A Long Weekend Pause for the Markets

July 3, 2023

4 min read

As we wave farewell to Canada Day and brace ourselves for the Independence Day, the stock and bond markets gear up for an early break. Don’t expect much turmoil today as trading floors take a breather.

Supreme Court Turns Down Biden’s Student Loan Forgiveness Plan

In a significant move, the Supreme Court has struck down President Biden’s ambitious plan to cancel student loan debt with a 6-3 vote. This $430 billion initiative could have been among the costliest executive actions in American history. Morgan Stanley reveals a rather grim picture, with just 29% of about 40 million Americans carrying $1.8 trillion in student loan debt confident about resuming payments without other financial sacrifices. A significant 34% express inability to make payments entirely.

Treasury Secretary Yellen Heads to China Amid Heightened Tensions

U.S. Treasury Secretary Janet Yellen is set to visit China, shortly after Secretary of State Anthony Blinken’s meeting with Chinese President Xi Jinping in Beijing. Yellen’s trip, expected to encompass macroeconomic and financial discourse with senior Chinese officials, comes at a crucial juncture. Amidst the escalating tensions, Yellen’s diplomacy aims to enhance bilateral communication and collaboration.

Inflation Persistence Amid Sluggish Economic Growth

The PCE Price Index, the Fed’s preferred measure of inflation, revealed a 0.1% rise in May, reaching 3.8% YoY, its smallest annual increase since April 2021.

Core inflation, however, remains obstinate at 4.6% YoY, only marginally down from the previous month’s 4.7% reading. Interestingly, “supercore” inflation saw only a 0.23% increase in May – the smallest rise since July 2022.

Goldman Sachs Eyes Exit From Consumer-Lending Business

In a surprising shift, Goldman Sachs is looking to move out of the consumer-lending business. After recently initiating (and even extending) a partnership with Apple to offer consumer savings accounts, Goldman Sachs is now actively seeking to transfer this venture—and similar ones—to American Express. If successful, this will effectively mark the end of Goldman’s excursion into consumer finance, except for its flagship product, Marcus.

Tesla’s Record Breaking Quarter Amid EV Boom

Tesla has unveiled its Q2 vehicle production and deliveries report, with 479,700 and 466,140 electric vehicles produced and delivered respectively. Not only does the latter set a new record for quarterly deliveries, but it also surpassed analysts’ expectations of 448,350 vehicles. This milestone signifies Tesla’s fifth consecutive quarter of production exceeding deliveries.

H1 2023: The Winners and Losers in the Market

The first half of the year presented a mixed bag of sectoral performances. Technology (+40%), Communication Services (+36%), and Consumer Discretionary (+32%) emerged as winners, while Utilities (-6%), Energy (-5%), and Healthcare (-2%) lagged behind. While most sectors seem relatively cheap compared to their long-term medians, Tech and Discretionary continue to defy this trend.

OPEC+ Allies Extend Oil Supply Cuts Amid Global Energy Dynamics

In a move that could impact global oil markets, Saudi Arabia and Russia, two OPEC+ allies, have chosen to extend their oil supply cuts. Saudi Arabia’s 1 million bpd reduction is set to last through at least August, while Russia has committed to a voluntary 500k bpd cut in August.

US Oil Rig Count on a Downward Spiral

The number of active oil rigs in the US has seen a decline for eight consecutive weeks. The total rig count dropped to 682 last week, 76 fewer than the same time last year and a whopping 401 less than the pre-pandemic total.