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WEEKLY ROUND-UP Thru July 21st 2023; “Pause for the Cause”

Hey folks we are approaching the middle of the summer months and as expected, volume and liquidity are both down and price action seem to be taking a pause in its upward momentum for now..Get my take on the current markets in this Week’s Round-Up

Weekly Sound Bites:

US indexes ended up slightly on hopes that the tight labor market and moderating inflation would help the economy avoid a hard landing. Tech-heavy Nasdaq, however, suffered a modest pullback.

Retail sales ticked up 0.2% sequentially in June, a slower pace than the 0.6% consensus estimate reported by FactSet while new filings for unemployment benefits fell for a second consecutive week and by more than economists had expected, with initial claims reaching their lowest level since May. The Conference Board’s Leading Economic Index, a forward-looking gauge of U.S. economic activity, decreased for a 15th consecutive month in June—the longest string of sequential declines since 2007–2008. The decrease appeared to stem from weakness in consumer sentiment and new orders as well as a slowdown in housing construction.

Meanwhile, in the UK we saw annual CPI growth slowed to 7.9% in June from 8.7% in May due to a decline in gasoline prices. The magnitude of the slowdown in inflation exceeded a consensus estimate and matched the Bank of England’s (BoE) forecast. And across the eurozone the economy avoided a recession in the first quarter of this year, with revised figures showing it remained unchanged instead of contracting as previously estimated. GDP was flat in the first three months of the year, up from a prior estimate of a 0.1% contraction.

In Japan, the Cabinet Office’s midyear economic forecast updates showed that Japan’s government revised down its forecast for economic growth in the fiscal year that began April 1 to 1.3% from 1.5%. It raised its total consumer price inflation forecast for the 2023 fiscal year to 2.6% from a previously forecast 1.7%. Inflation remains well above the BoJ’s 2% target—in June, Japan’s core consumer price index rose 3.3% year on year, in line with expectations and a slight uptick from the prior month’s 3.2% increase. Having patiently continued ultra-loose monetary policy under YCC, the BoJ will scrutinize at each policy meeting the progress made in achieving its inflation target.

Chinese equities retreated as the latest economic data pointed to faltering growth. On a year-over-year basis, China’s GDP expanded 6.3% in Q2—below expectations but faster than the 4.5% growth rate recorded in Q1. On a quarterly basis, the economy grew 0.8%, down from the first quarter’s 2.2% expansion. The government pledged to improve conditions for private businesses to boost corporate confidence amid the faltering recovery, according to a statement released Wednesday. China’s real estate sector has started showing signs of weakness amid poor consumer sentiment and persistent deflationary pressures.

Enjoy this week’s take on the current markets;

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