Although Moody’s shined a light on the struggling, debt-laden financial yesterday it only temporarily reignited fears in the sector as traders quickly returned to buying adding another warning to the list of the things it chooses to ignore.  Earnings continue to inspire buyers and with a slew of reports today I expect the push higher to continue testing recent resistance levels.  Mortgage, Petroleum, and bond auctions on the economic calendar may also provide some temporary inspiration for the bulls or bears as we wait on the CPI figures Thursday morning.  Plan for more volatility ahead with a likely morning gap Thursday to be considered in your risk calculations.

During the night China reported a consumer price drop for the first time in 2-years as their economy continues to weaken with indexes closing the session mixed.  European markets trade decidedly bullish this morning as the government in Italy quickly moves to water down their bank windfall tax announced yesterday.  U.S. futures point to bullish open with a light day of economic reports and another big day of earnings to inspire investors.

Economic Calendar

Earnings Calendar

Notable reports for Wednesday include ALRM, AAP, ALDP, CLNE, CDE, DIS, ENS, G, GDRX, ILMN, INFN, JACK, JAZZ, LL, MFC, NOMD, ODP, PAAS, PENN, PLUG, REYN, RBLX, SSYS, TBLA, SKIN, TTD, VVV, VERX, WRBY, WEN, & WYNN.

News & Technicals’

Rivian Automotive, a leading electric vehicle (EV) maker, announced its second-quarter financial results on Tuesday. The company reported a net loss of $995 million, which was lower than the $1.3 billion loss that analysts had expected. Rivian also raised its production guidance for 2023, saying that it plans to build about 52,000 vehicles, more than double the 25,000 vehicles it made in 2022. The company said that it had $10.2 billion in cash and cash equivalents at the end of June, which gives it enough liquidity to fund its growth and expansion plans. Rivian is preparing to launch its first two models, the R1T pickup truck and the R1S SUV, later this year.

David Portnoy, the founder and face of Barstool Sports, has regained full ownership of his media empire, after buying it back from Penn Entertainment. Portnoy announced the news in a blog post on Tuesday, saying that he and Penn had “gone our separate ways.” He did not disclose the terms of the deal but said that he was “very happy” with the outcome. Portnoy sold a 36% stake in Barstool to Penn in January 2020, valuing the company at $450 million. The deal gave Penn access to Barstool’s loyal fan base and online sports betting platform. However, Portnoy said that he and Penn had different visions for the future of Barstool and that he wanted to return to his “roots” as an independent media mogul. He thanked Penn for their partnership and wished them well. He also said that he was excited to take Barstool to the next level, with plans to launch new shows, podcasts, and events.

Kyle Bass, a well-known China hawk, and hedge fund manager, warned on Tuesday that he expects Chinese President Xi Jinping to launch a military invasion of Taiwan before the end of 2024. Bass, who is the founder and chief investment officer of Hayman Capital Management, told CNBC’s “Street Signs” that Xi is driven by his ambition to “bring war to the West,” and that he does not care about the economic consequences of such a move. Bass said that Xi is similar to Russian President Vladimir Putin, who annexed Crimea in 2014 despite international sanctions and condemnation. Bass said that he believes Xi will try to “reacquire Taiwan by force by the end of next year,” based on his speeches and actions. Bass said that Taiwan is a vital ally and partner of the United States and that its loss would be a “tragedy” for democracy and freedom. He urged the US and its allies to stand up to China and defend Taiwan’s sovereignty and security.

Several banks faced negative rating actions from Moody’s on Tuesday, dragging down the stock market. State Street and Bank of New York Mellon were put on review for a downgrade, while M&T and others were downgraded. Big banks like JPMorgan and Goldman Sachs also suffered losses of more than 0.5%. Moody’s banking downgrades and warnings only temporarily reignited fears about the debit-laden financial sector but the afternoon recovery suggests we can add that to the list of things the market chooses to ignore. Investors sought safety in Treasury bonds, pushing the 10-year yield below 4% briefly before hurrying back into stocks seemingly unconcern that consumer credit card debt topped 1 Trillion for the first time in history and defaults continue to rise. Global stocks also declined. Oil prices dipped in the morning after weak Chinese data, but also recovered later. The Chinese slowdown weighed on currencies like the Australian dollar, which weakened against the U.S. dollar. Today we only have Mortage Apps, Petroleum numbers, and bond auctions on the economic calendar.  However, with a slew of earnings reports in the wings, the push upward continues to test recent resistance levels.

Trade Wisely,

Doug