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This Week on Real Vision:

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Headlines (that I’m watching):

•🇹🇼As if the semis shortage isn’t bad enough, Taiwan’s TSMC (world’s beating heart of semiconductor production) now under threat of potential COVID breakout.

•🇯🇵BOJ to consider buying “green bonds” alongside other Asia central banks, according to BOJ’s foreign media lap dog Reuters. See my assessment of BOJ’s climate change MMT - this is what happens when you run out of JGBs and ETF to buy. New fund to be unveiled at this week’s BOJ policy meeting. See my note from June BOJ Thoughts on potential Climate Change Fund 

•🇨🇳PBOC’s -50bp RRR cut to all lenders in effect today, effectively injecting CNY 1 trillion into economy. Asia traders on the fence - is China easing risk positive, or do they see trouble ahead? My take- absolutely the latter: The recent crackdown on crypto and commodity speculation - this is (for once) a sincere effort to reign in excess froth ahead of potential storm clouds- and less to do with actually caring about BTC in China or even high raw material costs given currency strength. I also think China’s regulatory tech clamp spree is an interrelated crossover matter- China does indeed want to reclaim power and control back from tech industry, but is also taking preventative measures - they don’t want a disorderly crash of the giants, they want a centrally managed soft landing.

See my short China tech / long US tech market neutral pair  trade idea  here (looking less attractive)

•🇪🇺ECB will be changing something about it’s language (or the way it delivers its language?) at next ECB policy meeting this month, according to ECB Lagarde on Bloomberg. She’s talking about not even thinking about tapering.


•🗼Tokyo Olympics disaster clock countdown: 12 days away. 12 days and Tokyo just re-enters yet another extended lockdown. If you can’t even contain COVID v1.0, and can’t even vaccinate your own citizens past 15% current, and you’ve banned all non Olympian foreigners from entering and thus forgoing any tourism revenue, while now 3 cases of delta variant test positive among the athlete community, and nobody can attend the games locally, and BOJ is just going to bail out any / all public debts - can someone please tell me what the hell is the point of “hosting” this soon to be Wuhan 2.0 fest? Gold medal for worlds worst COVID “responder” goes to Team Japan 🇯🇵🥇…no clapping allowed. And no beer. And no condoms (yes seriously, and yes as a COVID precaution.. somehow. Gold medalistss).
Japan: The World’s Biggest COVID Failure

Markets:

UST YIELDS: Eyes on UST long end yields, and even more so on the explanation commentary that will narrative-hop alongside yield fluctuation. Received huge response over the weekend for my observation on meme stocks (namely AMC) potential impact explaining last week’s 10y UST yield moves in both directions. I even experimented with posting on TradingView, and my post was pinned on their homepage (so it’s not just “forced” pinned posts on the Exchange 🍻haha). I also took it to Twitter and somehow am now followed by AMC(?), I even posted it in Japanese to a well known Japan FX head strategist at Sony Financial in response to her “I don’t know why the markets are risk off…” (now I have 20+ soon for be disappointed Japanese FX & rates people following my 100% non Japanese tweets, not that I tweet often at all...

https://twitter.com/acrossthespread/status/1413054664984068102?s=21


More notable yet on what I thought was just another casual market observation post is  the deafening silence of absolutely anyone out there who cannot even begin to provide a specific answer for why 10y UST yields plummeted on Tues at 9:30am- not one. 

For anyone else who would like to make the claim that it ridiculous to put the idea out that “tiny AMC” who would never be able to impact the massive UST market - see my very direct response to a highly uninformed individual in the  comments section to Friday’s RVDB on how AMC & USTs can indeed match in size, not that that’s even a relevant comparison method.. For other meme stock skeptics (if you even still exist), just consider this stat: 

in June ‘21 for the month, avg daily $ amount in trading value for AMZN was $10bn for AMZN, $9bn for AAPL, and $14bn for AMC. From my response to a clueless commenter who I had to take down a peg for spewing erroneous nonsense: “…yes, AMC’s $20bn market cap trades +55% more in $ value traded vs AAPL’s 100x larger market cap…”

See video and the rest of my additional comments from RVDB Friday here w/ @Jack Farley   @Ash Bennington  

