Gear up for the next big spectacle in Washington as the debt ceiling comes back into force this weekend following a two-year suspension. The deadline will curb the Treasury's capacity to issue new debt unless lawmakers can reach an agreement, which seems far-fetched at the moment. GOP leadership contends that Democrats are in a spending free for all and will only support raising the debt ceiling if they promise major spending reforms and cutbacks.  This year’s spending spree alone will add a minimum of $250bn of annual interest expense if interest rates permanently stay below 3%. 

Amazon reported quarterly earnings after the bell yesterday, with revenues that were 25% higher than the same period last year. While that's pretty impressive in its own right, the percentage wasn't high enough to match analyst expectations. The e-commerce behemoth finished the quarter with $113B in revenue, compared to consensus estimates of $115B, prompting shares to slump 7%.

An inflation indicator that the Federal Reserve uses as its key guide rose 3.5% in June, a sharp acceleration that was nonetheless right around Wall Street expectations, the Commerce Department reported this morning.  That gain was slightly ahead of the 3.4% May increase and represents the biggest move since July 1991.

It was set to be one of the year's most highly anticipated listings, but Robinhood Markets may have to do more to convince investors to scoop up its shares. The stock trading app, which has surged in popularity among retail investors, priced its IPO at $38 - at the low end of a marketed range - and will begin trading on the Nasdaq today under ticker symbol "HOOD." It also detailed plans to reserve up to 35% of shares for users of its app, which could purchase the stock at the IPO price through a new product called IPO Access.

Investors continue to size up comments from Jerome Powell after the Fed concluded its two-day meeting by keeping interest rates in a target range between zero and 0.25%. No move was made on asset purchases, and while the economy is "making progress" toward its goals, it has ways to go before the central bank will adjust its easy policies

The U.S. economy rose at a disappointing rate in the second quarter in a sign that the U.S. has escaped the shackles of the Covid-19 pandemic but still has more work to do, the Commerce Department reported this morning. Gross domestic product, a measure of all goods and services produced during the April-to-June period, accelerated 6.5% on an annualized basis. That was slightly better than the 6.3% gain in the first quarter, which was revised down narrowly.

It was a huge quarter for big tech.  A blowout quarter from the iPhone maker shattered expectations, on revenues of $81.4B. Every one of Apple's major product lines grew over 12% on an annual basis.  Shares of Google parent Alphabet are higher this morning after advertising revenue soared 69% Y/Y to $50.4B.  Microsoft similarly crushed expectations, while the tech giant finished the year with $60B in annual earnings (and $165B in sales) for the first time ever.

Boeing reported its first quarterly profit in almost two years on Wednesday, boosted by a surge in deliveries of commercial jetliners as airlines began recovering from a pandemic slump and sales rose in the company’s other divisions. The plane manufacturer snapped six consecutive quarters of losses, swinging to a profit of $567 million for the second quarter.

All eyes turn to the Fed as the market awaits the latest policy decision.  While no action is expected from the FOMC today, there may be a possible mention of tapering the central bank's bond program. That could shake up some investing sentiment as the winding down of purchases is seen as the first step toward interest rate hikes (especially with inflation heating up). The Fed is currently purchasing $120B in securities a month, including $80B in Treasury bonds and $40B in mortgage-backed securities.

Fresh highs today would result in a six-day win streak on Wall Street and the latest slew of earnings could be enough to power the next leg of the journey. Industrial heavyweights General Electric and 3M reported this morning, beating estimates, but the presentation will quickly turn into a tech show after the close. Apple is expected to post impressive results as demand remained strong for its 5G iPhones.  Google parent Alphabet is meanwhile set to benefit from a recovery in ad spend and don't forget to look out for other tech earnings like Microsoft and AMD.

Shares of Tesla are positive after better-than-expected Q2 earnings after the bell yesterday. Not only did the company mark the eighth straight quarter of profit, The EV maker produced 206,421 cars in Q2 (+151% Y/Y).

