Market 07/22: Biden ends presidential campaign

Biden halts presidential campaign

Biden has officially announced his plan to halt the campaign with a letter posted on social media X yesterday, along with a promise to speak directly to American voters on television “in the near future”

Biden officially endorses Kamala Harris, the current Vice President, to become the Democratic Party's nominee.

• Note that, according to Federal Election Commission rules, only Kamala Harris has the right to use the funds previously donated to the Biden-Harris campaign

However, with the information only posted on social media X and cabinet members as well as the campaign not notified in advance, and Biden's schedule completely empty for the next 2 days.

US media and Congress are demanding that President Biden go on air to confirm the halt of his campaign.

Questions raised by the media and American people:

• With the Democratic primary race already concluded with Biden winning and 14 million votes, do Party voters have the right to decide who becomes the nominee or must they accept the Party's arrangement?

• If Biden halts the campaign due to health reasons with his current COVID illness, what is the health condition of the current leader of the United States?

• The deadline to change names on ballots in 9 states has passed, including important large states; can the Democratic Party change from Biden to Kamala in time?

Market reaction:

• The market had almost no significant reaction after yesterday's news as this rumor had been widely discussed during the past week.

• Bitcoin plunges when Biden announces but recovers afterward when Biden officially endorses Kamala Harris.

US Secret Service testifies before Congress: Does not take responsibility for Trump assassination attempt

Yesterday's congressional hearing of US Secret Service Director Kim Cheatle before the US Congress provided no additional answers about the world-shocking Trump assassination attempt.

• Kim Cheatle continues to refuse to resign

• The US Secret Service is still investigating the reasons for that day's failure, even though 9 days have passed.

• Anger from both parties, with Alexandria Ocasio-Cortez calling the event and investigation process “unacceptable”

• In particular, Kim Cheatle could not take primary responsibility for the event under her leadership, even saying “did not personally review the plan to protect President Trump”

Verizon: Earnings meet expectations, revenue misses

Q2 earnings report:

• Earnings $1.15/share vs $1.21 year-ago, in line with expectations

• Operating revenue $32.8 billion, below $33.07 expected

• Customer revenue $24.9 billion, below $25.16 billion forecast

• Business revenue $7.3 billion, below $7.35 forecast

• 2024 full-year earnings guidance $4.5 - $4.7/share, in line with prior $4.57 forecast

• Maintains expense guidance $17-$17.5 billion, in line with prior $17.34 forecast

plummets 6% after the above report, however with fairly stable growth, most fears come from the trend of declining consumer demand that could cause revenue to continue declining in the coming time. However, with a dividend yield of 6.82% / year at $39/share price, Verizon overall is a quite attractive stock for long-term investors and those wanting to gradually shift away from industrials.

Other important earnings reports this week:

CrowdStrike continues to face pressure

continues to be sold off from the opening session today with investment banks lowering targets and ratings. However, in the 6th day of sell-off, many investment firms have jumped in to buy the dip, notably with 38,595 shares.

China changes economic direction at the 20th Central Committee meeting

Under recession pressure and 3 crises: Real Estate, Debt and Deflation, China's once-every-5-years Central Committee meeting has outlined long-term direction:"

• Strengthen development and innovate methods of economic supervision and management

• Focus on developing high-tech industries and labor quality

• Expanding the domestic consumer market

Regarding the immediate financial crisis, important changes:

• Delegating more decision-making power to local governments

• Giving localities more authority to regulate the real estate market

• Giving lower-level governments control over more portions of the budget from tax revenues

Overall, regarding long-term development goals, this is the right direction; however, regarding the approach to escaping the immediate crisis, granting more power to provincial governments does not inspire much confidence among investors in capital control, transparency in borrowing, and project management - the 3 major reasons that caused the real estate bubble to form in China. Currently, provincial government bonds in China are among the riskiest bonds in Asia.

Read more from last week's Macroeconomics article:"

Market: Technology recovers after a tense week

US stock market rises again in the morning trading session with SPX successfully defending the 5000 level. Technology stocks lead with the energy sector declining slightly.

After last week's July OpEx, liquidity has not yet returned with extremely thin and unclear options positions. However, SPX 5500 remains an important put wall to determine direction.

VIX generally retreats in the morning, hedge demand does not increase but the available put volume continues to keep IV at quite high levels compared to previous weeks. Much of this hedging is for this week and next with an extremely high number of earnings reports and important macro data, plus the FOMC meeting on the 31st.

On internals, liquidity is quite low from the open, bond yields fell but then rose back, creating some instability in the market. However, looking at internals shows that most investors decided to sit out today's trading session.