Earnings push stocks higher, building permits decline, euro rallies as markets expect half-point ECB hike, bitcoin tries to hold USD 22k

US stocks are rallying as corporate earnings haven’t been terrible and on optimism that Russia won’t delay the restart of gas flows on Nord Stream 1 pipeline. ​ Earnings have been coming in mixed but nothing too terrible that is unnerving investors. ​ Even reports that Apple is slowing hiring is not enough to sink risk appetite. ​ Stocks are already down significantly this year and disastrous outlooks are what was needed to send the major indexes to fresh lows. ​

Two big risk events on this week’s calendar are the ECB decision and the potential restart of the Nord Stream 1 pipeline. ​ Reports have been circulating that Russia will not play games and delay the restart of the key pipeline, but they might reduce the levels given to Europe, which should keep supporting natural gas prices. ​ ​ ​

Housing market cooling down

Building permits are dropping which confirms the cooling of the housing market. The weakening trend in the housing market will continue as the Fed won’t be easing up with its aggressive tightening schedule. ​ New home construction in June fell to the weakest levels since September, while residential starts posted a surprising decline. Single-family construction is obviously weakening as the consumer struggles with widespread inflation and that sends permits to a 2-year low. ​ The housing market is cooling quickly and that should continue as inventories build up. ​ Tomorrow’s existing home sale data could show sales of previously owned US homes plunged to two-year lows and more than halfway towards the pandemic lows. ​

Bitcoin

Bitcoin is holding above the USD 22,000 level as the cryptoverse awaits any major announcements or financial commitments from Bloomberg’s crypto summit. Galaxy Digital CEO Mike Novogratz noted that more crypto hedge funds will fail, but did hold out optimism that Bitcoin can still get to $500,000 in five years. ​ Novogratz acknowledged he was ‘darn wrong’ about how much leverage was in the cryptoverse.

US Senators’ Kirsten Gillibrand (D-NY) and Cynthia Lummis (R-WY) pre-recorded interview was played at the key summit and highlighted that they expect their crypto legislation to be deferred until next year. ​

The dollar has been in freefall for a few days and that has provided some underlying support here for crypto. ​ This is a massive week for bitcoin and if prices can continue to grind higher, more investors might start to believe the bottom is in place. ​ Earlier in the week, reports that crypto miners are abandoning their bitcoin positions was not enough of a bearish catalyst to send prices back to the recent lows. ​

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