Sweeping crackdowns across China are continuing to send shockwaves across financial markets, with investors finding themselves in the firing line of some of the nation's hottest sectors. Shares of Tencent fell 10% on Monday after Beijing ordered the company to give up exclusive music licensing rights, food delivery companies were also targeted, while education stocks are in freefall amid a ban on for-profit tutoring. In fact, the Nasdaq Golden Dragon China Index - which tracks 98 of China's largest firms listed in the U.S. - dropped 8.5% on Friday and another 7% on Monday, marking the biggest two-day selloff since '08

Investors are gearing up for the biggest earnings week of the summer.  About 165 S&P 500 companies are due to report in the biggest week of the season. Tech heavyweights like Alphabet, Amazon, Apple, Facebook, and Microsoft will take the spotlight, with the five companies comprising more than a fifth of the total market cap of the S&P 500. The results should illustrate how large businesses are withstanding the pandemic and a recent uptick in inflation.

Initial public offerings have come roaring back, on track for a record year as companies race to go public in a stock market at all-time highs.  Proceeds from U.S. IPOs have reached $89 billion in 2021, a 232% jump from the same period last year, according to data from Renaissance Capital. For the year-to-date period, the market is already at a record level in terms of funds raised, and it is expected to surpass the full-year all-time high of $97 billion raised in 2000 amid the dot-com boom, according to Renaissance.

China has begun a sweeping overhaul of its $100bn private education industry will eliminate foreign investors from much of the sector and threatens to wipe out billions of dollars of investment from groups such as BlackRock, Baillie Gifford, Tencent, Sequoia and SoftBank’s Vision Fund. The regulations will ban companies that teach school curriculum subjects from making profits, raising capital or listing on stock exchanges worldwide. 

Weekly jobless claims unexpected moved higher last week despite hopes that the U.S. labor market is poised for a strong recovery heading into the fall.  Initial filings for unemployment insurance totaled 419,000 for the week ended July 17, well above the 350,000 Dow Jones estimate. On the positive side, continuing claims, which run a week behind the headline number, declined by 29,000 to 3.24 million, a fresh pandemic low.

After four straight months of declines, sales of previously owned homes rose 1.4% in June month-to-month to a seasonally adjust annualized rate of 5.86 million units, according to the National Association of Realtors.  These sales represent closings, so they are based on contracts signed in April and May.  Sales were 22.9% higher compared with June 2020. That annual comparison, according to the Realtors, is still slightly skewed due to pandemic lockdowns in certain parts of the country that lasted into summer last year.  The inventory of homes for sale at the end of June was 1.25 million, representing a 2.6-month supply at the current sales pace. That is a slight improvement from May’s 2.5-month supply.

A gauge of future U.S. economic activity increased in June, suggesting the economy continued to recover from the recession.  The Conference Board said their index of leading economic indicators (LEI) rose 0.7% last month to 115.1, topping its previous peak reached in May.
 

Strong earnings provided a ballast to beaten-down markets the last two days, and industry bellwethers Coca-Cola, Johnson & Johnson and Verizon gave investors reason to focus on the fundamentals. All three companies topped market expectations, converging with sentiment that’s driving the rally in a market that has seen very little downside in recent months.

According to the Congressional Budget Office the U.S. Treasury Department is projected to exhaust its borrowing authority in October or November, as a fight between Democrats and Republicans over raising the nation's debt ceiling erupted in Congress.  A failure to work out differences over whether government spending cuts should accompany an increase in the statutory debt limit, currently set at $28.5 trillion, could lead to a federal government shutdown - as has happened three times in the past decade. 

Nike could run out of sneakers made in Vietnam due to a halt in production at multiple suppliers as the coronavirus pandemic worsens globally.  The report comes just after Nike’s suppliers in Vietnam, recently stopped production due to rapidly growing COVID-19 infections in the region.  Nike said that contract factories in Vietnam make up roughly 50% of total Nike branded footwear.

