• US major indices close the day with mixed results
• Can it really be? Earnings calendar starts next week
• Crude oil futures settle at $104.79
• US May consumer credit outstanding +22.35B vs +31.9B expected
• The post-mortem on the $800 billion US Paycheck Protection Program is damning
• Baker Hughes oil rig count up 2 to 597
• Feds Williams: Debate of 50-75 bps is right position for July meeting
• European indices close mostly higher on the day and for the week
• Steep outflows could trigger a substantial downside for gold in coming sessions – TD
• Fed’s Williams: We must be resolute on inflation, we cannot fall short
• Fed’s Brainard: Crypto platforms are highly vulnerable to deleveraging and fire sales
• US wholesale inventories +1.8% vs +2.0% expected
• Fed’s Bostic: Economy is starting to slow and that’s what we need
• Canada June employment change -43.2K vs 23.5K estimate
• US June non-farm payrolls +372K vs +268K expected
• The JPY is the strongest and the CHF is the weakest as the NA session begins
• Abe put on a master-class in diplomacy by courting Trump
• US and Canadian jobs reports highlight the economic calendar
• Forexlive European FX news wrap 8 Jul

The US jobs report added 372K new jobs in June. That was higher than the 268K estimate. Admittedly, there was a revision of -74K over the last two months (with May revised to 384K from 390K). Nevertheless, if the current month was adjusted for that number, a net addition of 298K (372K – 74K revision) still beats the consensus estimate.

Looking at the other measures within the report, the unemployment rate remained steady at 3.6%. Average hourly earnings rose 0.3% as expected and rose 5.1% vs 5.0% estimate. The participation rate fell to 62.2% vs 62.3% estimate. The U6 underemployment rate came in at 6.7% vs 7.1% estimate.

Overall, the jobs report – barring a huge surprise in the CPI next week which is expected to show 1.1% gain MoM and 0.6% for the core – is likely to lead to another 75 basis point hike by the Fed when their interest rate decision is announced on July 27. That would take the target range to 2.25% to 2.5% which Fed officials called the neutral rate. The expectations are for the path of rate rises to continue into the year end. The Fed’s central tendencies saw the rate at the end of year at 3.4%, which implies an end of year target rate of 3.25% to 3.5%. That sounds about right.

The questions at that point is „What comes after that?“

• Can the Fed execute the soft landing?
• What happens to other rates like mortgage rates and to the housing market?
• Does the Fed indeed avert a recession?
• If not, does the Fed move back down toward neutral?
• How does the stock market react?
• Has the market gone too far with the bearishness

This week, the major stock indices moved higher with the Nasdaq outperforming with a 4.5% gain. The ARK Innovation fund rose 13.68%. Admittedly it is down -70.66% from it’s high, but is there roam to roam from lower levels. 10% on the current price of $46.86 is $4.68. Getting to $51 or $52 is not a hard hurdle considering the high in 2021 was up at $159.70 and the price traded at that level on April 25th – not so long ago.

In the forex market today, the USD was mixed with gains vs the JPY and CHF and declines vs the EUR, CAD, AUD and NZD. The greenback was little changed vs the GBP. The price action in the forex saw up and down volatility. The dollar moved higher after the jobs report, but then started to give up those gains into the London close. After London traders exited, there was a modest move back higher, but overall the changes on the day were relatively modest with a 0.33% gain vs the CHF and a -0.24 decline vs the EUR the biggest movers.

The strongest to weakest of the major currencies

Overall, the EUR was the strongest of the majors and the CHF was the weakest. The EURCHF was the biggest currency pair mover with a 0.57% gain on the day. Relatively speaking the changes were modest as traders ponder what may have already been priced in.

Nevertheless, it is hard to see a sharp move lower in the dollar going forward given the green light for the Fed to raise rates from both job gains and inflation, while Japan and the EU are still struggling with the idea of tightening, and the UK has political, inflation and European issues to contend with as well.

