This report is from today's CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.
What you need to know today
Waiting for earnings
U.S. stocks made slight gains Monday, but trading volume was lower than average as investors braced for second-quarter earnings. Asia-Pacific markets fell Tuesday. Hong Kong's Hang Seng Index tumbled more than 2%, weighed down by losses in real estate and technology.
Deflating Chinese economy?
China's economy is "on the verge of deflation," said Hong Hao, Grow Investment Group's chief economist, pointing to declining prices in the country. Meanwhile, China's lackluster gross domestic product figures, released yesterday, prompted Wall Street to cut their expectations of China's annual growth to around 5%.
Peak oil demand
India imported 2.2 million barrels of Russian oil per day in June. But that could be the peak of India's demand for Russian oil, at least for the rest of this year, said Viktor Katona, lead crude analyst at Kpler. Since Russia invaded Ukraine in February last year and oil price caps were instituted, India has become one of the leading importers of Russian oil.
Merger bonanza
Warren Buffett's Berkshire Hathaway reduced its stake in Activision Blizzard from 6.7% last year to 1.9% yesterday, according to a securities filing released Monday. The news comes as Microsoft inches closer to completing its $68.7 billion acquisition of Activision. Buffett previously revealed Berkshire added to its initial Activision stake in a bet the deal would close and cause shares to rise.
[PRO] Future of bitcoin
Bitcoin has risen over 80% this year. In the past month, it breached — and stayed above — the $30,000 threshold for the first time in months, amid institutional interest such as BlackRock filing a spot bitcoin ETF. Here's where analysts think bitcoin will go next.
The bottom line
Investors were cautiously optimistic yesterday.
Major U.S. indexes edged up. The Dow Jones Industrial Average advanced 0.22% to hit its highest close this year. The S&P 500 gained 0.39% and the Nasdaq Composite climbed 0.93%.
It should be noted, however, that trading volume was muted. The SPDR S&P 500 exchange-traded fund, which tracks the overall index, traded 52.4 million shares, below its 30-day average of 79.1 million.
The slower pace of trading makes sense. Major companies are due to release their earnings reports, starting with Bank of America and Morgan Stanley on Tuesday as well as Goldman Sachs, Netflix and Tesla on Wednesday.
Investors braced for those reports — and they aren't expecting good news. Analysts think second-quarter S&P 500 earnings will be more than 7% lower than they were a year ago, according to FactSet data.
But the good news is last quarter's earnings might be the floor. And things are looking up, not just for markets, but the economy. The long-awaited U.S. recession? Many analysts now think it's not merely late — it might not even show up.
With both consumer and producer price indexes cooling more than expected, "bringing inflation down to an acceptable level will not require a recession," Goldman Sachs' chief economist Jan Hatzius wrote, cutting his projection of a recession from 25% to 20%.
JPMorgan Chase's chief global markets strategist Marko Kolanovic has been skeptical of a soft landing. But even he noted that "the resilience of the US and global expansions should remain in place," causing the bank to "downplay near-term recession risks."
And Ed Yardeni thinks the recession — albeit "a rolling recession," meaning that different sectors of the economy have taken turns to contract — is already behind us. Instead, "now … we're in a rolling recovery," Yardeni said.
As earnings reports are released, don't look at companies' figures for the past quarter. Keep an eye out for their projections for the rest of the year. We might yet see signs of hope the economy will continue growing.
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July 18, 2023 at 01:30PM
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CNBC Daily Open: The long-awaited recession might not come - CNBC
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