[U.S.] Q2 GPD: Rises More Than Expected, Showing Strong Economic Growth

Data Interpretation

Summary:

The U.S. economy grew faster than expected in the second quarter while inflation eased. The real gross domestic product (GDP) growth largely reflected increases in consumer spending, private inventory investment, and nonresidential fixed investment. Expectations of a September rate cut by the Fed were unaffected.

At 8:30 a.m. ET on July 25, the U.S. Bureau of Economic Analysis released its second-quarter GDP report:

Real GDP increased at an annual rate of 2.8 percent in the second quarter, compared to an expectation of 2.0 percent. In the first quarter, real GDP increased 1.4 percent.

Excluding food and energy prices, the PCE price index increased 2.9 percent, compared with the expected 2.9 percent and the previous month's increase of 3.7 percent.

The price index for gross domestic purchases increased 2.3 percent in the second quarter, while the expectation was 2 percent and the previous reading was 1.5 percent.

Compared with the first quarter, the increase in real GDP primarily reflected increases in consumer spending, private inventory investment, and nonresidential fixed investment.

The increase in consumer spending reflected increases in both services and goods. Within services, the leading contributors were health care, housing and utilities, and recreation services. Within goods, the leading contributors were motor vehicles and parts, recreational goods and vehicles, furnishings and durable household equipment.

Nonresidential fixed investment, which reflected business investment, increased by 5.2 percent, 0.8 percent larger than in the first quarter. Within nonresidential fixed investment, increases in equipment and intellectual property products were partly offset by a decrease in structures.

The market continues to price in a Fed rate cut in September. Moreover, consumer spending and broader economic activity have cooled in various ways, with the US economy still performing well despite high interest rates. Bullard, a former hawkish member of the Fed, commented after the release of the GDP data that the economy is achieving a "soft landing" and that the Fed may begin to imply a rate cut in September.

U.S. Q2 GPD

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Glendon

Economic

In the rapidly evolving stock market, having access to accurate and timely information is crucial for making informed investment decisions. FintechZoom, a leading fintech platform, has become a trusted resource for investors seeking comprehensive insights and updates on various stocks, including Rivian Automotive Inc. (RIVN). This article explores FintechZoom's extensive coverage of Rivian stock, highlighting the platform's features, insights, and how it aids investors in navigating the complexities of the market.

Rivian Automotive Inc. (RIVN) Stock: An Overview

Rivian Automotive Inc. is an American electric vehicle (EV) manufacturer and automotive technology company. Founded in 2009 by RJ Scaringe, Rivian focuses on producing electric adventure vehicles, including the R1T pickup truck and the R1S SUV. The company's mission is to redefine the automotive landscape by developing sustainable, high-performance electric vehicles designed for both on-road and off-road adventures.

RIVN Stock Performance

Rivian's stock (RIVN) has garnered significant attention since its initial public offering (IPO) in November 2021. The stock's performance has been influenced by various factors, such as market trends, economic conditions, regulatory changes, and company-specific developments. Despite the challenges inherent in the nascent EV industry, Rivian remains a key player, attracting investor interest with its innovative products and strategic partnerships.

Key Factors Influencing RIVN Stock

Financial Performance: Rivian's quarterly earnings reports are critical for investors. Key metrics such as revenue, vehicle deliveries, production capacity, and profit margins provide insights into the company's financial health and growth prospects.

Product Innovation and Launches: Rivian's advancements in electric vehicle technology, including battery efficiency, autonomous driving capabilities, and new vehicle models, significantly impact its stock performance. Successful product launches and technological breakthroughs can drive investor confidence and stock performance.

Economic and Market Conditions: Broader economic trends, including consumer spending, energy prices, and interest rates, affect Rivian's business and stock performance. Market conditions and consumer preferences for electric vehicles also play a crucial role.

Regulatory Environment: The EV industry is subject to various regulations, and changes in emissions standards, safety regulations, and government incentives can influence Rivian's operations and profitability.

