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According to the Wall Street Journal: US President Trump submitted the Saudi Arabia nuclear agreement to Congress.August 26th - The Bank of Koreas policy decision this week may not be finalized until the last minute. Slightly more than half of economists expect the central bank to raise interest rates for the second consecutive meeting to maintain policy leadership, given stronger-than-expected economic growth and persistent underlying inflation. Of the 22 economists surveyed, 14 predict the Bank of Korea will raise its benchmark interest rate by 0.25 percentage points to 3% on Thursday, while 8 expect it to keep the rate unchanged. Furthermore, the Bank of Korea will release its latest forecasts, which are expected to support further tightening of monetary policy. Given stronger-than-expected exports and domestic demand, the banks economic growth forecast for 2026 is expected to be significantly revised upward from 2.6% in May. Similarly, the inflation forecast is also likely to be revised upward from 2.7% in May, reflecting rising oil prices, currency depreciation earlier this year, and signs that the semiconductor boom is driving investment and consumption. Of course, the central bank may also cite the recent rebound of the won as a factor to ease the urgency of an immediate rate hike. If the bank keeps rates unchanged, investors are likely to set their expectations for a rate hike in October.On August 26, according to Axios, US Secretary of State Marco Rubio recently told officials from several allied countries that the US is not currently expected to launch a new military strike against Iran. Sources familiar with the matter revealed that the Trump administrations current policy is to "temporarily avoid military action against Iran," instead increasing economic pressure through a US naval blockade and a new round of Treasury sanctions, and pushing as much oil as possible through the Strait of Hormuz into the global energy market. US officials stated that clearing most of the mines from the Strait of Hormuz and the recent increase in oil tankers passing through the southern shipping lanes have "significantly weakened Irans influence in the global energy market." One US official stated, "Iran has lost control of the strait, and now the US controls it." The US believes that the naval blockade is cutting off a vital source of revenue for Iran, and almost no oil tankers have been seen near Kharg Island, Irans main oil export port, in the past two weeks. Rubio stated that the US currently has no plans to resume large-scale military action, but the US retains the option to strike if Iran launches a preemptive attack. Another US official stated that this policy is expected to continue at least until after the midterm elections, at which point new military action may once again become an option.The U.S. Department of Justice stated that Deloitte agreed to pay $21.5 million to resolve allegations of employment discrimination violations.On August 26th, according to South Koreas *Chosun Ilbo*, South Korean DRAM export prices continue to soar, with AI-driven HBM production squeezing the supply of conventional memory. Data shows that from August 1st to 20th, the export price of South Korean DRAM reached $92,183 per kilogram, a 401% year-on-year increase and approximately 12.5 times higher than the low point in January 2023. Goldman Sachs predicts that the DRAM supply gap will widen from 5.0% this year to 5.9% next year, and believes that "HBM required for AI servers and high-capacity server DRAM are absorbing limited production capacity, leading to a further tightening of conventional DRAM supply." TrendForce predicts that by the end of next year, Samsung, SK Hynix, and Micron will account for 30% of total DRAM wafer input for HBM production, but HBM will only account for about 13% of actual DRAM bit supply. Memory manufacturers warn that the AI-driven DRAM and NAND supply shortage may continue beyond 2027. SK Hynix stated that from a supply perspective, 2027 could become "the most severe shortage year in the history of the memory industry." Goldman Sachs predicts that the supply shortage may continue until 2028.

Stocks Boosted by Strong Apple, Amazon Earnings, Nasdaq 100 Ends July 12.5% Higher

Cory Russell

Aug 01, 2022 15:50


Exceptional Apple and Amazon Earnings Boost Attitude

Major US indexes experienced strong gains on earnings optimism despite data released on Friday by the US indicating high inflationary pressures in June and elevated wage growth in Q2. These data led to a small rebuilding of Fed tightening bets. Bulls seeking a test of early-June highs in the upper-4,100s drove the S&P 500 up 1.4 percent to 4,130. The Nasdaq increased by 1.8 percent to reach its highest point since May and almost retested the 13,000 mark.


The S&P 500 had its greatest monthly performance since November 2020 with a gain of 9.1 percent. Meanwhile, the Nasdaq 100 index saw its biggest monthly return since April 2020, rising almost 12 percent in July.


After the business provided a positive outlook, Apple's stock price increased by more than 3.0% above its 200-Day Moving Average and reached its highest level since early May. The world's biggest firm by market capitalization said supply chain hiccups are subsiding and that demand for its iPhones is still high.


Meanwhile, after the e-commerce giant predicted robust Q3 sales despite increasing Prime membership fees, neighboring US internet giant Amazon saw its share price rise over 10% and to its highest level since April. The previous two weeks have seen US equities markets benefit significantly from Q2 earnings. 77.8% of the 279 S&P 500 firms who have released earnings results so far, according to Reuters, have surpassed analyst estimates.


The fact that Fed Chair Jerome Powell was less pessimistic during the Fed policy announcement on Wednesday, as well as data released on Thursday showing that the US was already in a technical recession in the first quarter of 2022, were major positives for stocks this week. Investors interpreted these factors as signs that the Fed would be less likely to raise interest rates in the coming quarters.


Markets Rebuild Slightly A flood of US data dropped on Fed Bets Friday. The closely watched US Employment Cost Index increased 1.3 percent QoQ in Q2, indicating that despite the economy's contraction, the labor market remained strong. The PCE price index, the Fed's favored inflation indicator, increased at its fastest YoY rate since 1982 in June, along with a 1.0 percent MoM jump that was the largest since 2005.


Personal Income and Spending both had somewhat stronger MoM growth in June than anticipated, supporting some hope that the US economy could be able to avoid contracting in Q3. After the big data dump, the money market indicated likelihood of another 75 bps rate rise from the Fed increased somewhat to just under 40% from closer to 30% before.


However, the stock markets seemed to be far more interested in optimistic earnings. Health Care (-0.4%) and Consumer Staples (-0.7%) were the only two of the eleven sectors in the S&P 500 GICS sector performance breakdown to show a loss. With increased oil prices and after Chevron and Exxon Mobil announced record quarterly profits, energy was the best-performing sector, up 4.5 percent. The second greatest performance, Consumer Discretionary, increased by 4.2 percent.

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