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Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) – US equities weakened after the close yesterday on a weak earnings report from Amazon, whose revenue estimates for next quarter missed estimates (more below). This came after the cash session saw the Nasdaq 100 index managing to sustain above 15,000 into the close and the S&P 500 likewise closed in the green after touching all-time highs intraday before weakening after the close.

The question is whether the blow to confidence from Amazon will compound with other factors to drive a more significant consolidation. The first pivotal level of note is perhaps the 21-dat moving average which recently supported the Nasdaq 100 and now sits at 14,833, actually above overnight lows. The 21-day moving average for the S&P 500 is at 4,355.

Bitcoin (BITCOIN_XBTE:xome) and Ethereum (ETHEREUM_XBTE:xome) – Bitcoin just can’t seem to do the deed and sustain the price action above the 40k level over the last couple of sessions, the key for a more significant attack on the higher range to 50k and above. Ethereum is similarly hesitant near key resistance above 2,400. In the US yesterday, a framework to regulate cryptocurrencies and stablecoins was introduced in the House of Representatives. In other news, Germany will allow some institutional funds to invest in crypto.

Amazon (AMZN:xnas) – Amazon missed Q3 revenue estimates, guiding for revenue in the quarter of $106-112 billion versus nearly $119 billion consensus expectations and seeing operating income in the $2.5-$6.0 billion range versus $8 billion estimated. The end of Covid lockdowns and changing consumption patterns that accompany them are seen as driving the lower estimates and drove Amazon shares sharply lower after hours despite strong growth in advertising and the AWS cloud unit.

Nikkei 225 Index (JP225.I) – The main large cap Japanese equity bears watching as it trades at new lows since the very first trading days of the year on a very weak session overnight – with a risk of an aggravated sell-off if the Japanese JPY rallies broadly – see below comment on USDJPY for levels.

US Treasuries (SHY:xnas, TLT:xnas, IEF:xnas) US Treasury yields rose amid ugly 7-year auction. Yesterday’s 7-year auction was the weakest since February. It stopped at 1.05%, tailing 1 basis point compared to When Issued (WI). Demand was also weak with the bid-to-cover at 2.23x, the lowest since March. The weak auction follows quite a substantial GDP miss which saw it expanding by 6.5% during the second quarter of the year, below an estimated 8.4%. At the same time, 10-year TIPS yield fell to 1.175% indicating that the market is beginning to fret about possible stagflationary pressures.

What’s going on?

Germany Jul flash CPI much hotter than expected with the headline CPI number coming in at +0.9% month-on-month and +3.8% year-on-year versus +0.6%/+3.2% expected, respectively. That 3.8% print is the highest in the German inflation data series since 1993.

US GDP comes in weaker than expected with highest inflation in nearly 40 years. The first estimate of US Q2 GDP came in weaker than expected at an annualized rate of 6.5% versus 8.4% expected, in part as inventories were drawn down heavily as companies struggled with supply chains, particularly in the residential construction industry. The Q2 GDP Price Index registered a stunning 6.0%, the highest level since 1982.

Robinhood (HOOD:xnas) IPO met with weak first day. The IPO of the at times controversial US based retail brokerage was priced at $38 per share, but ended the day below $35 in a weak first day of trading.