(INVESTORS WILL BE WATCHING CLOSELY AS THE MARKET NAVIGATES AN EVENTFUL WEEK)
July 29, 2024
Hello everyone,
Week ahead calendar
Monday, July 29, 2024
10:30 a.m. Dallas Fed Index (July)
7:30 p.m. Japan Unemployment Rate
Previous: 2.6%
Forecast: 2.6%
Earnings: On Semiconductor, McDonalds
Tuesday, July 30, 2024
9:00 a.m. FHFA Home Price Index (May)
9:00 a.m. S&P/Case Shiller Home Price Indices (May)
10:00 a.m. Consumer Confidence (July)
10 a.m. JOLTS Job Openings (June)
9:30 p.m. Australia Inflation Rate
Previous: 3.6%
Forecast: 3.8%
Earnings: Advanced Micro Devices, Live Nation Entertainment, Public Storage, Electronic Arts, Starbucks, Match Group, Microsoft, First Solar, Extra Space Storage, Caesars Entertainment, Corning, Howmet Aerospace, Procter & Gamble, Pfizer, Merck & Co, Stanley Black & Decker, PayPal.
Wednesday, July 31, 2024
8:15 a.m. ADP Employment Survey (July)
8:30 a.m. Employment Cost Index (ECI) Civilian Workers (Q2)
9:45 a.m. Chicago PMI (July)
10:00 a.m. Pending Home Sales Index (June)
2:00 p.m. FOMC Meeting
Previous: 5.50%
Forecast: 5.50%
2:00 p.m. Fed Funds Target Upper Bound
Earnings: MGM Resorts International Allstate, Albemarle, Lam Research, eBay, Qualcomm, Western Digital, Meta Platforms, Etsy, Norwegian Cruise Line Holdings, Hess, Boeing, T-Mobile, Marriott International, GE Healthcare Technologies, Generac Holdings, Kraft Heinz, Mastercard, Ingersoll Rand.
Thursday, Aug 1, 2024
8:30 a.m. Continuing Jobless Claims (07/20)
8:30 a.m. Initial Claims (07/27)
8:30 a.m. Unit Labor Costs preliminary (Q2)
8:30 a.m. Productivity SAAR preliminary (Q2)
9:45 a.m. Markit PMI Manufacturing (July)
10 a.m. Construction Spending (June)
10 a.m. ISM Manufacturing (July)
7:00 a.m. UK Rate Decision
Previous: 5.25%
Forecast: 5.00%
Earnings: Apple, Clorox, Intel, Amazon.com, Booking Holdings, Motorola Solutions, Microchip Technology, Kellanova, Hershey, Moderna, Air Products and Chemicals.
Friday, Aug 2, 2024
8:30 a.m. Jobs Report (July)
Previous: 206k
Forecast 185k
10:00 a.m. Durable Orders (June)
10:00 a.m. Factory Orders (June)
Earnings: Exxon Mobil, Chevron
This week the global interest rate landscape could shift significantly as the Bank of Japan, FOMC, and Bank of England convene to determine their respective rates. The BoE is anticipated to reduce rates by 25 basis points, marking its first rate cut since 2020. Conversely, the Bank of Japan might increase rates from 0% in an effort to bolster the yen, following suspected currency intervention last week which resulted in USD/JPY dropping 2.3% - its largest weekly decline since April.
After the market volatility last week, earnings results may well sway an already sensitive market into a chop and churn behavior pattern, especially with the backdrop of the Fed interest rate decision on Wednesday, and the Jobs Report on Friday. For the week ahead, 171 S&P500 companies, along with 10 Dow members, report results.
The market is expecting no change in rates on Wednesday from the FOMC, but it may clarify whether rate cuts are slated for September, aligning with trader expectations. The Jobs Report may show unemployment figures ticking up.
Amazon.com Inc. will be one to watch. It can show investors both sides of the coin, so to speak. Amazon’s e-commerce network can offer details on the state of online spending for both consumers and businesses. And its other segments provide a look into AI and cloud competition and entertainment.
