Headlines of the week | Biden withdraws from the election and Harris quickly launches an offensive. The market value of the Nasdaq 100 plummets by trillions of yen in a single day and rises strongly to subvert the global market.

Special topic: Weekly headlines: The Democratic Party\’s change of leadership in the United States has disrupted the Republican Party\’s position. Polls show that Harris will perform better than Biden in the duel with Trump. This makes the election result unpredictable and brings uncertainty to the economic policy outlook. sex.
Global risk assets from stocks to metals fell this week. In addition, weak earnings reports from technology giants such as Tesla triggered panic selling. U.S. stocks posted their largest daily decline in a year and a half in mid-week.
U.S. GDP growth in the second quarter far exceeded expectations, indicating that demand remains strong.
The Bank of Canada cut interest rates again and signaled further easing.
The strong rise of the yen has subverted global markets, pummeling Japanese stock markets, gold, Bitcoin and other assets. Investors are reassessing their leveraged bets.
[News of the week] Biden announced his withdrawal from the race. Polls show that Harris performed better than Biden against Trump. Is a Harris deal coming? On July 21, local time, current U.S. President Biden announced on social platforms that he would withdraw from the 2024 presidential campaign. He would support Harris to continue running as the Democratic presidential candidate.
This is the first time in more than 50 years that a U.S. president has withdrawn from the re-election campaign. The last time he withdrew from the re-election campaign was then-President Lyndon Johnson in the 1968 election.
In the past few weeks, Biden has been pressured by his party colleagues and donors to abandon his re-election bid due to his poor debate performance.
After Biden withdrew from the race, Harris\’ campaign raised $81 million in 24 hours, exceeding the $63.8 million raised by the Biden campaign in the entire month of June.
The latest Reuters poll shows that Harris\’ support rate has surpassed Trump\’s, leading the latter by 2 percentage points. This further increases the uncertainty about the outcome of the US presidential election.
Although poll results from other institutions show that Trump is ahead of Harris in support, this lead is gradually shrinking. Among them, NBC, PBS and Marist College in the United States in July local time A poll conducted on the 22nd, the day after Biden announced his withdrawal from the race and gave way to Harris, showed that Trump only led Harris by 1 percentage point, and it was likely to be even.
According to the Emerson College/Hill poll, Trump’s approval rating is ahead of Harris in four key states: Arizona (49% to 44%), Georgia (48% to 46%), Michigan (46% to 45%) and Pennsylvania (48% to 46%).
In Wisconsin, the two are tied at 47%.
On Thursday local time, Harris announced that he would join TikTok and open a personal account.
This comes after Harris-themed memes, pictures and videos surged in popularity on the platform, which some believed could be a sign of support for Harris among young Americans.
Earlier in the day, Harris said she had agreed to a televised debate with Trump on September 10. The Trump campaign responded that Trump would not agree until the Democrats formally confirmed their candidate. Debate with Harris.
Although Harris has not officially announced her candidacy, investors have begun to pay attention to the economic policy changes she may bring.
According to media reports, some analysts believe that Harris’s advocacy may be more progressive than Biden’s on economics, such as holding a more radical stance on clean energy issues.
Similar to Trump, Harris also advocates tax cuts. However, she supports tax cuts for low- and middle-income people.
And for the wealthy and corporations, she wants to increase taxes.
In terms of exports, Harris opposes trade protectionism and hopes to promote US exports.
[Market of the Week] Poor financial reports from technology giants triggered panic selling. The market value of the Nasdaq 100 index plummeted by trillions in a single day? Has the artificial intelligence craze peaked? On Wednesday, poor financial results from Tesla and Alphabet prompted investors to question whether the 2024 rebound driven by big technology companies and artificial intelligence is sustainable.
As investors were disappointed with the prospects of artificial intelligence, U.S. stocks closed sharply lower that day. Technology stocks led the decline.
The Dow fell more than 500 points. The Nasdaq plunged 650 points, a drop of more than 3.6%.
The value of the Nasdaq\’s 100 stocks evaporated by US$1 trillion. The index fell more than 3.5%, marking its worst performance since October 2022.
