Bulls are hoping strong earnings from Amazon and Apple can help reignite the rally but worry that a too-hot of a jobs report Report is due out before markets open this morning with Wall Street insiders expecting a gain of +200,000 new jobs.

More importantly, bulls are looking for a decline in average hourly wages. The tight labor market, and in particularly rising wages, seems to be the Federal Reserve's key target in its inflation battle.

The Fed fears that persistent wage growth could create a "wage-price" spiral, in which higher wages cause companies to raise prices and higher prices lead to employees asking for higher wages, and so on. Bears warn that upwardly-negotiated contracts during this summer's labor strikes haven't even been felt yet. Some very large unions, including UPS and the United Autoworkers, stand to win big raises for their members.

There are smaller strikes and union deals happening all across the country and labor so far seems to have the upper hand. Companies will likely try to pass those higher labor costs on to consumers, in turn making the Fed's job that much tougher.

A key concern for investors is just how much longer companies can preserve profits by simply raising prices. Kellogg's yesterday was the latest in a string of consumer goods companies this earnings season to report higher sales value but falling sales volume, an indication that consumers may be starting to revolt against more than two years of relentless price increases.

It will become an even tougher strategy going forward if the disinflation trend continues to hold. Tech companies have been ahead of the curve with their cost-cutting measures and those efforts seem to have paid off in Q2 earnings. Amazon, which has undergone the largest layoffs in its history, yesterday reported a huge earnings beat of 65 cent a share versus an expected 35 cents.

The company is also forecasting double-digit growth in Q3. Apple's earnings and sales topped expectations but analysts didn't set a very high bar. More importantly to investors, Apple confirmed it was "investing heavily" in artificial intelligence. Earnings today are due from Berkshire Hathaway and Dominion Energy.

The earnings calendar is packed again next week, though most of the big "headline" names have already reported. Highlights include BioNTech, KKR, Lucid, Palantir, and Tyson Foods on Monday; Barrick Gold, Duke Energy, Eli Lilly, Rivian, UPS, Warner Music, and Zoetis on Tuesday; Disney and Roblox on Wednesday; and Dillard's and US Foods on Thursday.

On the data front, the July Consumer Price Index on Thursday is the main event. Investors will also be digesting Consumer Credit on Monday; Wholesale Inventories and the US Trade Balance on Tuesday; and the Producer Price Index on Friday.

For full disclosure, Zoetis and Disney are now a couple of my top holdings so I will be paying close attention.

Amazon’s Online Advertising Brought in Over +$10 Billion! Amazon’s online advertising business is getting bigger as the slumping digital ad market shows signs of improvement. The online retail giant’s ad business brought in $10.68 billion in sales in the second quarter, which was a +22% jump from the previous year during the same period, the company said while reporting its latest financial results. Amazon’s overall sales grew +11% year over year to $134.4 billion in the second quarter. Amazon’s online advertising has developed into a lucrative business for the online retailer, representing about +7.3% of the worldwide digital ad market, according to Insider Intelligence. Alphabet and Meta are still the leading digital advertising companies, holding 28.8% and 20.5% of the global market, the research firm noted Source CNBC

How Many Americans are Without Healthcare and Uninsured? Believe it or not, the uninsured rate hit an all-time low in early 2023 with just 7.7% of Americans thought to be without health coverage. In the first quarter of 2022, there were approximately 23.4 million Americans ages 18-64 without health insurance coverage, and the number fell to 22 million in the corresponding period this year, per NCHS data. Source Axios

Russia's Crude Exports Slump Ahead of Even Deeper Cuts: Russian seaborne crude exports fell for a second consecutive month in July to fall below 3 million barrels per day (b/d) for the first time this year while oil product exports held steady as domestic refineries emerged from the maintenance season, tanker tracking data showed. Russia-origin seaborne crude shipments averaged 2.96 million b/d in July, a -15% fall on the month to the lowest since December and almost -890,000 b/d below the post-war high of 3.85 million b/d seen in May. The latest export fall puts July’s total slightly below average pre-war levels of 3.1 million b/d. Almost all the fall in Russian crude exports was seen to China where tanker shipments shrank by more than -400,000 b/d, the data showed. Shipments to India, currently Russia’s biggest oil buyer, were little changed at 1.56 million b/d, while ship-to-ship transfers off Greece almost dried up in July. The Russian administration has announced that exports in August will be reduced by -500,000 barrels per day to support oil prices. It remains to be seen whether the announced reductions will be in addition to the July reduction. Despite the decrease in Russian export volumes, an increase in Iraqi and Brazilian exports meant that global crude oil export volumes overall increased +3% m/m in July. Source Shipping news

Mortgage Rates Pushing Back Up To 7%: Mortgage rates were back to near 7% this week—bad news for home buyers contending with both higher rates and stronger prices. measure of the average 30-year fixed-rate mortgage was 6.9% this week, up 0.09 percentage point from the week prior and the highest such rate since mid-July. Freddie Mac’s measure last rose above 7% in November 2022. All else equal, the buyer of a $400,000 home would owe just under $400 more a month at this week’s rate compared with the same week in 2022, when the average 30-year fixed rate was 4.99%. “The combination of upbeat economic data and the U.S. government credit rating downgrade caused mortgage rates to rise this week,” Freddie Mac Chief Economist Sam Khater said in a statement. “Despite higher rates and lower purchase demand, home prices have increased due to very low unsold inventory.” Demand for home purchase loans has pulled back for three straight weeks, a Mortgage Bankers Association index gauging purchase loan application volume shows. The index fell last week to a level only +6% higher than its record low. Source Barrons

Global Shipping Costs Creep Higher After 16-Month Freefall: Spot rates for shipping containers jumped by the most in more than two years, a sign that a 16-month slump in ocean-freight costs that helped ease the sting of goods inflation is over. The Drewry World Container Index composite increased 11.8% to $1,761 for a 40-foot container, the fourth straight advance and biggest week-on-week percentage gain since June 2021. The composite — which reflects short-term rates across eight trade routes connecting Asia, Europe and the US — had fallen in 15 of the 16 months through June. The costs for shipping from Shanghai to Los Angeles reached $2,322 per 40-foot container unit, an +11.3% gain from the previous week and fifth straight increase, according to Drewry. Shipping rates jumped tenfold to record highs during the height of the pandemic as consumers loaded up on household items and Covid-19 led to clogged logistics networks. The costs to move containers have since returned to levels reached before the health crisis, weighed down recently by bloated inventories and subdued consumer spending. Source Bloomberg

‘Created By AI’ Warning Labels Are Coming To Social Media: This week it was reported that Meta-owned Instagram could soon be adding a notice that would identify when artificial intelligence has played a role in creating content for the platform. This was reportedly first discovered by app researcher Alessandro Paluzzi, who shared a screenshot of a page in the Instagram app that noted "the creator or Meta said that this content was created or edited by AI." This discovery of the AI warning label comes shortly after Meta, along with other major AI players including Google, Microsoft and OpenAI, made commitments to the White House around the responsible development of AI. These labels could be crucial as so much content could be generated by AI but it is getting increasingly difficult to know when the technology played a role. Source Forbes

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