U.S. homebuilding increased more than expected in June, though expensive lumber, as well as shortages of labor and land, continued to constrain builders’ ability to fully take advantage of robust demand for housing.  According to the Commerce Department housing starts rose 6.3% to a seasonally adjusted annual rate of 1.643 million units last month.  Permits for future homebuilding fell 5.1% to a rate of 1.598 million units in June.

Jeff Bezos’ space company, Blue Origin, has sold nearly $100 million worth of tickets for future passenger flights to the edge of space, the billionaire founder announced on Tuesday.  The company has not disclosed prices for seats on its New Shepard rocket. The only indication of Blue Origin’s pricing structure is a public auction the company held for a seat on its first flight with Bezos, which went for $28 million. That’s multiple times the $200,000-to-$500,000 range that Blue Origin’s suborbital space tourism competitor Virgin Galactic has charged for seats on its future flights.

Shares of Netflix are lower after the company reported earnings that missed on the bottom line and subscriber additions. The company’s revenue slightly beat estimates.  Analysts hadn’t been expecting a blockbuster quarter when it comes to subscriber adds, expecting 1.75 million users.  The company said it added 1.54 million users to finish the quarter with over 209 million paid memberships.

U.S. stocks fell aggressively Monday on concern a rebound in Covid cases would slow global economic growth. The selling picked up as the session went on, US Stocks had their worst day since last October.  Stocks leading the sell-off were tied to the economy being open like airlines, hotels, and energy names.

The nation’s homebuilders continue to be thrilled with buyer demand, but higher construction costs are starting to eat away at their confidence.  A monthly sentiment index from the National Association of Home Builders dropped 1 point to 80 in July. The index stood at 72 in July 2020. Anything above 50 is considered positive. The index hit a record high of 90 in November of last year. While lumber prices have fallen by more than 50% in the lumber futures market, those savings have not yet trickled down to builders, remodelers or consumers. Supply chain issues, as well as low inventory with suppliers, are both keeping retail prices elevated.

The Covid-19 recession is in the books as one of the deepest — but also the shortest — in U.S. history, according to the National Bureau of Economic Research, the contraction lasted just two months, from February 2020 to Aprill 2020.  Though the drop featured a staggering 31.4% GDP plunge in the second quarter, it also saw a massive snapback the following period, with previously unheard of policy stimulus boosting GDP output by 33.4%.
 

Sales at U.S. retailers rebounded in June as Americans flocked to bars and restaurants and bought the latest summer fashions, pointing to an accelerating U.S. economy.  Retail sales increased 0.6% last month in a much better showing than Wall Street had expected.  Retail sales are now up 18% in the past year and easily exceed pre-pandemic levels.   The biggest change is what Americans are spending their money on. Households are still buying plenty of goods, but they have shifted their spending toward services they avoided during the pandemic. Dining out, entertainment, travel, and vacations. 

U.S. consumer sentiment unexpectedly declined to a five-month low in early July as mounting concerns over rising prices led to a sharp deterioration in buying conditions for big-ticket items. The University of Michigan’s preliminary sentiment index decreased to 80.8 in July from 85.5 the prior month.  Consumers expect inflation to rise 4.8% over the next year, the highest since August 2008.

U.S. business inventories increased solidly in May, but shortages of goods like motor vehicles are making it harder for retailers to restock warehouses to meet booming demand.  Business inventories rose 0.5% after edging up 0.1% in April. Inventories are a key component of gross domestic product. Inventories increased 4.5% on a year-on-year basis in May.

Initial claims for unemployment insurance fell to a new pandemic-era low last week, according to the Labor Department.  First-time filings for benefits totaled 360,000, the best number since March 14, 2020.  Continuing claims, which run a week behind the headline number, also fell sharply, declining by 126,000 to 3.24 million. That also established a new low for a jobs market that still has some distance to go before getting back to its pre-Covid 19 self but has made significant strides.

