Market 06/20: Construction sector pessimistic in May data

Banking, Real Estate, and Bad Debt Crisis 2024 Officially Begins

Banking, Real Estate, and Bad Debt Crisis in the US Begins After 5 banks with over $548 billion collapsed in 2023, the entire market still always believed that the banking sector crisis had officially ended. However, the latest developments show that this crisis will become more severe by the end of this year. In the latest video, Steve will answer 3 questions:

• Will the historical crisis pattern continue?

• What is the serious reason for this crisis?

• Will 2008 repeat?

Pessimistic sentiment in construction sector: Housing starts and building permits at lowest since 2020

• May housing starts decline -5.5% MoM (estimate +0.7%, previous +4.1%).

• Building permits also drop sharply -3.8% MoM (estimate +0.7%, previous 3%).

• These 2 data series are continuously declining to the lowest level since 2020.

• Multifamily building permits falling to the lowest since October 2018:

  • Single-family units decline -2.9% MoM.

  • Multi-family units continue to plunge deeply -6.1% MoM.

• June builder confidence falls to 43 (estimate 46 | previous month 45).

• This pessimistic sentiment comes from the market lowering expectations for Fed rate cuts this year: => Mortgage rates will remain high for longer,

  => Homeownership demand is likely to continue declining.

Philadelphia Fed manufacturing index falls: High input prices, weak employment

• Philly Fed manufacturing index June: +1.3 (weaker than expected: +5 & previous +4.5).

• Details:

  • New orders: -2.2.

  • Shipments: -7.2.

  • Input prices: surge +22.5.

  • Working hours: +4.8.

  • Employment: -2.5.

• Outlook input prices 6-month ahead highest since June 2022.

• Meanwhile, the 6-month ahead outlook for freight transport plunged to the lowest level since November 2008.

→ Possible supply chain inflationary pressure due to gradually rising freight rates is present.

Labor market: Initial jobless claims last week higher than expected - Continued claims continue to rise slightly.

• Initial jobless claims last week: 238,000 (higher than estimate 235k | prior week 243k — revised up from 242k).

• Continued claims rose to 1.828 million (> estimate 1.81 million, prior 1.813 million) - near the highest since late 2021.

  

• 4-week moving average of initial jobless claims rose to 232,750 - highest since September.

• Jobless claims in California fell sharply again after last week's sharp rise.

• Weekly data is highly volatile — hard to reflect the trend.

Auction of $21 billion 5Y inflation-linked Treasury (TIPS)

FYI: The principal amount when purchasing TIPS (principle) will be adjusted upward if inflation and downward if deflation.

• TIPS interest rate remains fixed but coupon payments will be adjusted according to inflation conditions

• 5Y TIPS are auctioned only 4 times a year: in months 4, 6, 10, 12.

• High Yield: 2.050% (prior session 2024/04: 2.242%)

  • Bid-to-cover ratio required High Yield level: 87.44% (previous session: 41.87%)

• Bid-to-Cover Ratio: 2.52 (higher than previous session: 2.58)

  

Crypto market: VanEck Bitcoin ETF launches on Australian stock exchange

1. VanEck Spot Bitcoin ETF debuts on Australia's largest stock exchange.

2. MicroStrategy continues buying more 11,931 BTC (~786 million USD), increasing total holdings to 226,331 BTC (~8.33 billion USD).

Accenture ER: Lowers revenue forecast due to macroeconomic pressures

• Revenue: 16.47 billion USD (expected 16.60 billion USD)

• EPS: 3.13 USD (expected 3.17 USD)

Forecast:

• Q4 Revenue: 16.35 billion USD (expected 16.56 billion USD)

• Full-year EPS: 11.93 USD (expected 12.09 USD).

Other news: BOE holds rates steady - SNB cuts rates for 2nd time

1. Update on interest rate decisions by major central banks:

• Bank of England (BOE) holds interest rate steady 5.25% — despite inflation in the country cooling (2.8% YoY)

• Meanwhile, Swiss National Bank (SNB) cuts rates for 2nd time to 1.25%:

2. Dell and Super Micro Computer will supply server racks for Elon Musk's xAI supercomputer.

• Super Micro Compute and Nvidia up more than 4% in overnight trading (though pulled back in today's session).

3. Nvidia just surpassed Microsoft to become the world's largest market cap company.

4. US Q1 current account balance deficit -237.6 billion USD, higher than expected — but this data did not cause much market volatility.

5. There will be 5.1 trillion USD options expiring tomorrow (06/21).

   • The total notional value of options on individual stocks reached a record 870 billion USD - the largest ever.

6. Hacker group IntelBroker is selling stolen internal data from AMD on BreachForums —incident from yesterday— AMD is continuing to investigate.

   • However, today AMD stated that no critically important data was stolen.

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