Leaders in the AI ​​field such as Nvidia, Broadcom and Arm were among the top losers. The Big Seven index of the US stock market fell by 5.9%. The total market value evaporated by more than 750 billion US dollars. It suffered the largest single-day decline since October 2022.
Investors are questioning how long it will take for large investments in AI technology to pay off.
Kim Caughey Forrest, founder and chief investment officer of Bokeh Capital Partners, said: \”The return on their investment may take longer. That to me is the key.\”
The sell-off in Big Seven stocks over the past two weeks has caught investors off guard. But there are actually signs that this is going to happen.
Peter Boockvar, chief investment officer at The Boock Report, said investors are finally waking up to all the spending on artificial intelligence and realizing it is now more of an expense than a source of revenue.
Jim Covello, Goldman Sachs\’ top equity analyst and head of equity research, said he has no doubt that a liquidation will come.
He said it might not be this year. It might not even be next year. But one day it will come.
In his view, companies spending hundreds of billions of dollars in AI will not trigger the next economic revolution—not even as effective as smartphones and the Internet.
When that becomes clear, all the stocks that surged on the promise of AI will also fall.
Investors have been dumping corporate bonds issued by members of the Big Seven over the past two weeks, according to BondCliQ data. Although the sales have had little impact on yields.
The sharp sell-off in U.S. stocks pushed Wall Street\’s most closely watched measure of market volatility to a three-month high and boosted options trading, although strategists saw few signs of panic.
As stocks plummeted, the CBOE Volatility Index (VIX), Wall Street\’s fear gauge, rose to 18.46, the highest level since late April.
Trade Alert data showed that VIX options were changing hands at nearly twice the usual rate on Tuesday.
The sell-off highlights the market\’s vulnerability to weakness in any large-cap technology stock. It is raising concerns about overvaluation and is reminiscent of the dot-com bubble of more than two decades ago.
Still, options market participants say the decline so far looks more like an orderly retracement than a rout.
The Japanese stock market fell into the correction zone. It fell for eight consecutive days. The Nikkei 225 index closed down 0.5% on Friday to 37.667.41 points. It fell for the eighth consecutive trading day. It set the longest losing streak since October 2021.
Affected by the plunge in U.S. stocks overnight, the day before, the Nikkei 225 index fell 3.28% to 37,869.51 points. It was the largest single-day decline in the past eight years. It has fallen more than 10% from its July high. It marks that the Japanese stock market has entered a technical correction zone.
The background of the deep decline in Japanese stocks on Thursday was that the overnight plunge in U.S. stocks triggered market risk aversion.
The U.S. Nasdaq Composite Index, which is dominated by high-tech stocks, fell 3.6%, the largest decline among the three major indexes.
The market believes that the electric vehicle giant Tesla\’s financial report fell short of expectations and its stock price plummeted as the trigger for the collapse of investor confidence.
For most of the past six months, heavyweight technology stocks have led the rise in U.S. stocks. However, as the decline in U.S. inflation has become increasingly clear and the market’s expectations that the Federal Reserve will start cutting interest rates in September have strengthened, technology stocks have begun to pull back.
Analysts believe that due to the slowdown in performance growth, it has become increasingly difficult for heavyweight technology stocks to continue to rise, and there may be a significant correction from highs.
The fluctuations in Japanese stocks are roughly the same.
Risk aversion triggered by the decline in stock indexes is considered to be one of the factors driving increased buying of the yen. In turn, the appreciation of the yen will lead to a deterioration in the performance expectations of export companies, exacerbating the decline in Japanese stocks.
Therefore, the appreciation of the yen and the decline of the stock market are likely to form a double whammy that affects each other.
As for whether the situation of rising Japanese stocks and falling yen will be reversed, some analysts believe that at least until the extent to which the appreciation of the yen will continue cannot be confirmed, it will be difficult for investors to buy Japanese stocks with confidence.
As the yen exchange rate increases, arbitrage traders who borrow low-interest yen to invest in high-interest dollars will reduce their short yen positions. The resulting appreciation of the yen may continue for some time.
However, what needs to be paid attention to in the medium and long term is the difference between long-term interest rates between Japan and the United States.
The sudden strength of the yen triggered widespread liquidation of positions in global markets. The strong rise of the yen subverted the global market. It plunged Japanese stock markets, gold, Bitcoin and other assets. Investors re-evaluated their leveraged bets.