Next week, the Bank of Canada and the Reserve Bank of New Zealand are still expected to raise their rates by 50 basis points respectively (both announce on Wednesday).

In Canada today, their jobs report was weaker than expected with a decline of -43.2K jobs vs expectations of +23.5K (most in part time jobs at -39.1K and in the service sector). However, the unemployment rate declined to a new record low at 4.9% vs 5.1% estimate as the participation rate fell to 64.9% vs 65.3% with workers leaving the workforce.

In other markets today:

• Spot gold rose $1.98 or 0.11% to $1742.10. Last Friday, the price closed a $1810
• Spot silver rose $0.10 or 0.55% at $1931. Last Friday, the price closed at $19.87
• Crude oil is at $104.78 up $2.08 on the day. The close last week was at $108.42
• Bitcoin is trading at $21864. The price a week ago today was at $19239

In the US debt market today, yields moved sharply higher as it seems 75 basis points is baked in the cake now

• 2 year yield 3.105%, up 9.7 basis points on the day. The yield last Friday closed the week at 2.839% for a week gain of over 26 basis points
• 5 year yield 3.127% up 9.0 basis points on the day. The yield a week ago was at 2.884% for a gain of around 25 basis points for the week.
• 10 year yield 3.082% up 8.2 basis points on the day. The yield a week ago was at 2.889% for a gain of 19 basis points for the week.
• 30 year yield 3.252%, up 6.3 basis points on the day. The yield a week ago was at 3.116% for a gain of around 14 basis points for the week.

Sad notes this week included the killing of seven in Highland Park, Illinois during a 4th of July celebration parade include the mother and father of a 2-year child, and the assassination of former Japan PM Shinzo Abe while he addressed a crowd. during an election campaign rally in Nara, Japan. In the US gun violence is as common as the sun rising, but in Japan it is rare.

It is easy to become numb and complacent to violence. However, at the end of each bullet there are people with stories and incomplete lives and children and families and sometimes even nations that are denied what they could have done tomorrow, next week, next year and beyond. It is a tragedy that should not happen.

Let’s hope the pendulum starts to swing the other way, at some point and that time is soon. In the meantime, say a prayer for peace and for all the victims who happened to be at the end of a bullets path of destruction.

This article was written by Greg Michalowski at www.forexlive.com.

Elon Musk has filed a report with the SEC saying he has terminated his pursuit of Twitter.

Yesterday the Washington Post reported that Elon Musk had „stopped engaging in certain discussions around funding for the $44 billion deal“ and that the deal was in serious jeopardy, so this news isn’t out of the blue.

Twitter shares were down 5.35% on the report today and closed at $34.84 — far below the $54.20 agreement. For more than a month, there have been signs that Musk has a bad case of buyer’s remorse.

What’s far less clear is that he will be able to walk away from the deal.

He accused Twitter of being „in material breach of multiple provisions“ of the merger agreement.

„Mr. Musk is terminating the Merger Agreement because Twitter is in material breach of multiple provisions of that Agreement, appears to have made false and misleading representations upon which Mr. Musk relied when entering into the Merger Agreement, and is likely to suffer a Company Material Adverse Effect (as that term is defined in the Merger Agreement)“However he signed an agreement to complete a purchase of Twitter. It wasn’t an agreement to think about buying Twitter and the social media company has said it will enforce the deal.

Delaware courts, where this will be adjudicated, have been consistent in ruling that the bar for breaking a merger agreement is extraordinarily high. Musk has said the bot count is too high but Twitter this week released a presentation saying it was below 5%. Legal expert say that even if it was 20% it will be tough to argue it’s a material adverse clause.

Moreover, unless Musk already has conclusive evidence of fraud, he won’t be getting any further information from the company.

