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- GraniteShares | July 10th, 2024
GraniteShares | July 10th, 2024
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Today's insights are provided by GraniteShares. Learn more about their 2X leveraged long (TSLR) and short (TSDD) Exchange-Traded Funds to get exposure to Tesla.
| Market | Day | Month | Year |
|---|---|---|---|
| Dow | ▼0.13% | ▲1.44% | ▲16.73% |
| S&P | ▲0.07% | ▲4.34% | ▲26.82% |
| Nasdaq | ▲0.14% | ▲7.73% | ▲34.87% |
| Bitcoin | ▲1.51% | ▼18.58% | ▲86.37% |
| 10-Year | ▼0.07% | ▲1.52% | ▼0.58% |
GOOD MORNING
Here's everything you need to know today: As if simply being himself these days wasn’t hard enough, Fed Chair Jay Powell started his biannual two-day testimony on Capitol Hill Tuesday morning facing increased pressure from Congress to cut interest rates ASAP. But while Powell was at least given the grace of explaining to the Senate first that it’s still his job to balance inflation growth and unemployment, he will also wake up this morning knowing that he has to explain it all over again to House members.
Well, that’s what balloon animals are for…
However Powell might have to worry about Congress putting those lapel pins to actual use. New data showing that corporate bankruptcies have hit a 14-year high could give politicians an angle to poke holes in Powell’s both balloons and his reluctance to move quickly on rate cuts.
But even Fed hawks and doves can be simultaneously thrilled by news that the global chocolate market is booming. In fact, the confectionary market is poised to grow by $31 billion over the next four years thanks in large part to increased demand for healthier, darker chocolate. Someone send Jay Powell a Toblerone.
Let’s dive into more detail below.
ECONOMY
Fed Chair Powell Stresses Patience on Rate Cuts, Faces Senate’s Frustration
High interest rates continue to strain the housing market and manufacturing, with inventory shortages and high prices hitting young buyers hard
BREAKING NEWS
FED Chair Jerome Powell trudged up to the US Senate on Tuesday morning, kicking off the second of his biannual two-day stints on Capitol Hill.
Powell used his time in the higher chamber to address critical issues like persistent inflationary pressures, the housing market’s ongoing challenges, and the economic implications of climate change.
The embattled central banker’s testimony took pains to stress the central bank’s proactive stance on navigating the complex economic dynamics continuing to affect America, likely seizing on the opportunity to address anything of complexity before he deals with the House of Representatives tomorrow.
WHAT HAPPENED
Senate Banking Committee members pressed Powell to begin cutting rates in September, and some clarified that they’d like a follow-up 25 bps reduction by the end of the year. Powell and his fellow FOMC members indicated just one cut at their June meeting, citing inflation data that has turned encouraging after a surprise jump at the start of the year. The Fed’s preferred personal consumption expenditures price index showed inflation was 2.6% in May after peaking above 7% in June 2022.
“After a lack of progress toward our 2% inflation objective in the early part of this year, the most recent monthly readings have shown modest further progress,” Powell said. “More good data would strengthen our confidence that inflation is moving sustainably toward 2 percent.”
Speaking of the Fed’s dual mandate, there was also a clear focus on rising unemployment, with the jobless rate rising higher in what appears to finally be a slowing economy.
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BANKING
U.S. Corporate Bankruptcies Hit Highest Mid-Year Level Since 2010
Despite the historic spike in bankruptcies, Powell emphasizes the benefits of current Fed policies
BREAKING NEWS
On Tuesday, FED Chair Powell reasserted in his testimony before the US Senate that central bank independence is a well-established, time-honored, and necessary tradition for monetary policymakers trying to attain optimal results for the U.S. economy.
The assembled Senators politely refrained from letting their giggling be audible.
But while Powell’s stance is objectively true, it might get some pushback from recent S&P Global data indicating that U.S. corporate bankruptcies have surged to their highest level since the middle of 2010, with 346 filings by the half-point of the year.
Ignoring this trend in his testimony, Powell instead highlighted how current monetary policy buoys the American economy's sectors. But this approach will inevitably raise political and otherwise concerns about an even stronger wave of bankruptcies riding a tide of persistently high interest rates.
WHAT HAPPENED
Our first chart illustrates a historic rise in U.S. corporate bankruptcies through June 2024, reaching 346 filings—the highest mid-year level since 2010. This highlights growing financial distress among businesses, driven by high interest rates, reduced bank lending, and inflationary stress. As you can see, the 2024 figures surpass those of the previous years, marking a critical increase from 2022’s 223 filings and 2023’s 327 filings. This trend mirrors the severe economic conditions in 2010, two years after the global financial crisis, which was the most severe worldwide economic crisis since the Great Depression.
