LB Morning Call | 100 basis points Fed rate hike unlikely in September

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Asia Pacific

Overnight, the three major U.S. stock indexes fell across the board. The Dow fell 1.23% to 32,396.17 points, the S & P 500 fell 0.67% to 4,091.19 points, and the Nasdaq fell 0.16% to 12,348.76 points. Several Fed officials released hawkish signals, vowing to fight inflation, pouring cold water on the idea that the Fed will soon stop raising or cutting interest rates, putting pressure on the trend of U.S. stocks.

Caterpillar fell 5.86% and Boeing fell 3.45%, leading the Dow lower. Most of the big tech stocks fell, with Apple down 0.93%, Amazon down 0.91%, Netflix down 2.12%, Google up 0.24%, Facebook up 0.16% and Microsoft down 1.15%. Tesla rose 1.11%.

Airline stocks were weak, with Boeing down 3.45%, American Airlines down 1.54%, Delta Air Lines down 1.21%, Southwest Airlines down 1.8% and United Airlines down 1.22%.

US Stock News

1. It is reported that Tesla will develop its own recruitment software, a move intended to reduce recruitment-related costs and reduce reliance on external suppliers.

2. The Department of Justice has approved Google's $5.4 billion acquisition of cyber security company Mandiant - the second-largest acquisition in Google's history, after the $12.5 billion acquisition of Motorola's mobile phone unit Mobility in 2011.

3. Canadian semiconductor company Semtech has confirmed that it is in talks with Canadian internet company Sierra Wireless to acquire the latter at $31 per share.

4. DuPont's second-quarter net sales were $3.3 billion, up 7% year over year; net profit from continuing operations was $365 million, down 8% year over year; earnings per share from continuing operations were $0.71, up from $0.73 in the same period last year.

5. Caterpillar's second-quarter revenue was $14.247 billion, up 11% year over year; net profit was $1.673 billion, up 18.4% year over year. Non-GAAP EPS was $3.18, compared with $2.6 a year earlier.

6. Starbucks' third-quarter earnings per share were $0.79, expected to be $0.73. Revenue was $8.15 billion, expected to be $8.105 billion. Net profit was $913 million, expected to be $872 million. Starbucks U.S. shares rose nearly 2 percent after hours.

7. Gilead Sciences second quarter adjusted earnings per share of $1.58, expected $1.52. Revenue of $6.26 billion, expected $5.852 billion. Net profit of $1.144 billion, expected $1.415 billion.

8. AMD's second-quarter earnings per share are $0.27 and expected to be $0.81. Revenue is $6.55 billion, expected to be $6.528 billion. Net profit is $447 million, expected to be $1.336 billion. Full-year revenue is expected to be about $26 billion to $26.6 billion, up from about $26.3 billion previously expected. The gaming graphics card market is expected to decline in the third quarter. Chaowei Semiconductor's U.S. shares fell more than 5% after hours.

9. Samsung Electronics is planning to build an "unmanned factory" to solve the manpower shortage caused by the "population cliff".

Singapore News

1. Ascendas REIT's total revenue in the first half of the year increased by 13.7% year over year to 600 million 66.5 million yuan. As of the end of June, the dividend per unit (DPU) in the first half of the year was 7.873 cents, an increase of 2.8% year over year.

2. Great Eastern Holdings' second-quarter net profit attributable to shareholders as of the end of June this year rose 22% year-on-year to 200 million 82.9 million yuan, and net profit in the first half of the year fell 25% to 500 million 2.9 million yuan. The group will give an interim tier 1 tax-free dividend of 10 cents per ordinary share.

Macroeconomy

1. Statement of the Ministry of Foreign Affairs of the People's Republic of China: On August 2, Speaker of the House of Representatives Pelosi of the United States Congress ignored China's strong opposition and solemn representations and visited the Taiwan region of China, which seriously violated the one-China principle and the provisions of the three Sino-US joint communiques. It has seriously impacted the political foundation of China-US relations, seriously violated China's sovereignty and territorial integrity, seriously undermined peace and stability across the Taiwan Strait, and sent a serious wrong signal to the "Taiwan independence" separatist forces. China firmly opposes and severely condemns this, and has lodged solemn representations and strong protests with the US side. In response to the US House Speaker's visit to China's Taiwan region, China will take all necessary measures to resolutely safeguard national sovereignty and territorial integrity, and all consequences arising therefrom must be borne by the US and the "Taiwan independence" separatist forces.

2. Fed Evans still hopes that the Fed will raise interest rates by 50 basis points in September, and then continue the pace of rate hikes by 25 basis points until the beginning of the second quarter of 2023; he believes that by the second quarter of 2023, interest rates A rate of 3.75% -4% is high enough. If inflation does not improve, then deeper rate hikes will become more necessary.

3. According to the CME "Fed Observation": the probability of the Fed raising interest rates by 50 basis points in September is 58.5%, and the probability of raising interest rates by 75 basis points is 41.5%; the probability of raising interest rates by 75 basis points in November is 44.1%, the probability of accumulating 100 basis points of interest rate hike is 45.7%, and the probability of accumulating 125 basis points of interest rate hike is 10.2%.

Reminders

21:45, the final value of Markit services/composite PMI in the United States in July.

22:30, 2023 FOMC voting committee, Philadelphia Fed President Harker delivered a speech at the Philadelphia Fed's 6th Annual Financial Technology Conference.

23:45, 2024 FOMC Vote Committee, Richmond Fed President Barkin speaks on inflation.

The 31st OPEC and non-OPEC oil producing countries ministerial meeting was held.