A blockbuster week of calendar events is coming up, with rate decisions from both central banks and earnings from mega-caps. Rate decisions will arrive from the US, Japan and EU, along with PCE price data at the end of the week. Consumer confidence data from the US will also give a hint as to how likely and how deep a coming recession might be for the world’s largest economy; the world’s second-largest has already disappointed last week, forcing Beijing to announce support for the economy, though how much words will translate into meaningful action remains to be seen.
NASDAQ saw a correction last week as Tesla (TSLA) and Netflix (NFLX) disappointed. It is apparent that long gone are the heady days of growth and marketshare at all cost, where money is no object. Instead, we now see a world where the bottom is much more important as growth slows and funding costs balloon in response to rising interest rates. Tech companies with strong cashflows and strong moats were touted as safehavens, with the AI hype sparked by, amongst others, ChatGPT sending valuations higher. Microsoft (MSFT), Google (GOOG) and Meta’s (META) earnings will be a reflection of how much of this AI hypes has been transformed into cold hard cash thus far, and how much the market is willing to give these companies the benefit of the doubt that they will do so in the future.
In contrast, financial stocks have performed well, with Morgan Stanley (MS) and Bank of America (BAC) both delivered positive surprises, leading a rally in the sector that has recovered strongly from their woes, stemming from the collapse of multiple major regional banks, earlier in the year.
Upcoming Calendar Events
- Global flash PMI (Jul 24)
- US consumer confidence (Jul 25)
- FOMC rates decision (Jul 26)
- ECB rates decision (Jul 27)
- BoJ rates division (Jul 28)
- PCE Index data (Jul 27)
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