China reported second-quarter GDP growth that came in slightly below expectations, while retail sales and industrial production grew faster than forecast in June.  The country’s gross domestic product increased 7.9% in the second quarter from a year ago, according to the National Bureau of Statistics. That fell short of estimate of 8.1% growth for the April to June period.

Oregon workforce officials said the state’s unemployment rate dropped in June to 5.6%, down from a 5.8% tally for May.  The state added 7,500 jobs in June, according to the Oregon Employment Department, down from an average of 10,100 in the five months prior.  The numbers show Oregon continues to recover from the recession, but the rapid rebound seen in the recovery’s first months has slowed.

The Social Security cost-of-living adjustment for 2022 could be 6.1% thanks to inflation, according to a new estimate.  That would be the biggest increase since 1983, according to non-partisan advocacy group The Senior Citizens League, which calculated the increase.  The new estimate comes as the Consumer Price Index in June increased 5.5% from a year earlier, the largest gain since August 2008. Higher food and energy prices were among the culprits that helped push the inflation measure higher.

Federal Reserve Chairman Jerome Powell said yesterday that the economy needs to improve more before the central bank will change its ultra-easy monetary policy.  In remarks prepared for the House Financial Services Committee, the central bank chief noted improvements but said the labor market in particular is still well below where it was before the pandemic hit.  On inflation, Powell said it “has increased notably and will likely remain elevated in coming months before moderating.”  But he stuck to his oft-stated belief that the current surge is temporary and will be offset as conditions return to normal.

Oregon Tool said Wednesday its owners — American Securities and P2 Capital Partners — had sold the company to the California investment firm Platinum Equity.  Neither the Milwaukie company, known until earlier this year as Blount International, nor its buyers disclosed the value of the sale or how it is being funded. Oregon Tool — best known for selling chainsaws, saw parts and mowing blades — said it expects the transaction to be done by quarter four of 2021.

Fed Chair Jerome Powell is in the hot seat today as he heads before Congress for his semiannual testimony on monetary policy. Inflation, which was once the elephant in the room, is set to become the most heated topic at the grilling following yesterday's data on rising costs across the American economy. The Consumer Price Index grew at its fastest clip since August 2008, climbing 5.4% year-over-year versus a forecast of 4.9%.

BlackRock’s assets under management swelled to a record $9.5tn in the second quarter, boosted by robust financial markets that spurred inflows into actively managed and exchange traded fund products. The world’s biggest asset manager reported a 32 per cent year-on-year rise in revenue in the three months to June to $4.8bn, beating a forecast of $4.6bn, boosted by strong organic growth and higher performance fees.  In a nod to inflation, BlackRock said it would from September raise base salaries by 8 per cent for all employees up to and including those at director level.

Senate Democrats have agreed to press ahead with legislation worth $3.5tn in new government spending without Republican support in a bid to enact Joe Biden’s economic agenda before next year’s midterm elections. The intraparty deal was sealed on Tuesday night after negotiations that involved both the most progressive lawmakers, including Bernie Sanders of Vermont, and moderate Democrats. 

Get ready for the second quarter earnings season, which formally kicks off today as JPMorgan and Goldman Sachs release results.  Other major financial institutions will also report this week, including Bank of America, Citigroup and Wells Fargo on Wednesday and Morgan Stanley on Thursday. The banking industry is likely to unveil some blowout results, with S&P 500 financial sector earnings doubling year over year, though much of that growth will be measured against a time when much of the economy was brought to a pandemic standstill.

The breakneck pace of US consumer price increases seen since the start of the year accelerated in June, challenging the Federal Reserve’s case that the burst of inflationary pressures accompanying the economic reopening will prove temporary. The consumer price index rose 5.4 per cent in June from a year ago — above the nearly 13-year high of 5 per cent reported in May and surpassing the 4.9 per cent increase forecast by economists. Stripping out volatile items like food and energy, “core” CPI rose from 3.8 per cent in May relative to the year before to 4.5 per cent in June.