Competitive Landscape: Rivian faces competition from other major automakers and EV manufacturers like Tesla, Ford, and General Motors. Competitive dynamics and market share shifts can impact RIVN stock.

FintechZoom's Comprehensive Coverage of RIVN Stock

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Rivian (RIVN) stock remains a compelling investment due to the company's innovative products, market leadership, and growth potential in the electric vehicle industry. FintechZoom's detailed coverage of RIVN stock, combined with FastBull's real-time signals and analysis, provides investors with a comprehensive toolkit for navigating the complexities of the stock market.

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To stay updated on all economic events of today, please check out our Economic calendar

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Data Interpretation

Japan's Statistics Bureau released the latest Tokyo CPI report on July 26:

Tokyo CPI increased 2.2% YoY in July (expected: 2.3%, June: 2.3%);

Tokyo Core CPI rose 2.2% YoY in July (expected 2.2%, June: 2.1%);

Tokyo Core-Core CPI climbed 1.5% YoY in July (June: 1.8%).

According to the report, the core inflation reading got a lift from the end of government utility subsidies in June. It has accelerated for the third month and rose to 2.2% in July, up from 2.1% in June, meeting widespread expectations. The "core-core" CPI, which excludes both fresh food and energy costs and is closely watched by the Bank of Japan as a key gauge of broader inflation trends, increased by 1.5% year-on-year in July, following a 1.8% rise in June.

Sector-wise, the increase was mainly driven by energy prices, with electricity prices rising by 19.7% year-on-year. The rise in processed food prices slowed slightly. Hotel prices also saw a slowdown in growth, following the gradual removal of accommodation subsidies a year ago.

Bank of Japan Governor Kazuo Ueda has said the central bank will raise interest rates from their current near-zero level if underlying inflation, which takes the CPI and broader price indicators into account, accelerates toward 2% as expected. Tokyo inflation data is considered a leading indicator of national inflation trends. The acceleration in core inflation in July provides strong support for a potential rate hike at the Bank of Japan's meeting next week, boosting market expectations for a recent rate increase.

Tokyo July CPI Report

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Alex

Cryptocurrency

It is now the third day since Ethereum [ETH] ETFs received regulatory approval and the second day of trading. ETH’s price action so far confirms that it is experiencing a “sell the news” reaction.

We previously explored the possibility of Ethereum ETFs possibly experiencing a similar outcome to what happened right after Bitcoin ETFs were approved.

The price embarked on a correction from the previous rally that was observed days before the approvals. So far Ethereum ETFs have followed a similar pattern.

ETH’s price traded at $3,177 at the time of writing, signaling that a wave of sell pressure was in effect. Its press time price was down by slightly over 10% since the ETFs were approved.

Prior to that, ETH traded at a 21% premium from its July lows after achieving a robust rally 15 days ahead of ETF approvals.

Ethereum ETF approval sparks high sell pressure: Will ETH go below $3K?_1

ETH’s indicators, especially the MACD confirmed that the bulls lost their momentum. It was also on the verge of flipping to negative. The strength of the volumes that we will observe in the next few days will determine whether ETH will extend its bearish momentum.

The RSI indicated that there was some room for more sell pressure since it was not yet oversold. Our analysis also confirmed that the next major support level for ETH was below the $2,900 level.

Whales on the hunt

The sell pressure that prevailed in the last three days suggests that whales might be taking advantage of incoming Ethereum ETFs liquidity.

Lookonchain data confirmed that Grayscale moved 140,044 ETH to Coinbase Prime in the last 24 hours. An amount worth almost $500 million. This was a confirmation that whales are contributing to the sell pressure.

Meanwhile, discounted ETH prices may already be attracting more buys on the way down. Looksonchain data also revealed that the BlackRock(iShares) Ethereum ETF added 76,669 ETH worth roughly $262 million to its wallet.

