Stock indexes remain under pressure as the rotation away from tech weighs on the wider market. Wall Street is also trying to digest headlines coming out of the Republican National Convention and the current White house. Some are worried that the Trump-Vance ticket might take too strong of an antitrust stance, and that the government on both sides might take bigger swings at breaking up "big tech," as well as more protectionist policies being proposed by both political parties that could impact international trade and the bottom lines’ of multinational companies.

Bottom line, everyone trying to one-up each other during the campaign may add some uncertainties on Wall Street that could supercharge volatility as we get closer to November election. It also worth noting, headlines and rumors out of Washington DC, are saying that President Biden could make an announcement in the next few days that he will be stepping out of the race as fundraising and poll numbers continue to slump. The most likely to step in will be current VP Harris. Her possible running mate is thought to be one of the following: Arizona Senator, Mark Kelly; Kentucky Governor, Andy Beshear; North Carolina Governor, Roy Cooper. California Governor, Gavin Newsome and Michigan Governor, Gretchen Whitmer have made comments that they have no interest in serving as Harris's VP.

It will be interesting to see what plays out politically over the next couple of weeks.  

Bulls are really wanting to get the focus back to Q2 2024 earnings season where results so far have been mostly positive. Bulls are pointing to better-than-expected results from Taiwan Semiconductor Manufacturing Company (TSMC) yesterday that they believe reconfirms the robust demand for AI. TSM’s revenue climbed by more than +30% while sales of its high-performance computing (HPC) chips, used in AI technologies, were up +28%.

The company also raised its Q3 2024 guidance noting that demand has been very strong and that the company may struggle with “very, very tight supplies” through at least 2025.

Some bears are noting that TSMC executives also indicated that price increases are coming for its customers and they aren’t the only critical supplier of AI hardware to say that. Meaning the price of gaining AI capabilities may be set to get even more expensive.

Keep in mind, Wall Street has been feeling uneasy about the massive amount of money that companies are budgeting for their AI plans and whether and when those investments are going to pay off. Microsoft, Alphabet, Meta, and Amazon are set to shell out over $1 trillion on AI investments in coming years, according to Goldman analysts.

Earnings highlights today include American Express, Fifth Third Bancorp, Halliburton, Schlumberger, and The Travelers Companies.

Looking to next week, Alphabet and Tesla report on Tuesday, giving investors their first look at results from the so-called “Magnificent Seven” (Google-parent Alphabet, Amazon, Apple, Facebook-parent Meta Platforms, Microsoft, Nvidia, and Tesla).

Bulls are hoping solid results can help stop the bleeding and restore investor enthusiasm. The bulk of big tech results will roll out the following week, including four other members of the Mag 7 - Microsoft 7/30, Meta 7/31, and Apple and Amazon on 8/1. Nvidia’s results aren’t out until the end of August on 8/28. Other earnings highlights next week include Chubb, Lockheed Martin, Nucor, NXP Semiconductors, Ryanair, Truist Financial, and Verizon on Monday; Boston Scientific, Canadian National Railway, Capital One Financial, Coca-Cola, Danaher, FreeportMcMoRan, GE Aerospace, General Motors, KimberlyClark, SherwinWilliams, Texas Instruments, UPS, and Visa on Tuesday; AT&T, Boston Scientific, Carlisle Companies, Chipotle, Ford Motor, IBM, Invitation Home, KLA, NextEraEnergy, O'Reilly Automotive, and Thermo Fisher Scientific on Wednesday; AbbVie, AstraZeneca, Carrier Global, Dow, Honeywell, Keurig Dr Pepper,  Norfolk Southern, Northrop Grumman, PG&E, Royal Caribbean, Sanofi, Total Energies, Tractor Supply, Unilever, Union Pacific, and Valero Energy on Thursday; and 3M, ColgatePalmolive, and T. Rowe Price on Friday.

Turning to economic data, the big highlight next week will be the June PCE Prices Index on Friday. Existing Home Sales are out on Tuesday, followed by New Home Sales on Wednesday.

It feels like the political headlines are already starting to heat up and we are still over +100 days from the early-November election. ?L?ooking ahead and past the upcoming wave of earnings, I'm interested to see if any of the "uncertainty" surrounding US politics will eventually cause the bulls on Wall Street to pause.

Typically political headlines aren't all that sticky and don't play that big of a hand in influencing Wall Street, but tensions on both sides seem extreme enough this time around that there could be some spillover. 

Mortgage Rates Moving Lower: Freddie Mac reports the 30-year fixed-rate mortgage has dropped to its lowest since mid-March, now averaging around 6.77%, about the same level it was at a year ago before jumping higher. Most inside the mortgage business say you can shop around and get a 30-year fixed rate mortgage for under 6.5% with good credit. They are saying you can get a 15-year fixed for around 5.95% or in some cases even a bit better. 

