📈 Fear sweeps markets

Alarm bells for an economic downturn are clanging, investors left to guess where stocks go next, Berkshire cuts Apple stake by half, sharp slowdown in job growth, and Musk says Fed foolish not to have cut rates …

Author

Smart Owl
August 05, 2024

Good morning.

The Fast Five → Alarm bells for economic downturn are clanging, investors left to guess where stocks go next, Berkshire cuts Apple stake by half, sharp slowdown in job growth, and Musk says Fed foolish not to have cut rates …

Calendar: (all times ET) - Full calendar here

  • Today: ISM services, 10:00 AM

  • Tomorrow: US trade deficit, 8:30 AM

Your 5-minute briefing for Monday, August 5:

BEFORE THE OPEN

As of market close 8/2/2024. Bitcoin as of 8/4/2024.

PRE-MARKET

MARKETS

  • US stocks and yields plunged after a weak July jobs report ignited recession fears

    • Nasdaq's 10% correction is its first since January 2022

    • Russell 2000 lost 6.7% in its worst week in over a year

    • VIX volatility index hit its highest since March 2023

    • Rate futures now reflect a 70% chance of a 50 bps rate cut in September, up from 22% before the jobs report

  • Japan stocks entered bear territory, erasing their entire 25% YTD rally

  • Europe's Stoxx 600 hit a five-month low

  • US 2Y-10Y yield curve inversion is at -9 bps, the lowest since inverting in 2022

    • US 10Y yield hit its lowest since December

    • US 2Y yield plummeted ~30 bps to its lowest since May 2023

  • China 10Y and 30Y yields fell to a record low 2.13% and 2.37% respectively

  • Commodity index tumbled to its lowest since March as traders exit

  • Oil fell to an eight-month low

  • US dollar hit a four-month low

  • Yen strengthened to an eight-month high versus the dollar

  • Bitcoin dropped below $57k in its worst week since FTX collapsed

EARNINGS

  • Berkshire Hathaway reported record operating profit thanks to its GEICO unit, while dumping $75B worth of stock including half its Apple stake to amass a record $277B cash pile (link)

  • ExxonMobil beat Q2 EPS and revenue estimates with its second-highest results in a decade on record production in Guyana and the Permian (link)

  • Chevron missed Q2 EPS estimates due to lower refining margins and announced plans to move its HQ from California to Texas (link)

  • What we're watching this week:

    • Today: Palantir

    • Tuesday: Uber, Airbnb, Reddit, Amgen

    • Wednesday: Walt Disney, Shopify, Robinhood, CVS

    • Thursday: Eli Lilly

  • Full calendar here

NEWS BRIEFING

Tumbling yields have investors turning to utilities, REITs ‘The play is dividend payers,’ Wealth Alliance’s Diton says.

The conglomerate reported nearly $277 billion in cash in the second quarter. And while it sold about 390 million shares in Apple, it still owned about 400 million.

  • The alarm bells for an economic downturn are clanging (link)

  • Why fear is sweeping markets everywhere (link)

  • Sharp slowdown in job growth boosts unemployment to 4.3% (link)

  • Musk says Fed foolish not to have cut interest rates (link)

  • Neuralink implanted second trial patient with brain chip (link)

  • Nvidia AI chips face production delay (link)

  • India plans tougher ad curbs on liquor makers such as Carlsberg, Diageo, Pernod (link)

CRYPTO

  • The CFTC subpoenaed Ben "BitBoy" Armstrong's former company in a fraud investigation, requesting information on 15 tokens (link)

  • Morgan Stanley allowed wealth advisors to pitch Bitcoin ETFs to eligible clients with at least $1.5 million net worth (link)

  • Former President Trump floated using Bitcoin to pay off the $35 trillion US national debt, praising crypto innovation (link)

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