uro Zone GDP Surprise - Looks like Euro Dollar parity wasn't meant to be. Last week, every Euro Zone country except Germany exceeded GDP expectations for 2Q22. Estimates for very slight growth of 0.20% were met with real growth of 0.70% boosted mainly by tourism, while US 2Q22 GDP contracted by 1.6% officially marking a recession.

Jack Ma Steps Down...Again - Last week, the once-disappeared tech giant Jack Ma said he would step down as CEO of Ant Group, China's largest consumer lender and once the worlds biggest IPO until the CCP cracked down on tech companies two years ago. Ma claims to have been considering giving up control for several years. Expect more turmoil for $BABA ahead.

Market Wrap

As we expected, the Fed raised interest rates by 75 basis points following a second straight quarter of GDP decline. But, the NEBR can't decide whether or not the widely accepted definition of a recession still holds. They're so indecisive, they've changed the official defition to reflect more "nuance" and commissioned a panel to debate the topic. Chair Powell noted in his commentary that the fed funds rate is now close to the Fed's estimate of a neutral rate, indicating an official end of the post-pandemic easy money policy.

Powell referenced a fed funds range of 3.0%-3.5% by the end of the year. This would imply about 50-100 basis points more of tightening over the next three meetings this year, which means the pace of rate hikes could slow.
The slowing of rate hikes later this year to tackle record inflation reflects the Fed's broader policy objective of 2% to 2.5% average inflation.

The graphic below demonstrates that in fact, we've already returned to the target inflation rate since 2010. The 136.34% figure implies a 36.34% increase since 2010 prices, which falls within range of 2% (129.4%) and 2.5% (137.9%) inflation. But, whether or not mean inflation exceeds those bounds will be down to careful Fed policy.

Since-2010 Inflation Rates and Policy LimitsSource: Minneapolis Federal Reserve

Last week's earnings reports were front and center for investors. While there have been some high-profile misses, earnings season has met or exceeded a lowered bar. Some companies, like Microsoft and Google, had reported earnings misses but rallied after their reports. With both stocks down over 20% YTD, expectations were set appropriately low. Both companies also highlighted strength in enterprise spending and cloud businesses, while seeing relative weakness in consumer areas. We'll dive into their reports later this week.

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Shkreli vs. Kohrs

Two titans of Wallstreetbets, Martin Shkreli and Matt Kohrs are engaged in a battle to the death over who is the better trader. They each started with $50,000. First to double their money, or last to lose it all wins. You can track that “Trade War” here!

Only Degenerates and its analysts have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Aug 1, 2022
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