Long liquidations intensify

The bearish price action suggests that quite a number of net longs may have suffered. We confirmed this by evaluating the net longs on HyblockCapital’s heatmaps and here’s what we found.

Net longs peaked at nearly 50 million on 23rd July at around the $3,500 price level. The heat map indicates strong liquidation at that level, consequently pushing prices below $3,300 within the same trading session.

Ethereum ETF approval sparks high sell pressure: Will ETH go below $3K?_2

Roughly 44.76 million longs were present at the $3455 price level on 24 July. The next major heat map zone.

We also observed a spike in longs near the $3410 price level, followed by a heat map spike suggesting a surge in liquidations near the $3380 heat map level.

Source:Ambcrypto

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Glendon

Economic

The ongoing legal battle between the U.S. Securities and Exchange Commission (SEC) and Ripple Labs has reached a critical juncture this week, with significant developments that could shape the future of cryptocurrency regulation. The lawsuit, initiated in December 2020, alleges that Ripple conducted an unregistered securities offering through the sale of its cryptocurrency, XRP, raising over $1.3 billion. This article delves into the latest updates from the SEC vs. Ripple lawsuit and the implications for the cryptocurrency landscape.

Background of the Lawsuit

The SEC's lawsuit against Ripple Labs, its CEO Brad Garlinghouse, and co-founder Chris Larsen stems from allegations that the company sold XRP as an unregistered security. The SEC contends that Ripple failed to register its offerings, violating federal securities laws. Ripple, on the other hand, argues that XRP should not be classified as a security, emphasizing its utility and currency-like characteristics.

Key Developments This Week

Court Schedule Update

Magistrate Judge Sarah Netburn has established a timeline for the ongoing lawsuit, focusing on Ripple's motion to dismiss the SEC's latest expert evidence related to penalties. The SEC has been granted an extension until April 29, 2024, to file its counterarguments, while Ripple will have three business days to respond. This procedural update indicates that the case is moving toward a resolution, with both parties preparing for the next phase of litigation.

Ripple's Defense Strategy

Ripple has consistently maintained that its On-Demand Liquidity (ODL) sales do not constitute investment contracts. The company argues that XRP is used primarily for facilitating cross-border payments, rather than for investment purposes. Ripple's legal team is pushing back against the SEC's demand for substantial civil penalties, proposing a maximum penalty of $10 million, significantly lower than the SEC's earlier demand of $2 billion.

Judicial Insights

Judge Netburn's previous comments in the case have been favorable to Ripple, as she has recognized the utility of XRP and its distinction from other cryptocurrencies like Bitcoin and Ether. This perspective may influence the court's final decision regarding the classification of XRP and the potential penalties imposed on Ripple.

Implications for the Cryptocurrency Industry

The outcome of the SEC vs. Ripple lawsuit is poised to have far-reaching consequences for the cryptocurrency industry. A ruling in favor of Ripple could set a precedent that influences how cryptocurrencies are classified and regulated in the future. Conversely, if the SEC prevails, it may lead to stricter regulations for cryptocurrency offerings and increased scrutiny of blockchain projects.

Future Considerations

As the case progresses, industry experts are closely monitoring the developments. Predictions suggest that a resolution could be reached by summer 2024, with potential settlement discussions on the horizon. Ripple's representatives have indicated that they are prepared to defend their position vigorously, emphasizing the lack of evidence supporting the SEC's claims of future violations.

Conclusion

The SEC vs. Ripple lawsuit remains a pivotal case in the realm of cryptocurrency regulation. With critical court proceedings unfolding this week, the outcome could redefine the legal landscape for digital assets. Investors, industry participants, and regulators alike are watching closely as the case approaches its conclusion, highlighting the ongoing tension between innovation in the cryptocurrency space and regulatory oversight. As the legal battle continues, the implications for Ripple, XRP, and the broader cryptocurrency market will be significant and far-reaching.