Now, let’s zoom in on bankruptcies by month. The monthly breakdown of filings from January 2020 to June 2024 reveals a roller coaster of financial agony among companies. In 2020, there was a dramatic increase in filings, peaking in July with 74 bankruptcies due to the economic fallout from the COVID-19 pandemic. Monthly filings remained high throughout the year, exceeding 50 monthly filings from March to August.
In 2021, filings decreased significantly, with the lowest point in January at 17, reflecting initial economic recovery and government stimulus impacts. Filings remained relatively stable in 2022, fluctuating between 21 and 38 per month, indicating a period of relative economic stabilization. However, 2023 saw a renewed increase in filings, with a significant jump in March to 67 filings, signaling rising financial pressures.
COMMODITIES
Chocolate Confectionery Market to Grow by $31 Billion from 2024 to 2028
As consumer preferences shift towards premium and health-conscious options, the chocolate market could see significant growth
BREAKING NEWS
The global chocolate confectionery market is projected to grow by USD 31 billion from 2024 to 2028, driven by frequent product launches and packaging innovations.
Despite challenges like product recalls, the market is expected to maintain a Compound Annual Growth Rate (CAGR) of 4.36% during the forecast period.
Key players in the market include Hershey, Nestlé, and Mondelez International.
WHAT HAPPENED
The Chocolate Confectionery Market encompasses the industry dedicated to producing, distributing, and selling chocolate-based sweets and candies. This involves stakeholders such as chocolate manufacturers, cocoa suppliers, retailers, and specialty shops and is influenced by consumer tastes, cocoa prices, health trends, and product innovation.
As noted, the chocolate confectionery market is experiencing significant growth, driven by increasing demand for premium, health-conscious, and ethically sourced products. Consumers gravitate towards dark chocolate for its antioxidant properties and chocolates made with simple, trans-fat-free ingredients that align with healthy lifestyles.
Innovation is critical, with manufacturers offering unique flavors, textures, and origins, including artisanal creations, single-origin chocolates, and products infused with exotic spices or floral notes. The market is also responding to ethical concerns, with a rise in organic, sustainably sourced, and rare cocoa varieties. Millennials and centennials are particularly driving demand for less processed, natural chocolate products.
YESTERDAY | Here’s what you missed |
1. S&P 500, Nasdaq Eke Out Fresh Records
The S&P 500 and Nasdaq achieved new record highs, with investors keenly watching Federal Reserve Chairman Jerome Powell's upcoming remarks for insights on the future of interest rates. This is seen as a key indicator of market sentiment and economic direction.
2. Walmart Faces Class-Action Lawsuit Over 'Deceptive' Pricing
Walmart must confront a class-action lawsuit alleging deceptive pricing practices following a July 3 court ruling. This lawsuit could have significant financial implications for the retail giant.
3. Nvidia Stock Climbs Amid Continuous Rally
Nvidia's stock continued its impressive rally, rising by 159% this year. The tech giant's performance highlights its strong market position and investor confidence in its growth potential.
4. Tesla Investors Contest $7 Billion Legal Fee in Musk's Pay Case
Tesla shareholders are pushing for a Delaware judge to dismiss a $7 billion legal fee request from attorneys who challenged CEO Elon Musk's pay package. The outcome of this case could impact Tesla's financials and corporate governance.
5. Eli Lilly to Acquire Morphic in $3.2 Billion Deal
Pharmaceutical giant Eli Lilly announced a $3.2 billion acquisition of Morphic, a biopharmaceutical company. This strategic move aims to expand Eli Lilly's research capabilities and product portfolio.
6. Chinese EV Giant BYD to Build $1 Billion Factory in Turkey
BYD, a leading Chinese electric vehicle manufacturer, plans to invest $1 billion in a new factory in Turkey. This expansion aims to enhance BYD's production capacity and market presence in Europe.
7. BP Shares Drop 3% After Warning of $2 Billion Impairment
BP's shares fell by 3% after the company announced a potential impairment of up to $2 billion in Q2, alongside weak refining margins. This announcement underscores the challenges facing the energy sector.
8. Lucid's Record Quarterly Deliveries Boosted by Price Cuts, Incentives
Lucid Motors reported a record number of deliveries in Q2, driven by price reductions and incentives. This performance is crucial for the company's efforts to gain a stronger foothold in the competitive EV market.
9. Morgan Stanley Predicts 10% Fall in S&P 500 by US Election
Morgan Stanley's Chief Investment Officer Mike Wilson predicts a 10% decline in the S&P 500 before the US presidential election in November, highlighting concerns over market stability.
10. TSMC Crosses $1 Trillion Market Cap, Fueled by Nvidia's Gains
TSMC, a key supplier for Nvidia, has surpassed a $1 trillion market cap. This milestone reflects the semiconductor industry's growth, driven by the demand for AI technologies.
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Today's insights are provided by GraniteShares. Learn more about their 2X leveraged long (TSLR) and short (TSDD) Exchange-Traded Funds to get exposure to Tesla.
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