Markets start July and the second half of the year with a rally on Wall Street. This despite the US technically being in a recession during the first half of the year.
The Atlanta FEDs GDPNow Tracker is showing a Q2 GDP contraction of -1%. After Q1 contracted by -1.6% that is now two consecutive quarters of GDP contraction which is a technical recession.
The Institute for Supply Management ISM report dropped to 53 for the month of June (a reading below 50 means manufacturing contraction and over 50 means expansion).
The ISM report caused the 10 Year Note to fall to lowest level since May dropping 13 basis points to 2.88%.
Companies are not pulling back on tech investment despite fears of a recession. According to the CNBC Technology Executive Council survey more than three-quarters of tech executives expect to spend more on technology this year while nobody said they would spend less.
Yesterday the FED Repo market hit $2.3 trillion up a half trillion in a day. What that means is the FED moved $500 billion of assets, likely from dark pools, into their Repo market where now those assets will be charged the FED Repo Rate. That implication is we just got an off balance sheet ‘dark pool FED hike‘ of about 50 basis points.
The WHO says monkeypox cases have tripled in Europe in just the last two weeks and urgent action is needed to contain the virus.
Stock Specific News:
Kohls plunged 21% after confirming they have ended talks to sell the company to Franchise Group.
Meta fell 2.8% after cutting hiring plans for engineers with CEO Mark Zuckerberg saying “one of the worst downturns we’ve seen in recent history” is coming.
FedEx dropped 3.8% after being downgraded and having its price target cut at Berenberg citing rising inflation pressures.
Intel fell 3% after delaying plans to starts the new semiconductor chip factories in Ohio.
D&D liquidated our position in Capri after the negative RH news and the inventory issues cited by Kohls today. The risk reward in the second half of the year is just not as good as other stocks to put money to work in.
Market Knowledge Tip:
Shopping List.
In the second half of the year D&D likes the following type of stocks to put new money to work in:
- High Dividend yielding stocks that have strong profit margins
- Energy Exploration
- Cybersecurity
- MegaCap Tech
- Heathcare
- Defense Contractors
Specific Stocks D&D is targeting on our shopping list:
- AAPL (Apple)
- TSM (Taiwan Semiconductor)
- GOOG (Alphabet)
- AMZN (Amazon)
- MSFT (Microsoft)
- DVN (Devon Energy)
- TRGP (Targa Resources)
- PFE (Pfizer)
- UNH (United Health)
- PANW (Palo Alto Networks)
- CHKP (Check Point)
- AMD (Advanced Micro Devices)
- LMT (Lockheed Martin)
- BRK.B (Berkshire Hathaway)
- JNJ (Johnson & Johnson)
- TSLA (Tesla)
- NVDA (Nvidia)
Closing Markets (as of 1:15pm PST)
DOW up 1.05%
S&P 500 up 1.06% (3,825.33)
NASDAQ up 0.9%
VIX down -7.04% to 26.69
2 Year Note down -12.25bp to 2.96%
10 Year Note down -13.36bp to 2.88%
Oil up 2.43% to $108.331 a barrel.
Gold up 0.033% to $1807.90 an ounce.
Bitcoin up 12.38% to $19,418.33
Ethereum up 5.44% to $1,072.93
~ Dave James / Principal Trader and Market Strategist
D&D Investments 
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