Tuesday Morning Rebel Brief — Red Open Ahead of Important July Catalysts

Good morning Rebels! Stocks are set to open lower this morning as the market continues to grapple with pricing-in the likelihood of a recession.

Source: FinViz. Very little green to look at here, with energy wiping away early gains and some defensive stocks holding flat.

The US 10-Year Treasury has fallen from a high of 3.483 on 6/14 to as low as 2.805 — a decline of more than 19%.

Source: CNBC

In comparison, the indices have been relatively flat since the same date, with the SPDR S&P 500 ETF Trust (SPY) trading in a range roughly 7% wide, between $365 and $390. While the 10-Year continues to let off steam after a wild year long run, the market will likely continue to bounce around in this range until later this month, when a deluge of important catalysts hit the scene. 

Three Big Market Catalysts Coming in July

• July 13th: June CPI Report will be released. The May CPI Report was hotter than expected, which forced the data-dependent Fed’s hand in pushing forward a 75-basis-point rate hike last month. Investors will look to the upcoming report for signs of easing inflationary pressures.
• July 14th: Earnings season kicks off, starting with Morgan Stanley (MS), JPMorgan (JPM), and Charles Schwab Corp (SCHW). Many strategists have cautioned that this season may see companies guiding down in massé as they seek to account for the ongoing effects of inflation as well as potential demand disruption.
• July 26th and 27th: Next FOMC meeting commences. This is where we find out to what degree the Fed is raising rates. Fed Chair Jerome Powell has telegraphed a likely hike of either 50 or 75 basis points, likely indicating that he and the Fed will be looking to the June CPI Report to guide that decision.

Rebel Trivia

Do you know your market history? Quiz yourself, with this morning’s edition of Rebel Trivia: 

What was the first company to be listed on the New York Stock Exchange? 

Find the answer at the bottom of this article!

JPMorgan’s Oil Prediction

JPMorgan Chase & Co. analysts are predicting that oil could soon reach $380 a barrel. The catalyst: Russian retaliation over US and European penalties — specifically a new attempt to get oil prices under control through pushing forward a “cap” on the price of Russian oil. 

Analysts at JPM have said that Russia has the power to send the cost of a barrel of oil to as high as $380 should they decide to cut crude oil production (analysts at JPM believe Russia could cut production by up to 5 million barrels). This would be a double-edged sword — the move would almost certainly damage the Russian economy. However, it’s a move that JPMorgan believes may be made in the near future. Analysts at JPM have also cut economic growth forecasts in accordance to a series of weak data.

Energy Stocks on the Move

Occidental Petroleum (OXY) traded higher by 1.3% in the premarket on news that Warren Buffett’s Berkshire Hathaway (BRKb) has added to its stake in the company, which is currently 17.4%. However, the stock fell with the rest of the market, sinking 3% at the time of writing.

Exxon Mobil (XOM) was trading higher by 1.2% in the premarket off of a Friday afternoon announcement that they could earn as much as $18 billion in the second quarter. This stock has well is now trading significantly lower alongside the market. 

Rebel Trivia, Answered

The answer to the Rebel Trivia question from above: The Bank of New York (BK)!  listed more than two centuries ago in 1,792! 

For more quick takes on this morning’s market-moving news, check out 60 Seconds With Jon Najarian!

https://twitter.com/jonnajarian/status/1544309844232081416

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