Please see this week’s market views from eToro’s global
The US 10-yr bond yield winners and losers
Rise in US 10-yr bond yields over 4% a threat to market but should ease and be a tailwind ahead. Rise as much technical as fundamental and set to now calm. Benefited savers, US dollar, and cheaper Value stocks. Whilst the higher bond yield losers have been borrowers, and overall stocks, especially tech and real estate. Every 0.5% 10-yr yield move is +/- 8% our S&P 500 fair value. Higher 4% yields have taken market to a near record 30% premium to fair value. See Page 4
Reassuring US inflation calms markets
Tech stocks hold markets back again as reassuring US inflation balances weak China trade and double hit from Moody’s US banks downgrade and Italy’s windfall tax. US dollar DXY index held at 102 and 10-yr bond yields over 4%. NVO and LLY surged on weight drug progress. TPR agreed $9 billion luxury takeover of CPRI, and long-suffering BABA posted best sales growth in 2-years. See Q3 Markets Outlook HERE and at twitter @laidler_ben. See Page 2
Mixed inflation message an important test
Its most important number in markets and temp acceleration in US prices a mixed message. But we see underlying price pressure easing, and any market weakness likely to be bought. See Page 2
Windfall tax add to Europe valuation discount
Windfall tax popularity in UK and Europe is only widening yawning valuation gap vs US, by cutting profits and boosting uncertainty. No surprise oil and banks valued 40% lower than US. See Page 2
Three big crypto-adoption catalysts to watch
Institutional crypto ownership missing-link in this retail dominated asset. Catalyst 1) new company accounting rules, 2) global bank regulations, and 3) first central bank investor. See Page 2
Crypto catalysts to come
Major crypto coins BTC and ETH rangebound and holding asset class leading YTD gains. And seeing lower volatility and tech sector correlation. SHIBxM was boosted by high developer activity. Whilst XRP lower on SEC lawsuit appeal plans. PYPL to launch own US-dollar stablecoin. Next SEC spot BTC ETF deadline near. See Page 3
Commodities energy rebound broadens
Energy rebound broadens as Brent hits $87/bbl. after Ukraine attacks on no.1 exporter Russia infrastructure. Summer heat lifts US natgas prices, and a potential Australia LNG strike see’s EU prices soar. China centric industrial metals, from copper to iron ore, fall on weak trade data. Cocoa to sugar see supply-side relief. See Page 3
The week ahead: Walmart, FOMC and China
1) US big retail earnings WMT, HD, TGT plus July retail sales slowdown. 2) Minutes of FOMC ‘last hike’ meeting. 3) Struggling economy check-in (Tue) w/ China monthly data dump, and German ZEW. 4). UK inflation among the world’s highest with est. fall under last 7.9% (Wed). See Page 3
Our key views: A positive markets breather
Markets due a breather after the strong 1H, with weaker seasonality, low volatility, and coming growth slowdown. But fundamentally positive on lower inflation and coming rate cuts. Focus on defensive growth and long duration assets from healthcare to big tech. Cautious growth exposed cyclicals, commodities, and banks.See Page 5