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Good Morning Everyone!

Buckle up, we are entering peak earnings season: by the end of this week, ~70% of the S&P 500 will have reported.

MARKET UPDATE

China/U.S. money flow

• Yesterday, China’s pain translated into U.S. gain from money flow

• KWEB (China internet ETF) down 12%, now down 82% from its 2021 high

• Many view China as uninvestable

With Microsoft and Google set to report tonight,

• Nasdaq down 8% since Q2 earnings began 3 months ago (July 25)

• Microsoft down 26% year-to-date

• Google down 29% year-to-date

Crude    84           flat

Amazon

• Freezing hiring at AWS after Bezos warned of a looming recession

• “batten down the hatches”

• Amazon down 28% year-to-date

Inflation in Media

• Apple raising price of Apple TV+, Apple Music and Apple One

• Apple TV going up $2/month to $6.99, same price as Netflix Ad supported new product

• Apple Music $1 increase for individuals, $2 for families, due to increase in licensing costs

• Expect Spotify to follow Apple’s price increase

Earnings

• Discover Financial: EPS miss on higher than expected reserve build

• Coca-Cola: revenue beat    

• Novartis

• UPS: $2.99 vs. street $2.85, reaffirmed guide, cutting Capex

• Raytheon

• SAP: upping their cloud revenue

• HSBC: beat due to stronger NIM, boosted loan loss provisions, new CFO

• G.E.: miss and cut, taking a 40 cent charge on renewables

• 3M: reduced earnings and revenue guide, FX headwind

• GM: +4%, beat, concern is demand destruction in 2023

• Sherwin-Williams: beat

Tonight

• Microsoft 5:30pm call, 4% implied move

• Google 5pm call, 6% implied move

• Texas Instruments 4:30 call, 5% implied move

• Visa 5 pm call, 4% implied move

CRYPTO UPDATE

Correlations

• High correlation between stocks and crypto recently

• Starting to deterioate

• 60-day coefficient of Bitcoin and S&P 500 at 0.61

  • Down from 0.70 earlier this month

Bitcoin experiencing historically low volatility

• Avg spread between past month’s peak/trough across 10 largest cryptos ~20%

• Typically above 80%

• Bitcoin volatility now lower than S&P 500

MEME OF THE DAY

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