This is what he claims he asked for but didn’t receive:

„Mr. Musk is entitled, under Section 6.4 of the Merger Agreement to “all information concerning the business … of the Company … for any reasonable business purpose related to the consummation of the transactions” and under Section 6.11 of the Merger Agreement, to information “reasonably requested” in connection with his efforts to secure the debt financing necessary to consummate the transaction. To that end, Mr. Musk requested on June 17 a variety of board materials, including a working, bottoms-up financial model for 2022, a budget for 2022, an updated draft plan or budget, and a working copy of Goldman Sachs’ valuation model underlying its fairness opinion. Twitter has provided only a pdf copy of Goldman Sachs’ final Board presentation.“

What could be interesting is that if politics comes into play. Texas‘ attorney general announced on June 6 it will investigate Twitter for potentially misleading on bots. That looks like an out-and-out case of corruption after Musk moved his company to Texas and considering that Texas is not a regulator of Twitter nor is it located there.

If a judge rules against Musk he would owe enormous damages to Twitter, including the difference between the merger price and trading price, plus potential damages. Given that Musk may now go on offense on the very platform he was intending to buy, he could dig himself a hole (if he hasn’t already).

Some have argued Twitter should kick Musk off the platform but their best revenge may be to leave him on there. His social media presence has been divisive and I believe it’s increasingly eroding the Tesla brand.

In any case, buckle up. This will be a better ride that the Model S Plaid.

Here are some details of accusations:

Specifically, in the Merger Agreement, Twitter represented that no documents that Twitter filed with the U.S. Securities and Exchange Commission since January 1, 2022, included any “untrue statement of a material fact” (Section 4.6(a)). Twitter has repeatedly made statements in such filings regarding the portion of its mDAUs that are false or spam, including statements that: “We have performed an internal review of a sample of accounts and estimate that the average of false or spam accounts during the first quarter of 2022 represented fewer than 5% of our mDAU during the quarter,” and “After we determine an account is spam, malicious automation, or fake, we stop counting it in our mDAU, or other related metrics.” Mr. Musk relied on this representation in the Merger Agreement (and Twitter’s numerous public statements regarding false and spam accounts in its publicly filed SEC documents) when agreeing to enter into the Merger Agreement. Mr. Musk has the right to seek rescission of the Merger Agreement in the event these material representations are determined to be false.

Although Twitter has not yet provided complete information to Mr. Musk that would enable him to do a complete and comprehensive review of spam and fake accounts on Twitter’s platform, he has been able to partially and preliminarily analyze the accuracy of Twitter’s disclosure regarding its mDAU. While this analysis remains ongoing, all indications suggest that several of Twitter’s public disclosures regarding its mDAUs are either false or materially misleading. First, although Twitter has consistently represented in securities filings that “fewer than 5%” of its mDAU are false or spam accounts, based on the information provided by Twitter to date, it appears that Twitter is dramatically understating the proportion of spam and false accounts represented in its mDAU count. Preliminary analysis by Mr. Musk’s advisors of the information provided by Twitter to date causes Mr. Musk to strongly believe that the proportion of false and spam accounts included in the reported mDAU count is wildly higher than 5%. Second, Twitter’s disclosure that it ceases to count fake or spam users in its mDAU when it determines that those users are fake appears to be false. Instead, we understand, based on Twitter’s representations during a June 30, 2022 call with us, that Twitter includes accounts that have been suspended—and thus are known to be fake or spam—in its quarterly mDAU count even when it is aware that the suspended accounts were included in mDAU for that quarter. Last, Twitter has represented that it is “continually seeking to improve our ability to estimate the total number of spam accounts and eliminate them from the calculation of our mDAU…” But, Twitter’s process for calculating its mDAU, and the percentage of mDAU comprised of non-monetizable spam accounts, appears to be arbitrary and ad hoc. Disclosing that Twitter has a reasoned process for calculating mDAU when the opposite is true would be false and misleading.What’s going to hurt his own case that is that as early as May 13, he said he was putting the deal on hold — less than three weeks after the April 25 agreement.

This article was written by Adam Button at www.forexlive.com.

