Rise and shine everyone and Happy Friday!

It’s earnings season! Bank earnings are pouring in, and big surprise… JP Morgan delivered a fantastic double beat! The company reported GAAP EPS of $6.12, $0.24 better than the $5.88 GAAP FactSet consensus; reported revs +22% yr/yr to $50.8 bln vs. $42.23 bln FactSet consensus.

Wells Fargo was not far behind reporting Q2 (Jun) earnings of $1.33 per share, $0.04 better than the FactSet Consensus of $1.29; revenues rose 0.8% year/year to $20.69 bln vs the $20.29 bln FactSet Consensus.

The US stock market displayed erratic behavior following the release of soft CPI figures. While the Nasdaq and S&P 500 experienced significant declines, the small-cap Russell index surged by 3.6%. The Dow also managed to retain two-thirds of its pre-market gains. This divergence in performance highlighted the volatility and uncertainty present in the current market environment.

This trend continued in Asia, where markets exhibited mixed reactions. The Nikkei and Kospi experienced substantial drops, reflecting investor concerns. In contrast, the ASX and Hang Seng showed strong performance, rising by 1.8%, while the Shanghai Composite remained unchanged. The varied responses across these markets underscore the global uncertainty and differing economic conditions influencing investor behavior.

Tech-heavy indices were the worst performers across all equity markets, as non-tech business valuations began to normalize after being relatively overlooked in favor of tech stocks over the past 12-18 months. Notably, Nvidia saw a decline of 5.6% in regular trading and an additional 1.0% after hours. This shift suggests a recalibration in investor focus, with a potential rebalancing away from the tech sector towards more traditional industries.

US Equity Futures are flat this morning with Commodities pulling back across the board, except Copper. Bitcoin is marginally lower.

Today’s major news to look out for is the US PPI and Michigan Sentiment data.

Quote of the Day

Not the most optimistic reaction to JP Morgan earnings as Jamie Dimon warns of tail risks in the economy:

Calendars

(news taken from Reuters, FT, Bloomberg; Calendar from Trading Economics)