The US economy showed resilience in the second quarter as GDP grew at a faster rate than expected, reaching 2.4% annually,
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2023-07-28 | Sign Up | View Online | Advertise
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S&P 500 4,537.43 -0.64%
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Markets & Economy
The US economy grew stronger than expected in the second quarter (2 min read)

The US economy showed resilience in the second quarter as GDP grew at a faster rate than expected, reaching 2.4% annually, surpassing the estimate of 1.8%. So far this year, the economy has been defying predictions of a recession, and despite the Fed's interest rate increases, it continues to show signs of strength. Positive indicators in durable goods orders and jobless claims were also reported. Markets climbed higher after the reports were released.
European Central Bank raises rates by a quarter percentage point (3 min read)

The ECB raised its key rate by another 0.25% to 3.75%, marking a full year of consecutive rate hikes to combat high inflation. Eurozone’s inflation slightly declined to 5.5% in June but remains well above the ECB's 2% target. Similar to the Fed on Wednesday, the ECB did not provide specific forward guidance on future moves but expressed its commitment to data-dependent decision-making. However, the market reaction shows anticipation of further rate increases in the eurozone.
2% Inflation Target is Silly (3 min read)

The author of this article argues that the Fed’s 2% inflation target is arbitrary and that 4% would be a more rational goal. He claims that the Fed has been consistently late in recognizing and responding to the inflation dynamics in the post-pandemic economy and that many economists are still influenced by the 1970s/80s inflation experience, which is no longer relevant today. He also criticizes the use of inflation expectations as a guide for monetary policy, saying they are unreliable and backward-looking. More details on his argument are available in the article.
Business & Stocks
3 Warren Buffett Stocks That Violate His Core Investing Principles (5 min read)

This article discusses three of Warren Buffett’s significant stock holdings that have violated his core principles. Despite advice to buy wonderful companies at a fair price, Buffett's investment in Apple seems pricey. His preference for long-term investing also doesn't align with his short-term bet on Activision Blizzard. Additionally, Buffett's aversion to heavily indebted companies contrasts with his significant investment in Occidental Petroleum. While these deviations might be tactical, they appear to contradict his usual value-oriented strategies.
Big banks have to raise capital by as much as 19% under proposed US rules (7 min read)

US regulators are proposing significant changes to banking regulations to protect against future crises. The proposal suggests that big banks should increase their capital levels by 19% on average, making them more resilient. This will primarily affect the largest banks like JPMorgan and Bank of America. Smaller banks with $100-$250 million in assets will see a 5% rise. Regulators want banks to assess risks differently and include more institutions under the new rules.
Royal Caribbean Sails To 3-Year High On Q2 Earnings Rout (2 min read)

Royal Caribbean reported strong Q2 earnings and revenue that beat estimates, with booking volumes and pricing reaching record levels, indicating robust demand for cruising. The company also raised its full-year outlook, expecting double-digit growth and increased earnings. Its stock has risen over 121% this year and surged another 10% after the quarterly report. Other cruise line stocks also rallied following the positive news and shows the industry is experiencing powerful gains as consumers resume vacation plans after pandemic restrictions.
Funds & ETFs
Single Bond ETF Tops $1B in Assets for First Time (3 min read)

Shortly after the first single-stock ETF reached a billion dollars in AUM, the first single-bond ETF to achieve this milestone has also emerged. The US Treasury 3 Month Bill ETF (TBIL) just hit $1 billion in assets, less than 10 months after launching. TBIL only holds a single T-bill that was most recently issued for a month before rolling into the next new issue. This approach appeals to investors with sophisticated strategies but it also competes well against other bond funds.
Banking ETFs Skyrocket as Industry Recovers (2 min read)

Financials and Banking ETFs are experiencing the highest inflows this year, outperforming all other sectors, including technology. The interest is attributed to investors seeking to capitalize on the banking industry's recovery after a crisis in March triggered by the collapse of Silicon Valley Bank. Despite some regional bank ETFs being down this year, investors see growth potential in the sector as banks continue to recover and interest rates rise.
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