The yen rose to its highest level against the dollar in more than two months on Thursday, reflecting the height of bets that interest rate differentials between Japan and the United States will narrow.
A stronger yen is not good for Japanese exporters, causing the Nikkei 225 index to enter a technical correction.
Gold and Bitcoin also fell amid signs traders were unwinding previously popular bets and embracing the yen instead.
This is actually a massive deleveraging event triggered by a short squeeze on the yen. Kyle Rodda, senior market analyst at Capital.Com, said.
This forced a large-scale liquidation of positions across the entire market.
The fading of the artificial intelligence boom has already affected global assets. The renewed strength of the yen has increased market volatility.
The yen hit multi-decade lows against the dollar earlier this month and has since risen more than 6%. But that momentum will be tested with the release of new U.S. data and policy meetings from the Bank of Japan and the Federal Reserve in the coming week.
Behind the Japanese yen\’s comeback is the global use of low-yielding currencies such as the Japanese yen as financing currencies. The massive cooling off of carry trades in high-yielding currencies such as the Mexican peso, Australian dollar and New Zealand dollar.
Rising market expectations for the Federal Reserve to cut interest rates as early as September are another key factor.
Yuting Shao, macro strategist at State Street Global Markets, said that as carry trades are unwound, the yen may continue to rise heading into next week\’s Bank of Japan meeting.
The swaps market currently prices a 75% chance that the Bank of Japan will raise interest rates next Wednesday, up from 44% earlier this week.
Copper prices fell below the US$9,000 per ton mark, and the metal\’s decline intensified. On Thursday, LME copper prices once fell below US$9,000 per ton. This was the first time since early April.
This comes at a time when global stock markets are falling and market pessimism about the demand outlook is rising.
Copper prices have fallen by about a fifth since reaching record highs in mid-May, as bold bull bets on tight supplies and an imminent surge in usage have given way to growing concerns about rising inventories and weakness in the spot market.
Previously, the market\’s concerns about sluggish downstream demand in the copper market continued to ferment. Although social inventories have decreased recently, they are still significantly higher than the same period in previous years. At the same time, London Metal Exchange (LME) copper inventories continue to accumulate, further exacerbating market oversupply. expectations.
The recent significant decline in the U.S. stock market and the correction in precious metal prices reflect a significant cooling of market risk appetite.
The plunge in global technology stocks has also raised questions about the strength of the artificial intelligence industry.
Investors had bet that the use of data centers and related power infrastructure would surge. Therefore, they bought a lot of copper.
The Bank of Canada cut interest rates again, turning its focus to downside risks. The Bank of Canada cut interest rates by 25 basis points for the second consecutive time. It also hinted that as inflation concerns subside, it will further loosen policy in the future.
Policymakers led by Governor Tiff Macklem cut the benchmark overnight interest rate to 4.5% on Wednesday, in line with consensus expectations by the market and economists surveyed.
Officials believe growth below potential will continue to cool inflation and say they will spend more time discussing economic headwinds.
\”With the target in sight and excess supply in the economy growing, downside risks become a greater factor in our monetary policy review,\” Macklem said in prepared remarks.
Macklem reiterated that expectations for further interest rate cuts are reasonable and that the bank will make decisions one by one.
This refutes expectations that the bank has a predetermined path to cutting interest rates.
Central bank officials said they continue to make progress in curbing price pressures and that a return to the 2% inflation target is in sight.
The bank said that the consumer price index in June showed that the year-on-year inflation rate fell to 2.7%, which also showed that basic price pressures are easing.
Overall, officials appear more confident that price pressures are under control and are increasingly focused on maintaining a soft landing for the economy.
The dovish tone suggests that the Governing Council has turned its attention to ensuring that inflation does not fall significantly below its 2% target.
This is a significant change in the bank\’s attitude towards inflation.
A summary of discussions at a June meeting of officials showed policymakers debated whether more evidence of falling inflation was needed before easing policy.
Now they are even more confident that they have enough evidence.
The balance of risks is also changing.
Officials cited weaker-than-expected household spending as the main downside risk. They cited upcoming mortgage renewals as a risk to consumption growth.
