Twitter has created an opportunity for Facebook to kill another social media platform. Remember Friendster, MySpace and Google+? They all fell to Facebook and all signs are pointing to Twitter following suit.

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Rivian Upgrade

Rivian's shares surged by 14.2% last week, marking its 8th consecutive session of gains after reporting quarterly deliveries that surpassed expectations. Amazon also reported they'd be rolling out Rivian vans in Germany for delivery. Analysts upgraded the price target to $30/share.

BABA Gets the Green Light

US shares of Chinese firm Alibaba increased by 8.8% in afternoon trading following news that its affiliate, Ant Group, would pay a $984 million fine to Chinese regulators, thereby resolving a multi-year disagreement. Additionally, Alibaba introduced an artificial intelligence tool capable of creating images based on text prompts.

BIIB FDA Approval

The U.S. Food and Drug Administration granted standard approval to Eisai and Biogen's Leqembi, marking it as the first Alzheimer's treatment to achieve this status. This approval paves the way for broader insurance coverage of the drug. This FDA decision is a significant achievement for a fatal disease that has been challenging to tackle for drugmakers. Clinical trials demonstrated that the drug slows the progression of Alzheimer's by 27% in patients at the earliest stages of the disease.

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• -3.32% (1-Week)
• -10.95% (1-Month)
• +25.72% (1-Year)

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CASE STUDY: CMC Up 8%

Commercial Metals Company announced a +14% increase to its dividend in tandem with a slight earnings beat. The company's dividend was already 1.2%.

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Double digit dividend increases on dividend yields above 1% typically drive large share price movements. The stock rose 8% following the alert, and then another 4% the following week.

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Upcoming Catalysts:

Notable Earnings

Monday

• WD-40 (WDFC)

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Thursday

• Pepsi (PEP)
• Delta Air Lines (DAL)

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Friday

• JP Morgan (JPM)
• BlackRock (BLK)
• Citigroup (C)
• State Street (STT)
• Wells Fargo (WFC)

Economic Reports

Monday

• 3 Fed Speakers

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Thursday

• US CPI

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Friday

• US Consumer Sentiment

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LEVEL 2 Trade Updates

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Our Level 2 members saw +8% 1-day gains last week following an alert we sent about BABA.

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Reuters reported the Chinese government is preparing to fine Ant Financial $1.1 billion for failing to meet regulations for its IPO. It appears BABA and Ant Financial have finally satisfied the Chinese government and with this speeding ticket, both are ready to move on - BABA with its proposed restructuring and Ant with its IPO. BABA shares soared on the news.

Shares of Digital Ocean (DOCN) were up also up big last week, and up +31% since we touted it in the Spring.

This week, we introduced two new plays in the technology space based on transformational recent events in the China-U.S. trade wars and EV market.

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CUMULATIVE RETURNS ON CLOSED LEVEL 2 TRADES:

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This is not financial advice. All information represent opinions only for informational purposes.

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The LevelFields Team