Goldman Says Don't Buy the Summer Dip:  Given earnings season has just begun as summer vacations are starting to beckon, the market may struggle to lure fresh money to push it higher. Looking for bargains right now is not the way to go, says our call of the day from Goldman Sachs’ tactical strategist Scott Rubner, who offers seasonal caution. He notes the S&P 500 hit 38 all-time highs this year, on pace for the second-most closing highs in 100 years. The pain trade is no longer higher from here. I am not buying the dip, Rubner told clients in a note. Rubner backs up his view with historical factoids showing that July 17 typically marks the end of summer party for the S&P 500, dating back to 1928. In other words, returns get tougher from here. He notes the first 15 days of July marked the best two-week stretch for the S&P 500 since 1928. 5 stocks are up 41%, and the bar for those stocks heading into earnings is remarkably high. And by high, I mean they need to be great, he says. Rubner also tosses in other factoids, such as, If you allocate $1 into the S&P 500 ETF, 29 cents goes into the top 5 stocks, a new record.  Source MarketWatch

Private Equity’s Dry-Powder Mountain Reaches Record Height: The mountain of dry powder — money that investors have committed to private equity and venture capital funds — has set a new record high, as firms anticipate that deal markets will continue improving. Since December 2023, private equity and venture capital funds have added $49.44 billion to their cash reserves, nearly twice as much as they did during the previous 12-month period, bringing the total to more than $2.62 trillion, according to S&P Global Market Intelligence. To some observers, it is an astonishing sum of ready money considering how little there was two decades ago. In 2000, there was just $157 billion of dry powder. Since reaching a then-record of $1 trillion in 2015, the total has steadily grown every year. The 25 firms with the largest war chests collectively have $556.19 billion of uncommitted capital, more than 21 percent of all dry powder globally, according to S&P Global Market Intelligence. Topping the list of managers are KKR (which has had a celebratory five-years ) and Apollo Global Management, which each have more than $40 billion in dry powder. Ten others have at least $20 billion and the rest have at least $12 billion. Source Institutional Investor

Inflation Bypassed 401(k) Fees: The fees Americans are paying to manage the money in their 401(k) accounts have fallen dramatically this century, per a new report from the Investment Company Institute. The billions of dollars saved in management fees are instead remaining in the market and compounding in savers' accounts over decades. Two-thirds of the money in 401(k) accounts is invested in mutual funds — about $4.8 trillion, as of the end of 2023. With fees at current levels, mutual fund companies are collecting more than $15 billion per year for managing the money in 401(k) accounts. Every basis point (one-hundredth of a percentage point) that fees come down represents a savings of about half a billion dollars per year. Employees picking out funds generally choose the options with the lowest fees, while savers who have been part of a plan for many years are more likely to stick with whichever funds they originally chose. As a result, fees naturally tend to decline over time as older savers withdraw their funds and newer savers enjoy lower costs. The larger the 401(k) plan, the lower the fees, in general.  Source Axios

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Why End of Mom-and-Pop Landlords: Real-estate insiders often divide owners of single-family rental homes into two groups. There are the big guys and then a whole lot of little guys, or mom-and-pops, who own the vast majority of single-family rentals. The past few years have solidified single-family rental homes as genuine moneymaking enterprises, not just ho-hum nest eggs. Meanwhile, a whole ecosystem of startups has sprung up to meet the every need of mom-and-pop landlords, from basic stuff like tenant screening to the minutiae of air-filter delivery. A steady stream of rental data and an onslaught of new property-management services have made amateur landlords savvier than ever. And that's to say nothing of the changing of the guard as baby boomers age out of their property-owning days, which leaves millennials and Gen Zers to take on the mantle. In other words, your kindly mom-and-pop landlord is about to get a lot more cutthroat.  Source Business Insider

Jet Shortages, Supply Chain Stress to Dominate Aviation Summit: Aviation leaders gathering in the UK next week have a shot at addressing some of the lingering issues hanging over the industry — from plane production woes at Boeing Co. and Airbus SE that are causing huge order backlogs, to aging fleets that are making it increasingly hard to cut flight emissions. The Farnborough International Airshow, which kicks off July 22, is typically a platform for planemakers to rack up multibillion-dollar deals. But two years on from the pandemic, there’s mounting frustration among airline executives over lengthy waits for new jets, supply chain breakdowns and a lack of spare parts. Constraints on the factory floor are more than a headache for two major planemakers and their airline customers. The lack of capacity could impact passengers too, translating into fewer flights and routes, and higher fares. People are also flying on older planes for longer. At the same time, Airbus and Boeing continue to take on new orders as some carriers bet big on air travel demand into the next decade, meaning order books are ballooning even as production remains sluggish. Source Bloomberg

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