PepsiCo raised its earnings forecast for the full year, as people returning to restaurants and cinemas boosted sales of the company’s sodas. The pandemic dragged on demand for 7Up, Mountain Dew and other beverages as coronavirus restrictions kept crowds away from bars, stadiums and other venues. PepsiCo said on Tuesday net revenue in the June quarter jumped 20.5 per cent year on year to $19.2bn
 

Cyclicals or growth? While the two industries continue to battle over who will lead the market higher, both sectors appear to be doing quite well as investors head into the second half of the year. The major averages rallied on Friday, all finishing the day up about 1% to reach fresh all-time highs after a volatile week.  The movement comes before the second quarter earnings season.  Profits of S&P 500 companies are expected to be up 65% from the same quarter a year ago.  It would also be the strongest earnings growth since Q4 of 2009.

Companies begin reporting their second quarter profits this week. Things really kick off tomorrow, when Goldman Sachs, JPMorgan Chase and PepsiCo publish their earnings before the market opens.  Some soft economic data recently spooked the market, and analysts expect corporate profits to moderate in the coming quarters. Still, the jump in S&P 500 earnings for the full year is expected to rival the strongest in recent history. And business leaders seem confident that their companies are coming out of the pandemic in much better shape than expected.

In a sign of the Didi chilling effect, ByteDance Ltd., the Chinese owner of popular short-video app TikTok, put on hold indefinitely its intentions to list in the US after government officials purportedly told the company to focus on addressing data-security risks.  The Beijing-based social-media giant, last valued at $180 billion in a funding round in December, had been weighing an initial public offering of all or some of its businesses in the U.S. or Hong Kong, according to people familiar with the company’s plans.
 

The next leg of the billionaire space race commences this weekend, with Sir Richard Branson journeying to the edge of space in Virgin Galactic's VSS Unity spaceplane. The flight on Sunday will come just nine days before Jeff Bezos is scheduled to blast into the thermosphere and the rivalry is quickly turning into a cold war. Branson has denied the scheduling was a contest to see who would go up first, while Blue Origin has said the two companies aren't even after the same prize.

President Biden will sign a wide-ranging executive order today targeting the power of big companies. It’s the latest move intended to promote competition that, his administration argues, is hampered by corporate giants and deal-making. The order itself will not create immediate change — that will largely be left to the regulators — but it sets activity in motion across a host of industries.

A surge in green coffee prices may soon begin percolating into costs paid by consumers for their daily caffeine fix, in the latest sign of how hot commodity markets are affecting the broader global economy. Coffee bean prices on international markets have surged as crops in top producer Brazil have been damaged by the worst drought in almost a century.  At the start of June, the futures benchmark in New York for arabica, the high-end coffee bean, hit $1.70 a pound, up almost 70 per cent from a year before.
 

A prolonged drop in U.S. Treasury yields is catching bond and fixed income traders by surprise, as well as other investors in the broader financial markets. The 10-year U.S. Treasury yield dropped below 1.3% on Wednesday, and fell another 7 bps overnight to 1.25%, despite lingering concerns about rising inflation and a gradual removal of Fed stimulus. Treasury yields play an important role in the economy, affecting borrowing costs on everything from mortgages to corporate bonds.

Job openings remained at a record high of 9.2M in May, according to the latest data from the Labor Department, though quits dropped slightly to 3.6M, from a historic peak of 3.9M in April. The high demand for labor comes as the economy fully reopens and companies scramble to keep up with soaring sales.  The non-farm payrolls report from last Friday showed the U.S. adding 850K jobs in June, though it would take more than a year at that rate to restore employment to pre-pandemic trends.

Some of America’s biggest oil groups are racking up tens of billions of dollars in hedging losses despite soaring crude prices, as contracts signed during last year’s crash leave them selling their output at deeply discounted prices.  Oil is trading near six-year highs of around $75 a barrel, but almost a third of the US’s 11m barrels a day of production is being sold for just $55 a barrel, according to IHS Markit.
 

