It is shaping up to be a weak start to record stock markets across the pond, as Asian and European markets kick off in the red.  Multiple parallel crackdowns in China have soured global bullish sentiment while cryptos have exploded higher on possible Amazon acceptance. This is all happening ahead of the busiest week of second quarter earnings and Wednesday’s FOMC meeting, while many traders continue with their vacations to add thin liquidity into the mix.

Huge FAAMG earnings

Among the many stats about earnings beating estimates this time around, we note that company results were projected to be roughly 50% higher in 2023 than they were in the year immediately prior to the pandemic, significantly more than was anticipated in most other major economies. Analysts are now speculating if this tailwind of rising earnings forecasts which has provided so much support to the stock market over the past year will now fade in the coming months.

Tesla leading the way

The blitz of some of the largest tech companies in the world begins with Tesla after hours later today. Of course, the Elon Musk-led company is a bellweather in the green and electric vehicle space and is poised to report more record revenues as it navigates the global chip shortage. But as always with this company, there are lots of questions to be answered including how much of its earnings actually comes from selling cars versus selling regulatory emissions credits and the current state of play regarding the supercharger network, bitcoin’s status and China.

The stock has lagged after hitting a record high in January, with the shares closing down nearly 30% from its highs. A descending triangle pattern is playing out with a break of support at $563 potentially opening up downside towards November lows around $408. Bumper results and clear answers to the sceptics could see a break higher. A close above $689 will see the eyes of the bulls light up with a move to $800 on the cards.

Glass half empty, half full

The real yield on US 10-year debt fell to all-time lows earlier today on mounting concerns that the Delta variant will derail the economic recovery. Along with growth assumptions being questioned, geopolitical worries and tighter Chinese regulations are rearing their heads too.

The FX space is relatively quiet, but USD is losing ground on these worries. DXY has tracked sideways over the last few sessions with 93.19 and 92.50 being the highs and lows over the past week.

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