Nasdaq Markets Outlook

Italian banks regain footing as cap set on windfall tax -RTRS | quiet day on the economic front | US CPI tomorrow | China slides into deflation as consumer, factory prices drop -BBG = policy easing which markets will cheer...? | Treasury auctions off to good start = yields stabilizing -BBG | soft economic landing, hard landing, or no landing ...

"Markets have been celebrating lower inflation and an imminent Fed pivot. Historically, markets always rise, and expect a soft landing, when the Fed is nearly done tightening. Pivot rallies end when claims rise sharply (i.e. hard landing).” -Piper Sandler, Michael Kantrowitz

* source: Piper Sandler, Michael Kantrowitz

| "A lost 18 months for the S&P 500: The S&P 500 has taken a roundtrip to January 2022 levels on forward earnings ($227) and on its multiple of 20x - a lost 18 months" -BofA's Savita

* source: BofA's Savita

| Any other interest rate rise shocks? | will anything else break?

* source: Oxford Economics

1) KEY TAKEAWAYS

1) Equities + TYields HIGHER | Oil down by 2%

DJ -0.0%, S&P500 -0.2%, Nasdaq -0.4%, R2K -0.6%, Cdn TSX +0.2%

Stoxx Europe 600 +0.5%, APAC stocks MIXED, 10YR TYield = 4.012%

Dollar LOWER, Gold $1,923, WTI +1%, $84; Brent +1%, $87, Bitcoin $29,912

2) 30YR mortgage rates touching fresh highs... | Mortgage demand drops again after FHA loan interest rate hits 21-year high -CNBC

* source: Yardeni Research

3) "The regional banking index had reached a post-SVB high the previous day, with a +34% increase since its low in mid-May, having reversed about two thirds of the post-SVB decline. Moody’s cited higher funding costs, potential regulatory capital weakness, and increasing commercial real estate risks." -Jim Reid, Deutsche Bank

* source: CNBC

4) War + inflation = rise of nuclear power...

* source: BofA

5) next topic, interest rate cuts...?

* source: Goldman Sachs Global Investment Research

6) High debt levels in the spotlight... | US annual interest payments approaching $1 trillion!

* source: BofA

* source: BofA

7) Yield curve normalization? | Bond traders are eyeing a return to a type of trade that left them battered earlier this year - betting on yield curves returning to a more normal shape as slowing economies force central banks to cut interest rates. -RTRS

* source: Yardeni Research

8) Food for thought | with monetary policy normalizing after 14+ years will we see a paradigm shift?

* source: BofA

9) CPI (inflation) + Small Biz Optimism + Consumer Survey = highlights this week

* source: Grindstone Intelligence

10) Rising yields have been a recent theme, will it break above the resistance level? #YieldBackUp

-pricing in positive economic data (yield curve steepening), new supply, Fed commitment to higher for longer, UK inflation still elevated, Japanese bonds spiking

* source: Yardeni Research

"yes, the BoJ pivot mattered. As we’ve seen in the past, higher foreign bond yields can lead to higher U.S. bond yields. There’s a particularly strong correlation between Treasury and Bund yields … which are also grinding higher." -Piper Sandler' Nancy Lazar

* source: Piper Sandler

2) ESG, COMPILED BY NATHAN GREENE

OFF TODAY

3) MARKETS, MACRO, CORPORATE NEWS

Italy banks stocks regain ground as cap set on windfall tax-RTRS

• Rising prices for travel do not appear to be curbing wanderlust-RTRS
• China tips into deflation as efforts to stoke recovery falter-RTRS
• Italy joins wave of windfall taxes on banks across Europe-FT
• Investors’ expectations of eurozone inflation hit 13-year high-FT
• South Korea unemployment rate climbs to six-month high-RTRS
• Treasury auctions off to good start, strong demand for three-year notes-BBG
• Fund capitulation on record short US equity bet pays off-RTRS
• Bond traders prepare to brave 'painful' yield curve bets as rate hikes slow-RTRS
• Weight-loss stocks soar after obesity-drug study spurs investor frenzy-BBG
• Weird weather hits utility profits and a blistering summer is little help-BBG
• Ueda’s YCC tweak fuels bets that end to negative rates is near-BBG
• White House to detail plans restricting some US investments in China-RTRS
• Investors visiting China find officials fearful of upsetting Xi-BBG
• No decoupling, but West and China drift apart-RTRS
• Joe Biden makes his big Middle East push: a Saudi Arabia-Israel pact-FT
• UAW demands would add $80 billion to US carmaker labor costs-BBG
• Amazon in talks to become anchor investor in Arm ahead of IPO-RTRS
• Airtel exploring offering CPAAS platform in overseas markets-ET
• Virtual reality startup Immersed to go public via SPAC deal-RTRS
• L’Occitane Boss in advanced talks on $6.5 billion buyout-BBG
• IWG eyes departure from London Stock Exchange-LT
• Brazil state to sell Copel’s control in $1.1 billion offer-BBG
• Loan losses at US banks hit $19bn as borrowers feel rate rise pain-FT
• Google fails to end $5 billion consumer privacy lawsuit-RTRS
• KKR scoops up auto loans as regional lenders sell assets-BBG
• WeWork says there's "substantial doubt" about its future-BBG
• Oil/Energy Headlines:
  1) Ukraine to ‘pick’ targets if Russia blocks ports, Zelenskiy says-BBG
  2) US oil output to hit record this year, helping counter Saudi cuts-BBG
  3) Russia Seaborne crude flows steady before Ukraine’s Black Sea attack-BBG