Also on my radar is Starbucks. Earnings results will show the spending habits of consumers and any shifts in behavior toward discretionary expenses.
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The Paris Olympics has begun. Spectators and television audiences saw a rain-soaked opening ceremony. (Many spectators at the opening ceremony complained they couldn’t see anything, and so chose to go home). Australia has been successful in many events, most notably swimming and most recently in the kayak singles final where Jess Fox won gold.
MARKET UPDATE
S&P 500
Since recording a Bearish outside reversal week in mid-July, the S&P 500 has been undergoing a significant corrective decline. From an Elliott Wave perspective, the market is interpreted to have completed its extended Wave 3/ advance to signal the start of a broad Wave 4/ correction. Support should be found between 5, 265 and 4,954. Only a sustained break below key 4,954 support (the prior 4th wave low) would instead signal that the market is correcting its entire uptrend from 3,492 – 5,670, to then risk a deeper sell-off back toward the late 4,500’s.
GOLD
Gold is still completing an irregular corrective wave structure. Resistance = around $2400/$2440. There is a risk of a deeper correction below $2365/$2350 support toward the $2290/$2275 support area and even $2225/$2200, before exhaustion. If that move eventuates scale into GLD to build your holdings here. It may be a similar story with silver. If silver follows a similar pattern, scale into SLV to build your position here as well.
BITCOIN
Strong resistance in the low $70k’s is likely to contain strength in the short term, which may prompt a correction back to the low $60s/high $50s in the near term. If this eventuates, scale into Bitcoin on this corrective move.
WHAT IS…
Temporal Discounting
…is the common experience of valuing more immediate rewards over those in the future. In Behavioural economics and neuroeconomics, temporal discounting, or hyperbolic discounting can help us appreciate how our financial decisions are not always rational. Understanding the phenomenon, also known as time discounting or intertemporal choice, can help us make better decisions.
We all know that sometimes we make poor financial decisions, and even unhealthy lifestyle choices, but understanding temporal discounting helps us not only gain greater awareness of our financial and lifestyle choices but also develop insight into the extent it affects our emotional well-being when we opt for short-term gratification, which can ultimately lead to regret or guilt later.
At its core, temporal discounting is about how we perceive the value of time.
Let’s look at an example here. Imagine you have the choice of receiving $100 today or $110 in a month. Many people are going to take the $100 today even though the future number is greater. Many people perceive the $10 as less valuable because it is delayed or seen as so far away. Temporal discounting relates to how we value future rewards or punishments.
Understanding hyperbolic discounting sheds light on why we make illogical or self-defeating choices. Whether it’s skipping a workout, wasting money on a rash purchase, or opting for fast food over a healthy meal, the appeal of immediate gratification frequently overshadows rational decision-making.
WE OVERVALUE IMMEDIATE REWARDS AT THE EXPENSE OF LONG-TERM GOALS
Delaying Gratification is Challenging
The tendency to focus on the now often puts an individual/family at risk of not achieving important long-term goals. Why are people behind on saving for retirement?
The following data shows results from a Franklin Templeton Retirement Strategies and Expectations Survey conducted in early 2022. The sample size was 2,029 adults 40 years of age and older and weighted by age, gender, geographic region, race, and education.
The survey also showed that many of those nearing retirement are ill-prepared. As illustrated in the chart here, 37% of those aged 60-69 have between $0-$100K saved for retirement, and 35% have nothing saved at all.
QI CORNER
AUSTRALIAN CORNER
40-50-year mortgages
Lower deposit requirements
These are a couple of the notions being tossed about by big four bank Australian CEOs to help fix the nation’s housing crisis.
Commonwealth Bank group executive retail banking services Angus Sullivan said, “improving housing affordability is a complex issue and there’s no silver bullet, but product innovation is key, as are partnerships between the public and private sectors.”
SOMETHING TO THINK ABOUT
GOOD VIBES CORNER
Cheers,
Jacquie