Cryptocurrencies Posts Positive Week — Market Talk

1437 ET - Bitcoin and major cryptocurrencies in general have had a positive week, taking cues from AI and tech equities and some investors scooping up crypto tokens with prices at multi-year lows. Total cryptocurrency market capitalization rose by 2.3% this week, to $2.19 trillion according to data from CoinMarketCap. While outflows from bitcoin ETFs have resumed, they are at a slower rate than seen last month. Bitcoin ETFs had a net outflow of $95.3 million Thursday according to CoinGlass, much less than the hundreds of millions that moved out of bitcoin on daily basis in previous weeks. ([email protected])1418 ET - The World Cup was a demand driver for Delta Air Lines but didn't require much extra supply or disproportionately impact domestic results, Chief Commercial Officer Joe Esposito says on a call with analysts. While the tournament was certainly a major event and Delta was a beneficiary of the travel demand it created, he says, "it's not significant enough to make a huge difference to the quarter." Delta didn't have deploy a lot of capacity for the World Cup this year and doesn't think it will impact how it approaches capacity next summer, according to Esposito. "It's actually very small in the grand scheme of the size that we are," he says. ([email protected])1417 ET - The central bank released its semiannual Monetary Policy Report to Congress today noting that the committee will deliver price stability. "Measured inflation then stepped up further in March as energy prices surged after the start of the Middle East conflict," the report says. Next week, Fed Chairman Kevin Warsh will testify before Congress for his semiannual monetary policy hearings, but he's "unlikely to break new ground in his testimony," according to a note from the economics team at BofA Securities. Some reasons they list are Warsh's opposition to forward guidance and the fact that the task forces haven't fully started. ([email protected])1333 ET - Headline CPI likely fell 0.09% month over month in June due in part to sharp decline in prices at the pump, BofA Securities analysts said in a note ahead of the Labor Department's CPI report next week. However, core inflation should remain elevated at 0.28% month over month, or 2.9% year-over-year, partly because World Cup-related demand is driving up services inflation, they add. "Based on this forecast, we expect core PCE to be slightly firmer than CPI again." ([email protected])1317 ET - Residential-solar companies that have followed a misguided strategy of combining installation and maintenance services are partly responsible for the lack of assistance that owners of rooftop photovoltaic panels face today, says John Berger, the CEO of Otovo, which provides power services for homes and small businesses. Many such installers went bankrupt, leaving their customers without alternatives to fix solar panels and related equipment that are increasingly breaking after a boom of solar adoption during the past decade, Berger says. "Installation is a materially different business than service," so companies shouldn't try to mix them, he says. Focusing exclusively on services, as Otovo does, largely avoids the pitfalls that plagued many U.S. residential-solar companies in recent years, such as rollbacks of government incentives for clean energy, rising cost of capital and supply-chain bottlenecks, he adds. ([email protected]; @lhvgarcia)1157 ET - China may have removed some of the barriers to agricultural trade between itself and the U.S., but the U.S. remains at a disadvantage on its soybean prices when competing with Brazil. "South American soybeans remain 50 to 60 cents below comparable U.S. pricing," says Jim Wiesemeyer of Ag Bull in a note. "Tariff relief, in other words, is necessary but not sufficient to unlock the 25 million metric tons of annual purchases China has promised through 2028." Wiesemeyer adds that the average cost for Brazil to produce a bushel of soybeans is roughly $1.20 per bushel below the U.S. average, which gives it the edge in competition even with the balance between the real and the dollar shifting. CBOT soybeans are up 0.6% in morning trading. ([email protected])1132 ET — The latest Canadian employment data wasn't great but could have been much worse, with job growth sustained in June and roughly in line with expectations, Scotiabank's Derek Holt says. Jobs are neither ripping nor tumbling while the unemployment rate falls to a level close to the OECD's measure of the natural rate of unemployment, he says. "We basically have full employment in Canada within the context of a low-hire and low-fire labor market, where basically anyone who wants a job has one, but growth has been curtailed partly as a reflection of tightening supply through immigration policies." Holt expects the Bank of Canada will look to the jobs trend with next week's policy decision and conclude the labor market is doing okay. ([email protected]; @RobbMStewart)1123 ET - Soft employment growth in Canada has been enough to keep the unemployment rate stable in a 6.5%-7% range for the past two years, despite a substantial slowing in labor supply with new immigration trends, Citi's Veronica Clark says. This range for the jobless rate, while indicating that demand isn't necessarily weakening further, is consistent with a persistently negative output gap, Clark notes. She says the hours-worked metric is moving essentially sideways and corroborates that gross domestic product growth remains soft and is likely still running below potential. "We struggle to see how and why demand would pick up without policy rates more accommodative, especially as markets pricing rate hikes have implicitly tightened policy over the last four months," Clark says. ([email protected]; @RobbMStewart)1111 ET - Minutes from June's European Central Bank meeting indicate policymakers remain concerned about broadening indirect impacts from surging oil prices, Oxford Economics' Mateusz Urban says in a note. But with oil prices and futures falling since the tentative U.S.-Iran ceasefire, council members should now keep rates unchanged at July's meeting, he says. That's also consistent with scant evidence of second-round impacts and benign June inflation print. Statements from President Lagarde and other influential policymakers point to the ECB staying put too, Urban says. "However, we cannot rule out another hike later in the year, especially if the passthrough of the cost shock to core inflation proves stronger than we assume, or if energy prices surge again." ([email protected])1056 ET - Monthly hard and survey-based data available so far for the second quarter suggest German economic momentum held up better than feared, Deutsche Bank Marc Schattenberg and Felicitas Henze say in a note. German manufacturing output, services turnover and retail sales are on a solid footing, as is brighter sentiment data across sectors, they say. "Against this backdrop, our current second-quarter GDP forecast of minus 0.2% on-quarter may prove too pessimistic." New data would point more toward stagnation, which would imply an upside risk to their annual GDP forecast of 0.5%. However, the resurgence of airstrikes in Iran reminds that economic headwinds could intensify again. "We therefore refrain from making an upward revision to our GDP forecast at this stage," the economists say. ([email protected])1026 ET - Japan's efforts to increase investment in domestic assets could have a meaningful impact on the currency, Goldman Sachs analysts write. Finance Minister Satsuki Katayama says the government is considering ways to encourage investors to buy more domestic securities, rather than foreign assets. Goldman Sachs estimates Japan's Government Pension Investment Fund could rotate as much as $80 billion within its current target allocation bands. The analysts, however, doubt the strategy will be efficient in the long run without "a more favorable rate differential." The 10-year Japanese government bond pays 2.76% yield, compared to 4.56% in its U.S. counterpart. The dollar weakens 0.4% against the yen. ([email protected]; @ptrevisani)1010 ET - New supply of euro-denominated credit is projected to slow down in the coming weeks as companies enter the earnings blackout period, Societe Generale's Juan Valencia says in a note. "We expect the new issue market to remain open but we believe volumes will start to slow down." The summer holidays are also expected to result in reduced new issuance, Valencia says. ([email protected])