Netflix earnings spark a rally, Housing Market Cools, Bitcoin higher

No one expected Netflix to trigger a decent risk-on rally for the other mega-cap tech stocks, but that is exactly what is happening.  Stocks are rising as Wall Street grows confident that corporate earnings might not fall off a cliff.  Pessimism won’t be completely going away as two major risk events are in the next 24 hours; the ECB rate hiking decision and the Russian decision on how much gas to let flow through the Nord Stream 1 pipeline. Italian politics are dampening the mood too, as the government is on the verge of collapse as support for Mario Draghi runs low. ​

Netflix

Netflix earnings results were better than expected. The streaming giant only lost 970,000 accounts subscribers for the quarter, much less than the 2 million analysts were expecting. The company confirmed they will launch a new ad-supported tier around the beginning of next year. The company still will struggle with spending as content will cost them around USD 17 billion a year.

After the report that Apple was planning on slowing hiring and spending, tech stocks needed some good news and they kind of got it from Netflix.  Tremendous growth across the Asia Pacific was also a good sign for Netflix as they continue to attract subscribers globally.  ​

Home sales cool off

The housing market is clearly cooling. The June existing home sales report posted the slowest pace of sales in two years and a separate report showed mortgage applications fell to the lowest levels in 22 years. Sales of previously owned homes fell 5.4% steeper decline in the -1.1% eyed by analysts. Expectations are for home sales to get much worse as these contract closings reflect where the mortgage rates were in April and May which is well in advance the one to 30-year fixed mortgage rate rose above 6%.

The median price of an existing home posted another record high at USD 416,000, a 13.4% jump from a year ago.  Both prices of homes and borrowing costs are surging and that will undoubtedly lead to even softer prints for the rest of the year.

Bitcoin

Bitcoin continues to grind higher alongside equities. The macro backdrop remains troubling, but the way some investors are positioned, we could still see further bullish momentum as price breaks above key trading ranges.

Peak pessimism is close to getting priced in and crypto was the punching bag for that trade. The risks remain elevated but now Bitcoin is at the USD 24,000 level and selling pressure seems to be throwing in the towel for now.

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