(charts below- I added the 9:30am US cash equity open in vertical dotted lines - when US10Ys move, despite their trading ex US equity hours)

Approximately zero of these seemed to catalyze anything
Approximately zero of these seemed to catalyze anything
Approximately all of AMC price action on the way down and the reversal pivot seemed to match up well 
Approximately all of AMC price action on the way down and the reversal pivot seemed to match up well 
AMC vs US10y (top), AMC notional volume traded & market cap (bottom)
AMC vs US10y (top), AMC notional volume traded & market cap (bottom)
✔️ Russell 2000 & US10y. ❌SPX & US 10y
✔️ Russell 2000 & US10y. ❌SPX & US 10y

Follow up note from original → Yields Reverse the Fall & Moving Higher. & Popcorn..

This has crypto implications as well. Watch AMC closely alongside UST price action, and watch for sharp moves (either direction) on USTs at / around US cash equity open, and watch the 10y & 30y UST auction this week, along with the macro heavy schedule of key central banks and macro data, all below.

Equities: Japan kicks of the week strong out of Asia, NKY +2.25% on the day led by retail long NKY levered index ETFs, as well as a rare bright day for 9984 SoftBank group +3%. But the real strength was in the factory automation and robotics manufacturers after 6506 Yaskawa Electric reported and guided strong, shares +6.5%, along with peer & NKY heavyweight 6964 FANUC +6.5% (full disclosure, Yaskawa Elec & FANUC among my very few long term longs). Semis/SPE stocks Tokyo Electron, Keyence & Nidec also strong.

Note that spx eminis did not participate in the NKY party, though still mostly green across Asia (and not in Europe). Also note VIX finds higher lows MTD, from 15 → 16 → 17 current.

Macro:

Mon 7/12

  • US 10Y Auction ($38bn)

Tues 7/13

  • US CPI: Estimates 4.9% headline (5% previous), 4% core (3.8% previous)
  • Germany Inflation: estimates 2.3% (2.5% previous)
  • France Inflation: estimates 1.5% (previous 1.4%)
  • US 30Y Auction ($24bn)

Wed 7/14

  • China GDP, Retail Sales, Industrial Production, Unemployment Rate,
  • Australia Unemployment & Labor
  • UK Inflation: Estimates 2.2% (2.1% previous)
  • Spain Inflation: estimates 2.6% (2.7% previous)

Thurs 7/16

  • Italy Inflation: estimates 1.3% (1.3% previous)
  • OPEC Monthly Report

Fri 7/16

  • EU CPI: estimates 1.9% headline (2% previous), 0.9% core (1% previous)
  • US June Retail Sales: Estimates -0.4% (-1.3% previous)

See Darius Dale’s latest expectations on macro data and projected slowdown in inflation:


Policy Schedule:

Mon 7/12:

  • 🇨🇳China PBOC RRR cut -50bps announced Fri in effect,

Wed 7/14:

  • 🇹🇷Central Bank Republic of Turkey Policy (consensus hold at 19%)
  • 🇨🇦Bank of Canada Policy
  • 🇰🇷Bank of Korea Policy
  • 🇺🇸Fed Chair Powell semi-annual testimony to Congress (Day 1 of 2)
  • 🇺🇸Fed Beige Book

Thurs 7/15

  • 🇯🇵Bank of Japan Policy
  • 🇺🇸Fed Chair Powell semi-annual testimony to Congress (Day 2 of 2)

Earnings:

  • S&P500 earnings consensus calling for net profit +65% QoQ, highest estimates since Q4 2009
  • US Financials- Tues: Goldman, JPM. Wed: BofA, Citi, Wells Fargo, BlackRock. Thurs: Morgan Stanley. Fri: Schwab


See bank analyst Chris Whalen & @Jack Farley  on bank earnings season expecting increased buybacks + divs, as well as release of COVID loan loss reserves, but the top in growth put in this quarter.

See @Petr Pinkhasov on bear case for banks via technicals 

More daily market commentary out of Asia Pacific w/ @Matt Daniell  here →  APAC Monday 12th July 2021.


Insane Charts (not by me)

THIS is particularly insane… 2021 equity inflows > all combined inflows for last 2 decades???