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JULY 21, 2023

NOT MUCH IMPACT

Both Bitcoin and Ether, along with other top non-stablecoin cryptocurrencies, have experienced declines in their prices over the last 24 hours, and they remain below crucial support levels, despite the Securities and Exchange Commission (SEC) accepting eight spot Bitcoin exchange-traded fund (ETF) applications for review. As of 8:00 AM CST, Bitcoin’s value stayed close to $29,875.00, slightly below the $30,000 mark, while Ether was at $1,894.62, with a 0.67% decline over the past week. Although the SEC’s acceptance of the ETF applications from various firms was acknowledged, it did not boost confidence among crypto investors.

PROFIT GROWTH

American Express reported a successful second quarter with increased profit and revenue, nevertheless, the company’s stock slipped before the market opened due to additional funds being set aside for potential payment defaults. The company surpassed expectations by earning $2.89 per share, higher than the expected $2.80. In addition, although revenue fell short of expectations at $15.05 billion instead of the projected $15.42 billion, the increase was driven by higher loan volumes and greater spending by cardholders. However, not all results were positive as provisions for credit losses totaled $1.2 billion – a significant rise from the previous year’s $410 million, which means that the company had to set aside a much larger amount of money to cover potential defaults on payments. Following these mixed results, American Express still maintained its full-year forecast for earnings and revenue growth.

RECESSION PREDICTIONS SHIFT

Some economists who initially predicted a U.S. recession are now uncertain as inflation decreases and the economy remains resilient. Deutsche Bank Vice Chair of Research, Peter Hooper, Fannie Mae chief economist, Doug Duncan, and Nomura Securities International senior economist, Aichi Amemiya, believe that a recession is still possible but acknowledge that the outcome is becoming more uncertain. Factors such as stronger-than-expected housing starts, home prices, and new automobile sales are providing support to the economy. The positive sentiment was reflected in Bloomberg’s July survey of economists, where GDP estimates for the second and third quarters were revised higher, however, economists still believe there is a 60% chance of a recession within the next 12 months. Paradoxically, the Federal Reserve’s rate-hiking campaign is credited by Hooper for actually reducing the risk of a recession. This is because it has successfully re-anchored inflation expectations. As a result, economists in the survey are becoming more optimistic as inflation cools down, which is leading to a decrease in their expectations for rate cuts from the Fed in the coming year.

CASH PEAK NEARS

Bank of America global research has stated that the trend of investors moving their money to cash, which has been a dominant theme this year, may be reaching its peak. With $10 billion dollars of outflows from cash in the past two weeks, this could be seen as a turning point after a significant amount of inflows since the failure of the U.S. Silicon Valley Bank in March. This rush for cash has been fueled by central banks raising interest rates, making cash-like money market funds more appealing and reducing investor demand for stocks. However, recent excitement about artificial intelligence has caused a boom in tech stocks, and there are signs of easing inflation in both the U.S. and Europe, suggesting that the end of rate hikes may be in sight. Major market indexes, such as the the S&P 500 is currently trading at its highest level in 15 months, despite the recent loss it experienced in the last session. In addition, Bank of America’s “bull bear indicator,” which measures market sentiment, has risen to its most optimistic level this year.

PRE-OWNED HOME SALES FELL

Sales of pre-owned homes declined by 3.3% in June compared to May, with a total of 4.16 million units sold, as reported by the National Association of Realtors. This represents an 18.9% drop in sales from the previous year and the slowest pace for June since 2009. The main factor behind this decline is not a lack of demand but rather a significant shortage of available homes. At the end of June, there were only 1.08 million homes for sale, a 13.6% decrease from the previous year. This shortage is causing prices to rise, with the median price of an existing home sold in June reaching $410,200, the second-highest ever recorded. Despite the decline in sales, the higher-end market segment seems to be recovering. However, first-time buyers are facing more challenges, with their share of June sales dropping to 26%, the lowest since tracking began. Overall, the existing home market is unlikely to see a rebound soon, but sales of newly built homes are enjoying more positive trends.

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