The major US stock indices are closing mixed. The Dow and S&P are down on the day while the NASDAQ index eked out a small gain. It was a choppy session for stocks with the US jobs report providing mixed signals.

For the week, the major indices were higher.

A look at the final numbers shows:

• Dow industrial average fell -46.4 points or -0.15% at 31338.16
• S&P index fell -3.26 points or -0.08% at 3899.37
• NASDAQ index rose 13.97 points or 0.12% at 11635.32
• Russell 2000 fell -0.23 points or -0.01% at 1769.36

For the trading week all the indices were higher led by the NASDAQ index:

• Dow industrial average rose 0.77%
• S&P index rose 1.94%
• NASDAQ rose 4.56%
• Russell 2000 rose to 2.22%

Looking at the Dow 30 this week, the gains were led by:

• Nike, up 6.67%
• Apple up 5.84%
• Intel up 4.54%
• Salesforce up 4.34%
• Microsoft up 3.11%

The Dow losers this week included:

• Walgreens, -2.62%
• Chevron -2.55%
• Verizon -2.23%
• Coca-Cola -1.93%
• Travelers -1.27%

Some big gainers this week included:

• Beyond Meat, +24.51%
• Rivian, +24.47%
• Celcius, +18.94%
• Chewy, +18.66%
• Roblox, +17.79%
• Moderna, +17.53%

Some big losers this week included:

• Raytheon, -17.17%
• Phillip Morris -5.5%
• Schlumberger, -3.73%
• Twitter, -3.71%
• Lockheed Martin -3.04%
• Wynn resorts -2.96%
• Chevron -2.55%

This article was written by Greg Michalowski at www.forexlive.com.

The US earnings calendar is upon us again when next week some of the major financials kick off the earnings cycle. Below is a list of some of the scheduled earnings releases

Tuesday, July 12

• PepsiCo

Wednesday, July 13

• Delta Airlines

Thursday, July 14

• JP Morgan Chase
• Charles Schwab
• Morgan Stanley
• First Republic Bank

Friday, July 15

• Citigroup
• Wells Fargo
• State Street Corp
• PNC Financial
• UnitedHealth Group
• US Bancorp
• Bank of New York Mellon Corp.

In addition to earnings, next week, the US economic calendar will be highlighted by:

Wednesday, July 13

• US CPI, Est 1.0% headline. Core 0.6^

Thursday , July 14

• PPI, Est 0.8% MoM

Friday, July 15

• US Retail Sales, est 0.9% for headline and 0.7% for the core
• US Preliminary Michigan Consumer sentiment, est 49.0 vs 50.0 last month

Other key events/data

Monday, July 11

• BOE Bailey to testify on the BOE Financial Stabilty Report at 10:15 AM ET

Wednesday, July 13

• Australia Employment change, Est 30K. Unemployment rate 3.8%

• RBNZ rate decision, 10 PM ET on July 12, Est. 2.50% vs 2.0% last

• BOC Monetary Policy report, 10 AM ET
• BOC rate decision. 10 AM ET, Est 2.0% vs 1.5% last
• BOC Press conference, 11 AM ET

Thursday, July 14

• China GDP, Estimate 1.0% vs 4.8% last

This article was written by Greg Michalowski at www.forexlive.com.

Crude oil settles between 100 and 200 hour moving averages

The price of WTI crude oil is settling at $104.58, up $2.06 or 2.01%.

The low for the day reached $101.54. The high reached $105.21.

A week ago, the price closed the week at $108.48. The low this week reached $95.13 on Wednesday. The high reached $111.42 on Tuesday.

Looking at the hourly chart, the price is settling between the 100 hour MA below at $102.90, and the 200 hour MA above at $106.12. Next week, traders will be looking for a break in either direction to provide the technical directional bias.

The weekly oil inventory data released on Thursday showed a much larger than expected build in inventories of .

Key event next week, Biden heads to Saudi Arabia.

This article was written by Greg Michalowski at www.forexlive.com.