The bank said in a statement that there are more signs of slack in the labor market. It takes longer for job seekers to find jobs.
[Data of the week] The U.S. economy accelerated in the second quarter and the growth rate exceeded expectations. The U.S. economic growth accelerated in the second quarter. The growth rate exceeded expectations. This indicates that demand remains strong under the pressure of rising borrowing costs.
The government\’s preliminary estimate shows that gross domestic product will grow at an annual rate of 2.8%. The previous growth rate was 1.4%.
Personal consumption, the economy\’s main growth engine, grew by 2.3%, also higher than expected.
A report released by the U.S. Bureau of Economic Analysis on Thursday showed that a closely watched core inflation measure rose by 2.9%, which was slower than the first quarter but still higher than expected.
Although the pace of growth accelerated compared with the first quarter, it still slowed down compared with last year.
Under the pressure of high interest rates, consumer spending and overall economic activity have cooled. High interest rates have also helped gradually curb inflation.
That bodes well for the Federal Reserve, which is trying to achieve a soft landing for the economy and could begin cutting interest rates as soon as September.
However, there needs to be a fine balance between cooling the labor market enough without causing millions of people to lose their jobs, especially when the unemployment rate has been rising for three consecutive months.
After the report was released, U.S. Treasury bond yields rose slightly. Stock index futures fluctuated slightly.
Policymakers are not expected to cut interest rates when they meet next week.
The GDP report showed that consumer spending was mainly driven by a rebound in durable goods such as cars and furniture, as well as modest growth in services spending compared with the first quarter.
Boosted by defense spending, the contribution of government spending to GDP was higher than in the first three months of this year.
Residential investment\’s contribution to GDP turned negative for the first time in a year as high mortgage rates dampened sales activity and new construction starts.
Business investment grew at the fastest rate in the past year. Among them, equipment investment recorded the strongest growth since the beginning of 2022.
Another report on Thursday showed that U.S. capital goods orders excluding aircraft and defense supplies increased by the most since early last year in June.
This suggests such spending will continue to boost economic growth in the coming months.
[Company of the Week] Tesla’s poor Q2 earnings report caused the stock price to plummet. Musk announced the postponement of the release of Robotaxi. Tesla’s second-quarter profit was lower than Wall Street’s expectations. It continued the poor start to the year. Previously, as electric vehicle sales slowed .The company conducted a massive layoff.
This is the fourth consecutive quarter in which Tesla’s results fell short of expectations.
The company reported second-quarter adjusted earnings per share of 52 cents on Tuesday, below analysts\’ average estimate of 60 cents; revenue rose to $25.5 billion, exceeding analysts\’ expectations of $24.6 billion.
Tesla said its focus remains on cutting costs and reiterated that it expects growth to be significantly lower in 2024.
The company said its deliveries have picked up due to improving consumer confidence and financing incentives, but the next wave of growth will be driven by advances in self-driving technology and new product launches.
After Tesla released its earnings report, its stock price fell by more than 12% on Wednesday.
Tesla\’s electric car deliveries have fallen for two consecutive quarters, and it hasn\’t launched the low-cost models that many expected, leading buyers to turn to rival electric carmakers.
Tesla has been forced to cut prices and increase incentives to boost sales of its older lineup of cars.
Musk said that competitors have significantly reduced discounts on electric vehicles, making Tesla\’s situation even more difficult.
The company said that cheaper models expected to be launched in the first half of 2025 will lead to lower cost reductions than previously expected. It also postponed the highly anticipated self-driving taxi launch to October.
Tesla\’s pricing is not based on the car. It\’s based on autonomy and AI…We believe any payoff from (Tesla\’s AI) plans are still very far away,\” UBS analyst Joseph Spak wrote. Reiterating A sell rating on the stock.
Tesla shares trade at 50 times expected 12-month earnings. Traditional automaker Ford Motor Co. trades at 7 times earnings.
Musk said on Tuesday that Tesla\’s Optimus humanoid robot has begun performing tasks autonomously in one of its factories and that he would be shocked if there were no unsupervised self-driving Tesla cars next year.
In 2019, Musk told investors that Tesla would operate a robotaxi network by 2020.
