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China’s financial situation is getting so bad they are now asking some investment funds to avoid being net sellers of stocks.

What happened to free markets?

🛒 The US consumer is not letting a little inflation get in the way of their spending. Retail sales grew 0.7% in July, easily topping expectations of a 0.4% increase and marking the fastest pace since January, both on a monthly and year-over-year basis. A 1.9% gain in e-commerce spending (which saw a significant boost from Amazon's Prime Day) led the way across increases in a variety of categories of both goods and services. Stripping out food, autos, building materials, and gas stations, control group sales similarly rose by the most since the start of 2023.

🏘️ Confidence among homebuilders fell this month for the first time all year. The drop (to 50 from 56, where a reading below 50 indicates poor sales conditions) in the NAHB Housing Market Index was well below expectations and ends a 7-month winning streak that saw it reach the highest levels since June 2022. The index now sits at its lowest since May. Driving the deterioration in confidence were rising construction costs, a shortage of workers and building materials, and last but certainly not least, mortgage rates that have now topped 7%.

☀️ The outlook across global fund managers is improving. That's the key takeaway from BofA's latest Global Fund Managers Survey which reveals investors are at their most optimistic (or least bearish, if you're a glass-half-empty guy or gal) in a year and a half. Here are some highlights from the report:

• Cash levels fell to the lowest since November 2021.

• Allocation to equities is the least underweight since April 2022 and saw the biggest monthly increase in August since November

• Investors have dumped REITs and increased allocations to tech.

• Long Big Tech is still seen as the most crowded trade.

• They have covered their bets against commodities.

• And they increasingly expect no recession within the next 18 months.

🔍 What were hedge funds buying and selling in Q2? According to Bloomberg's analysis of 878 13F filings, Meta saw the most buying of any single stock for the quarter and Technology saw the biggest gains across sectors. Investments fell most for the Energy sector. Beyond Tech, Healthcare and Discretionary stocks command the largest weightings across portfolios while funds are most underweight Utilities and Real Estate.

🛢️ US crude inventories are slowly falling. The latest data from the American Petroleum Institute (API) revealed a larger-than-expected draw in the week ending August 11. While stockpiles have risen by close to 18 million barrels YTD, crude inventories have seen a net draw of ~30 million barrels since April. On the other hand, the Department of Energy reported a 600k barrel build in the Strategic Petroleum Reserves on Monday. That follows the previous week's 995k barrel addition which marked the first weekly build since June 2020.

HD Home Depot: $4.65 EPS (vs. $4.45 expected) ✅, $42.92 billion in revenue (vs. $42.23B expected) ✅.

• The bellwether home improvement retailer beat sales estimates for the first time in 3 quarters.

• Consumers are spending less on big-ticket items in favor of smaller projects.

• The company reiterated its full-year revenue forecast of a 2-5% decline.

👀 What we’re watching today:

• CSCO Cisco Systems

• TJX TJX Companies

• SNPS Synopsys

• JD JD.com

• SQM Sociedad Quimica

• AMCR Amcor

• UK CPI: Headline inflation in the UK declined in July but core prices unexpectedly rose.

• Mutinous behavior: Senior managers at Goldman Sachs are not happy with CEO David Solomon.

• IG debt: US companies don't appear to anticipate a near-term decrease in interest rates.

• Cheap EVs: Tesla has released new models in the US that cost $10,000 less than standard versions.

• Short report: Short seller Hindenburg Research has accused Freedom Holding of fraud.

• Crypto approval: Coinbase has obtained regulatory approval to offer crypto futures trading to US retail investors.

• Streaming vs. Cable: Traditional TV usage fell below 50% for the first time ever in July.

• Hollywood offer: Hollywood studios have made concessions to striking screenwriters in a new offer.

• Canceled: Intel has terminated its $5.4 billion acquisition of Tower Semiconductor due to regulatory hurdles.

• Mining IPO: Canadian mining entrepreneur Rob McEwen is eyeing an IPO for McEwen Copper.

• DAC tech: Occidental Petroleum is buying direct-to-air capture (DAC) technology firm Carbon Engineering for $1.1 billion.

• Consulting stake: Private equity firm TPG Capital wants to buy a stake in EY's consulting arm.

• Unorthodox loans: Apollo is looking to lend out over $4 billion in unorthodox NAV loans to struggling private equity firms.

Sources:

• https://twitter.com/YahooFinance/status/1691470468685959168?s=20

• https://www.zerohedge.com/markets/bearish-positioning-no-longer-tailwind-fms-finds-wall-street-least-bearish-feb-2022

• https://www.bloomberg.com/news/articles/2023-08-14/hedge-funds-add-meta-apple-on-tech-rally-cut-alibaba-13f-wrap?srnd=technology-vp

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