To stay updated on all economic events of today, please check out our Economic calendar

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Samantha Luan

Economic

Investors have fallen over each other in recent weeks to buy the yen on bets that interest rates are finally about to tip in Japan’s favor. They face a moment of truth as soon as Wednesday.

The currency is holding onto an advance of about 5% against the dollar since just before it began surging on July 11, in a move that was amplified by suspected intervention by Japan. Some investors warn that the rally is fragile, as was on show overnight when the yen rapidly retraced gains after stronger-than-expected US economic growth figures.

Swaps markets suggest a 38% chance of the Bank of Japan hiking rates by 15 basis points by the conclusion of its July 31 policy meeting, indicating plenty of caution. And only 30% of BOJ watchers surveyed by Bloomberg forecast a hike, even if more than 90% see it as risk.

That leaves yen bulls vulnerable, particularly if the BOJ also disappoints expectations for a sizable cut in bond purchases, or if the Federal Reserve later in the day does anything to damp hopes for rate cuts in the US in coming months.

“This is a crazy yen rally,” said Nick Twidale of ATFX Global Markets, who has traded Japan’s currency for a quarter of a century. “The BOJ could be party poopers and not play their part in tightening policy.”

‘Crazy’ Yen Rally Is at Risk of Shattering as Soon as Next Week_1

Twidale said that if the BOJ underwhelms the market, carry trades that have kept the yen weak “may come back with a vengeance.”

Others from BlackRock Inc. to former central bank officials are predicting the BOJ will stand pat on interest rates for longer.

Patchy economic data lend credence to this view: while a key gauge tracking the strength of Japan’s service sector rebounded in July, a measure of factory activity showed a contraction. Weak consumer spending is further complicating the BOJ’s decision next week, people familiar with the matter say.

“If BOJ does nothing, the dollar-yen rate could surge again,” said Amir Anvarzadeh, strategist at Asymmetric Advisors who has tracked Japanese markets for over three decades.

The yen swung between small gains and losses Friday. It was little changed at 153.96 per dollar at 10:15 a.m. in Tokyo, after inflation figures for Tokyo earlier showed that consumer prices accelerated for a third month.

Nathan Swami, managing director of FX trading at Citigroup Inc. in Singapore, saw additional demand for bullish yen options after the outsized move this week.

“It is still too early to tell if this signals a longer-term investor sentiment shift, and may thus more likely be a tactical shift in short-term positioning or hedging activities for now,” he said.

According to other traders, some hedge funds remained on the sidelines amid uncertainty over how much the currency could gain ahead of next week’s BOJ policy meeting.

If the BOJ “doesn’t fully deliver,” then the yen could weaken toward the 158 level against the dollar, according to National Australia Bank Ltd.’s Rodrigo Catril.

Yet even if the BOJ does tighten policy on Wednesday, there is still a case for it to retain favor in carry trades, in which investors take advantage of Japan’s ultra-low interest rates to borrow in yen to then invest in currencies with higher yields.

The yen’s implied yields would still be about 90 basis points lower after a hike than those for the Swiss franc, which is an alternative funding currency for carry trades.

‘Crazy’ Yen Rally Is at Risk of Shattering as Soon as Next Week_2

US rates risk also abound. Should the odds of Fed rate cuts retreat, Japan’s currency could come under attack once more.

“The yen can test 160 if the Fed doesn’t signal a September rate cut and US data starts to strengthen again,” said Charu Chanana, head of currency strategy at Saxo Capital Markets.

Source:Bloomberg

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Daily News

[Quick Facts]

1. Tokyo core CPI rises 2.2% YoY in July, meeting expectations.

2. U.S. economy continues to grow strongly by 2.8% in Q2.

4. Fed seen to hold rates steady in July and start cuts in September.

3. Nagel says ECB should be able to cut rates if data stay on course.

5. U.S. Durable goods orders unexpectedly plummet.

[News Details]

Tokyo core CPI rises 2.2% YoY in July, meeting expectations

Data released on Friday showed that Tokyo core CPI rose 2.2% in July from a year earlier, accelerating for the third consecutive month. The market now maintains expectations of a rate hike by the Bank of Japan (BOJ) in the near future.