He also launched a poll on X asking whether Tesla should invest $5 billion in his artificial intelligence startup xAI — a quarter of which he plans to reserve for X investors.
The value of .X has plummeted since he spent $44 billion to acquire the platform.
Some Wall Street analysts have questioned whether the 2025 timeline for robotaxis is realistic. An October 10 launch is currently expected.
TD\’s Osborne said Tesla\’s self-driving technology is still a long way from fully autonomous driving. They may not reach a level where the car can drive itself without any human intervention until the end of the century.
Alphabet releases second-quarter report: Cloud business is booming. But AI losses widen Google parent company Alphabet announced its second-quarter earnings after the market closed on Tuesday. Both revenue and profit exceeded analyst expectations. As its cloud business continues to accelerate. Business Profit exceeded the $1 billion mark for the first time.
This quarter, the company\’s earnings per share were $1.89 and revenue was $84.7 billion.
According to the data, analysts expected earnings of $1.85 per share and revenue of $84.3 billion.
That\’s a significant increase from the same period last year, when the company earned $1.44 per share on revenue of $74.6 billion.
Advertising revenue reached $64.6 billion, higher than analysts’ expectations of $64.5 billion. It was also higher than last year’s $58.1 billion.
However, YouTube advertising revenue was not satisfactory. It was only US$8.66 billion, lower than the expected US$8.95 billion.
After the statement was released, Alphabet\’s stock price rose slightly. However, it still ended the week with a decline of more than 7%.
Google\’s cloud computing revenue was $10.35 billion. This was better than analysts\’ expectations of $10.1 billion. It was also higher than the $8 billion in revenue and $395 million in operating income the company reported in the second quarter of 2023.
Alphabet shares have risen 30% so far this year.
Shares of rivals Microsoft and Amazon are up 18% and 22% respectively so far this year.
All three companies are investing heavily in building their own generative AI capabilities and spending heavily to build data centers to support AI models provided through cloud service platforms.
Alphabet reported that in the second quarter, the company invested $2.2 billion in its DeepMind and Google Research units to build AI models. This figure is up from $1.1 billion in the second quarter of 2023.
When AI will start generating revenue for Google\’s cloud business (let alone its advertising business) remains unclear.
Jefferies analyst Brent Thill wrote in a recent investor note before Alphabet reported earnings: It is too early to count on the benefits of artificial intelligence. As most companies Still in pilot mode. Substantial AI revenue is more likely to materialize in 2025-26.
Google is still trying to find its footing with AI Overview, a generative AI feature that appears at the top of Google search results pages.
The company launched the search feature in May, but users quickly discovered that its answers weren\’t always accurate. For example, it would tell them to put glue in a pizza or eat a stone a day.
Google responded by withdrawing some generative AI features.
While increasing investment in artificial intelligence, Alphabet is also cutting expenses in other areas, including layoffs.
In the second quarter, the company reported a total of 179,582 employees, down from 181,798 in the same period last year.
The CrowdStrike crisis caused the stock price to plummet and short sellers made huge profits. U.S. cybersecurity company CrowdStrike said on Wednesday that the CrowdStrike software update that caused a global computer crash last week affected the aviation, banking and healthcare industries in many countries around the world. This major incident Caused by an error in the company\’s quality control mechanism.
Friday\’s widespread IT outage was caused by a failure in CrowdStrike\’s Falcon Sensor platform, which forced computers running Microsoft\’s Windows operating system to crash and display a blue screen of death.
Falcon Sensor is the company\’s advanced platform for protecting systems from malware and hackers.
CrowdStrike said in a statement: Due to a bug in the content validator, one of the two template instances passed validation despite containing problematic content data.
The company was referring to a failure of an internal quality control mechanism that allowed the data in question to pass the company\’s own security checks.
As CrowdStrike continued to plummet due to this, the short-sellers who insisted on massively shorting CrowdStrike reaped huge returns.
According to the latest statistics from S3 Partners LLC, CrowdStrike\’s stock price fell 23% on Friday and Monday. Investors who shorted the stock realized a book profit of US$978 million.
The sell-off was enough to give short sellers who had previously lost money on CrowdStrike\’s surge in stock price a huge profit so far this year. It pushed total paper profits in July to nearly $1.5 billion.
