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Tuesday, August 20

Some of the largest macro moves in the market today include: Gold +0.9%. Bitcoin +2.1%. Some of the largest moves among US mega-cap stocks include: Eli Lilly and Co (LLY) +2.0%. 

The People's Bank of China has decided to keep its key lending rates unchanged at the August fixing, maintaining the 1-year loan prime rate at 3.45% and the 5-year rate at 3.95%. This decision comes amid a fragile economic recovery in China following recent weak economic data.

In Europe, producer prices in Germany fell by only 0.8% year-on-year in July, marking their smallest decline over thirteen months despite ongoing deflationary pressures from energy costs. Meanwhile, inflation within the Euro Area rose slightly to an annualized rate of 2.6%, aligning with preliminary estimates but exceeding initial market expectations for a slowdown.

Market participants are closely watching upcoming speeches by Federal Reserve officials Raphael Bostic and Michael Barr today as well as Fed Chair Jerome Powell's address later this week during Jackson Hole symposium events that could provide further insights into future U.S monetary policy adjustments amidst easing recession fears.

Gold (XAU/USD) [+0.9%]
Gold prices have surged to new all-time highs, reaching the $2,520s per ounce today. This increase is driven by strong demand from China and a weakening US Dollar amid geopolitical tensions in the Middle East. Expectations of potential interest rate cuts by central banks are also supporting gold's appeal as an investment asset during uncertain economic conditions. In related movements, Silver has increased by 1.30%, reflecting a strong correlation with Gold. Additionally, social media activity highlights positive momentum for GDX, which reached its highest level since April 2022 in premarket trading, alongside an Elliottwave intraday analysis suggesting further upward movement.

Bitcoin (BTC/USD) [+2.1%]
Bitcoin has gained ground today, hovering near 61,000, amid a broader rally in cryptocurrencies that reflects the upward trend of major stock indices like the S&P 500 and Nasdaq. This surge coincides with notable inflows into U.S. spot exchange traded funds (ETFs) and gains in major tokens such as XRP and BNB. U.S.-listed Bitcoin miners are benefiting from easier capital-raising opportunities. Concerns regarding a potential U.S. recession are diminishing, as leading economic indicators no longer signal such an outcome, which may bode well for risk assets, including cryptocurrencies. Additionally, Bitcoin-related stocks like MicroStrategy and Coinbase have also seen increases during premarket trading, fueled by positive momentum in digital assets ahead of Federal Reserve Chair Jerome Powell's upcoming speech at Jackson Hole, which may provide insights into potential interest rate cuts next month.

JD |-3.6%|-2.8B
JD.Com Inc has experienced a decline of nearly 3.7% in pre-market trading. This movement coincides with a significant drop in Vipshop Holdings Ltd, which fell over 6% following disappointing second-quarter financial results. Vipshop reported decreases in net income, revenues, and active customers year-over-year. The negative performance of Vipshop is likely influencing JD's price action, given their historical correlation. Despite JD's strong Q2 earnings report, which included a notable increase in non-GAAP net profit and robust revenue generation, the company has been underperforming relative to its sector peers. In the first half of 2024, JD also repurchased approximately $3.3 billion in shares, demonstrating strong cash flow generation.

LLY | +2.0% | +18.1B
Eli Lilly and Co reported significant topline results from the SURMOUNT-1 study, which indicated that weekly injections of tirzepatide reduced the risk of developing type 2 diabetes by 94% in adults with pre-diabetes and obesity or overweight. The study, involving 1,032 participants over three years, showed an average weight loss of 22.9% for those receiving the 15 mg dose, compared to just 2.1% for the placebo group. The findings also highlighted sustained weight loss throughout the treatment period and a favorable safety profile, with adverse events primarily being mild to moderate gastrointestinal issues. Tirzepatide is already approved in the U.S. under the brand names Mounjaro and Zepbound for diabetes and weight management, respectively. Eli Lilly's stock has increased by 2.2% since Monday, outperforming its sector peers.

BA |-1.2%|-1.3B
Boeing has grounded its 777X test fleet due to structural damage in the engine mount, identified during routine inspections. This decision affects ongoing evaluations and could delay the aircraft's certification timeline and entry into service, which was already postponed from 2020 to a projected 2025 or later. Concurrently, test flights of the 777-9 have been halted following a component failure discovered during maintenance checks. The FAA has mandated inspections for certain 787 Dreamliners and is introducing a new airworthiness directive due to concerns regarding potential uncommanded movement of the captain's seat. These developments have contributed to a 1.4% decline in Boeing's stock price since Monday.

AMD |+1.9% | +5.0B
Advanced Micro Devices Inc. has been reaffirmed as a top large-cap pick by Piper Sandler, receiving an Overweight rating and a price target of 175. This endorsement highlights AMD's strong market position amid ongoing technological advancements. A recent tech roundup noted progress in the sector, particularly following AI-related deals, which may bolster AMD's competitive stance. Additionally, Nvidia is reportedly facing heightened competition from AMD, suggesting a favorable environment for AMD's growth. Furthermore, AMD's strategic acquisition of ZT Systems for 4.9 billion aims to enhance its artificial intelligence capabilities, addressing concerns about its competitiveness in the AI chip market. Despite some adjustments to price targets, analysts maintain a positive outlook, reflected in 27 buy ratings and a consensus rating of "Moderate Buy."

BAC |-1.2% | -3.7B
Berkshire Hathaway has divested approximately 13.97 million shares of Bank of America, valued at around $550.7 million. The share prices during these transactions ranged from 39.2719 to 39.6454 each. Following this sale, Berkshire's ownership stake in Bank of America has decreased to 12%. Warren Buffett's recent sale of 13.9 million shares at an average price of 39.42 per share further reduced Berkshire Hathaway's stake in Bank of America to 11.9%. This significant divestment aligns with Berkshire Hathaway's ongoing divestment strategy, as detailed in SEC filings.

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