The "core-core" CPI, which excludes both fresh food and energy costs and is closely watched by the BOJ as a key gauge of broader inflation trends, increased by 1.5% year-on-year in July, following a 1.8% rise in June.

Tokyo inflation data is considered a leading indicator of national inflation trends. Bank of Japan Governor Kazuo Ueda has said the central bank will raise interest rates from their current near-zero level if underlying inflation, which takes the CPI and broader price indicators into account, accelerates toward 2% as expected.

U.S. economy continues to grow strongly by 2.8% in Q2

Gross-domestic product (GDP) expanded by a 2.8% seasonally- and inflation-adjusted annual rate in the second quarter, easily surpassing the 2.1% estimate in a survey of Wall Street Journal economists, expectations, according to data from the U.S. Commerce Department on Thursday.

Real GDP growth primarily reflected increases in consumer spending, private inventory investment, and nonresidential fixed investment. The increase in consumer spending reflected increases in both services and goods. Within services, the leading contributors were health care, housing and utilities, and recreation services. Within goods, the leading contributors were motor vehicles and parts, recreational goods and vehicles, furnishings and durable household equipment, and gasoline and other energy goods.

The increase in private inventory investment primarily reflected increases in wholesale trade and retail trade industries that were partly offset by a decrease in mining, utilities, and construction industries. Within nonresidential fixed investment, increases in equipment and intellectual property products were partly offset by a decrease in structures. The increase in imports was led by capital goods, excluding automotive.

Although in many ways the U.S. economy is performing well even with high interest rates while the pace of inflation has slowed, many Americans are unhappy that prices for groceries, automobiles, and homes are much higher than they were a few years ago. Although recession predictions have receded, there are still signs of weakness in the economy, and the job market has begun to slow down, with employers adding jobs at a slower pace in the second quarter than in the first quarter. Consumers are also facing growing headwinds from elevated borrowing costs.

Fed seen to hold rates steady in July and start cuts in September

Federal Reserve policymakers are expected to leave interest rates unchanged at 5.25%-5.50% next week and start cutting rates by 25 basis points in September, after the latest data showed the U.S. economy regained momentum last quarter. Before the data were released, traders expected a 9% chance of the Fed cutting rates next week, but that probability fell to less than 7% after a government report showed the economy grew by 2.8% last quarter, faster than expected and twice the rate of growth in the first quarter. The re-acceleration of the economy "should help ease concerns about the economy's ability to sustain the expansion and quell rumors that the Fed will need to cut rates in July."

Traders continue to expect the Fed to cut interest rates by 25 basis points each in September, November and December, while they reduced bets on further rate cuts by the Fed. Prior to this, traders bet on a 21% likelihood that the Fed would cut rates by more than 25 basis points before the September meeting, which is now down to about 15%.

Nagel says ECB should be able to cut rates if data stay on course

The European Central Bank (ECB) should be able to lower borrowing costs if economic data don't deliver a negative surprise, ECB Governing Council member Joachim Nagel said on Thursday. Monetary policy should be within a restrictive range until inflation reaches a stable level of 2%. Policy decision will be made on a meeting-by-meeting basis, without pre-commitment to what might happen in September. Wage conditions in the Eurozone continue to be "very strong" and the path for inflation down back to 2% will be "bumpy".

U.S. Durable goods orders unexpectedly plummet

U.S. durable goods orders fell 6.6% to $264.5 billion in June from the previous month, marking the first decline after four consecutive months of gains, according to data released by the U.S. Commerce Department. It was the biggest drop since January 2024, well below expectations of 0.3% and the reading of 0.1% in May. Transportation and capital goods orders fell the most in June, with non-defense aircraft and parts orders seeing the biggest drop.