Daily Scoop 22-7-20 (correction)

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Today's Scoop:Cruising

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[Correction]

Our previous email incorrectly stated that the dollar had crossed below 1:1 parity with the euro. That would be a big deal for the currency pair. The US dollar hit 1:1 parity briefly but is now back to slightly less valuable than the euro.

Big Picture

1. Fewer people are taking out mortgages and buying homes.

2. Home prices continue to break records.

3. The US dollar is stronger than it has been in decades.

The Market: 

⬆️

+0.6%

S&P 500: 3,959.90

1Mo:

+5%

| 1Yr:

-9%

| 5Yr:

+60%

Markets continued the positive momentum today as investors debated whether we've seen the bottom.

Corporate financial reports have been better than feared

, but many are

warning of the impact of the stronger dollar on profits

. A stronger dollar makes US goods and services more expensive internationally. US corporations might lose business to international competitors overseas.

High mortgage rates and record home prices have slowed buying.

The National Association of Realtors reported existing home sales hit the slowest pace in two years in June, with 14% fewer homes sold than last June. Mortgage rates have spiked, now nearly double where they were in January. Mortgage demand is 19% lower than a year ago.

Median

home prices hit a new record

of $416,000 in June, 13% higher than a year ago. While still rising,

home prices are growing more slowly

, only climbing 1.9% in June versus over 4% per month earlier in the year. That's lower inflation.

This is what the Central Bank is trying to do broadly

- increase rates to make borrowing more expensive and slow demand, decreasing the inflation rate.

Company Scoops ❤🌎💰

(Click to dig in & vote your reaction, see how others feel)

PepsiCo

turns Portugal and Spain green

-

General Motors

builds out an electric charging network

-

Netflix

continues its slowdown

-

Goldman Sachs

looks to bring back year-end layoffs

-

Johnson & Johnson

is worried about the dollar

(These links only work for 24 hours while the story is live)

🤓 Inside Scoop...

The relative value of any particular

currency

can be affected by several factors. Some currencies, like the Chinese yuan, are artificially manipulated by the government to peg the currency to a specific exchange rate. The government buys and sells foreign currency and debt to ensure the value stays low to incentivize exports. Many other currencies, like the US dollar and euro, have free-floating values. The value and strength of a free-floating currency versus others depends mainly on supply and demand. Higher demand for a currency increases its value and the power of its exchange rate. That higher demand might be caused by relatively-higher confidence in the country's financial stability or its domestic investment opportunities.

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