More details are coming together in the lead-up to DiDi Global's IPO on the New York Stock Exchange. The stock tumbled 20% yesterday just three sessions after the company went public - after China began a probe into the firm's data practices and barred new users from its app. DIDI is down again this morning, leading many to question how much was known before the ride-hailing giant raised $4.4B at a $67B valuation? Wall Street banks including Goldman Sachs, Morgan Stanley and J.P. Morgan made about 2% on the total amount raised, or around $88M when spread out between them.

Hyperlocal social media platform Nextdoor has agreed to go public through a merger with a special purpose acquisition company, in a deal that it said would give the business an implied valuation of $4.3bn. Founded in 2011, the social network carved a niche distinct from dominant rival Facebook by creating an online space for neighbors to discuss local events, rate local businesses and exchange goods and services. It will merge with a Nasdaq-listed Spac launched by Silicon Valley venture capital group Khosla Ventures, raising $686m in gross proceeds.

Investors will pay close attention when minutes from the US central bank’s last meeting are released later today. The Fed surprised market participants after the June 15-16 meeting when it signalled a potential policy shift in the face of higher inflationary pressures and strong growth.
 

Shares of DiDi Global are off 25% premarket to $11.60 as trading reopened after the July 4 holiday weekend. That's also 17% below DiDi's IPO price of $14, though many retail investors likely bought in a lot higher.  Fearful of their growing influence, China is in the middle of a sweeping crackdown on the nation's biggest tech firms. Last November, Beijing pulled the planned IPO of fintech giant Ant Group, and in April, it hit Alibaba with a record $2.8B fine over abusing its market dominance. In May, China's antitrust regulator also ordered DiDi and nine other on-demand transport companies to overhaul their practices ranging from price hikes to driver treatment.

JPMorgan Chase has made more than 30 acquisitions in 2021, putting America’s biggest bank by assets on track for its largest buying spree in years. The acquisitions, mostly of smaller companies ranging from an online money manager in Britain to a Brazilian digital bank, are a sign of how JPMorgan chief Jamie Dimon is turning to deals to expand the banking giant. The bank has done 33 deals so far in 2021, according to data from Refinitiv, with nine deals alone in June.

Saudi Arabia and the United Arab Emirates headed into the boxing ring for another round on Monday, before OPEC+ called it quits on a production deal. The unresolved spat between the long-time allies saw WTI crude soar another 2% to near $77/bbl, further squeezing an already tight oil market and raising concerns over inflation. At issue is the current terms of "baselines," or the measure in which each country calculates its production cuts. The UAE feels its current level is too low - but the Saudis and Russia have rejected any readjustments, fearing that other OPEC members will issue similar demands.
 

Following the latest round of talks hosted by the OECD, the U.S. won backing for a global minimum tax from a group of 130 nations that represent 90% of global GDP. It's part of a wider corporate tax overhaul for multinationals and the Biden administration's plan for raising revenue.  Heavy federal spending will push the budget deficit to $3T for the 2021 fiscal year, according to the Congressional Budget Office, which would be the second-largest since 1945 in nominal terms and as a share of the economy. The forecast doesn't even include the impact of two "trillion-dollar" infrastructure proposals, though the budget office does forecast the economy to grow 6.7% this year after adjusting for inflation.

Hot investing app Robinhood Markets filed Thursday for an eagerly anticipated IPO at what many on Wall Street expect will be about a $40B valuation. The filing included few other details about the initial public offering, such as how many shares Robinhood will offer or at what price range, but 35% of them are expected to be allocated to retail investors. The company is set to be the buzziest name to tap the U.S. IPO market this summer and follows a record number of listings in the first half that's on pace to break annual records.

Job growth leaped higher in June as businesses looked to keep up with a rapidly recovering U.S. economy, the Labor Department reported this morning.  Nonfarm payrolls increased 850,000 for the month, compared to the Dow Jones estimate of 706,000 and better than the upwardly revised 583,000 in May. The unemployment rate, however, rose to 5.9% against the 5.6% expectation.