The wooden girl Cathy Wood bought Crowdstrike at the bottom for two consecutive days.
After the outage occurred last Friday, two ETFs owned by Ark purchased 38,595 CrowdStrike shares, worth approximately US$13.24 million.
Ark\’s ARKW fund sold 14,859 Tesla shares on Monday. Based on the closing price of $251.51 that day, the value was approximately $3.74 million.
In this storm, which is known as the largest IT accident in history, there are also some ridiculous market episodes.
Deutsche Bank analyst Brad Zelnick was unable to publish his comments on the global outage last Friday because of a computer outage.
[Character of the Week] Buffett sold Bank of America stocks for six consecutive days. Buffett’s Berkshire Hathaway filed a document with the U.S. Securities and Exchange Commission (SEC) on Wednesday night local time, showing that the company sold about Nearly 19 million Bank of America shares were sold for $800 million.
In the previous three trading days last week, Berkshire reduced its holdings of 33.89 million shares of Bank of America at a price of approximately US$1.5 billion. This means that it has sold a total of approximately US$2.3 billion worth of Bank of America shares for six consecutive trading days. Silver stocks.
This is the first time Berkshire has reduced its stake in Bank of America since the fourth quarter of 2019.
In 2022, Berkshire exited several long-term bank stocks, including JPMorgan Chase, Goldman Sachs, Wells Fargo and U.S. Bank. But Bank of America was not among them.
Berkshire still holds 980 million Bank of America shares, worth approximately US$41 billion, equivalent to approximately 12.5% ​​of the shares.
Bank of America remains Buffett\’s second-largest holding, after Apple.
Still, given the recent sell-off, investors will remain wary of the possibility that Berkshire will sell more Bank of America shares in the coming days and weeks.
Some analysts said that according to Buffett\’s previous habit of clearing positions, the selling of Bank of America may not have stopped this time.
Buffett may first reduce his stake in Bank of America to less than 10% (which means that about 200 million shares will need to be sold next). Then Berkshire will no longer need to disclose its shares to the SEC within two working days. Trade. After all, Buffett prefers to buy and sell stocks without quick public disclosure.
This is the rhythm that Berkshire has previously liquidated stocks such as Hewlett-Packard, U.S. Bank, and Paramount Global. But it is unclear when Berkshire will stop selling.
However, some analysts believe that Buffett\’s reduction in Bank of America may be related to concerns about its valuation.
Bank of America\’s cumulative increase this year has reached about 28%, far outperforming the U.S. stock market.
This reduction should be a normal operation for Buffett to adjust his position. It is similar to the reduction of Apple in the previous two quarters. The purpose is to free up some cash for subsequent investments or repurchases.
[Next week’s preview] July 30 (Tuesday) 07:30 Japan’s unemployment rate in June 13:30 France’s second quarter GDP 16:00 Germany’s second quarter GDP 17:00 Eurozone’s second quarter GDP 20:00 Germany 7 Monthly CPI July 31 (Wednesday) US stock market after-hours Microsoft and AMD financial reports 09:30 Australian second quarter GDP 11:00 Bank of Japan announces interest rate decision and outlook report 14:30 Bank of Japan Governor Ueda Kazuo holds monetary policy press conference Meeting 14:45 French July CPI monthly rate 15:55 German July unemployment rate 17:00 Euro zone July CPI 20:15 US July ADP employment 20:30 Canada May GDP 22:30 US to July 26 EIA crude oil inventory for the current week, August 1 (Thursday) 02:00 US to July 31 Fed interest rate decision (upper limit) US stock after-hours Meta, Qualcomm earnings report 17:00 Eurozone June unemployment rate 19:00 UK to The central bank’s interest rate decision on August 1; the Bank of England announced the interest rate decision and meeting minutes 20:30 The number of initial jobless claims in the United States for the week to July 27 22:00 The U.S. ISM manufacturing PMI in July OPEC+ held a ministerial group meeting to discuss Review of oil production policy August 2 (Friday) U.S. stock market after-hours earnings report of Apple, Amazon, Intel 14:30 Swiss CPI in July 20:30 U.S. unemployment rate in July; U.S. non-farm payrolls in July