S&P 500 EARNINGS BEATS FALL FLAT — Bloomberg’s Jeran Wittenstein: “Investors have greeted a stellar second quarter earnings season for U.S. companies -- with a yawn. A large swath of S&P 500 companies surpassed Wall Street profit estimates, but their shares barely budged. It’s the second consecutive quarter of a lackluster response to earnings beats, fueling the case that U.S. stocks are due for a pullback after an 18 percent rally this year.” CASH IS FLOODING INTO SHORT-TERM MARKETS LIKE NEVER BEFORE — WSJ’s Julia-Ambra Verlaine: “An unusual surge of short-term lending by cash-rich companies is raising concerns on Wall Street that a period of unrest may lie ahead. Investors such as money-market funds and banks are parking over $1 trillion in spare cash overnight at the Federal Reserve. That is the most on record since the Fed opened its facility for these reverse repurchase agreements in 2013. “The scale of the moves has some analysts warning that the markets for short-term funding are vulnerable to disruption. The cause for this summer’s rush into the Fed’s reverse repo facility appears to be the central bank’s decision in June to nudge up the amount of interest it pays, from 0 percent to 0.05 percent—though usage had already been rising in the spring.” SEC APPROVES NASDAQ PROPOSAL TO REQUIRE CORPORATE BOARD DIVERSITY — Reuters’ Jessica Dinapoli: “The U.S. Securities and Exchange Commission approved a proposal from stock exchange operator Nasdaq Inc that requires its listed companies to have diverse boards, or explain why they do not. "The proposal requires that companies have two diverse directors, including one who identifies as female and another as an underrepresented minority or LGBTQ+, or explain why they do not. Companies also have to publicly disclose the diversity of their boards. ‘These rules will allow investors to gain a better understanding of Nasdaq-listed companies’ approach to board diversity,’ said SEC Chair Gary Gensler in a prepared statement.” RECORD PACE FOR CORPORATE EARNINGS KEEPS STOCKS BUOYANT — WSJ’s Karen Langley: “A solid corporate earnings season has bolstered the case for stocks. Recent developments have had many investors expecting rockier trading in the coming months, following an 18 percent advance in 2021 that has taken the S&P 500 to 44 record closes. “The rapidly spreading Delta variant of the coronavirus has cast a cloud over the economic outlook, and rising prices have sparked debate over whether sustained inflation will hamper the recovery. China’s crackdown on corporations, meanwhile, has analysts considering the possibility of a drag on U.S. markets.” SEC BRINGS ITS FIRST DEFI CASE OVER UNREGISTERED TOKEN SALES — Bloomberg’s Matt Robinson: “The U.S. Securities and Exchange Commission brought its first case tied to the booming decentralized finance market, alleging a company sold digital tokens that should have been registered with the Wall Street regulator. “The SEC sued Cayman Islands-based Blockchain Credit Partners and two of its top executives for illicitly offering securities through its DeFi Money Market platform from February 2020 to February 2021, according to a Friday statement. The company sold more than $30 million worth of two types of tokens that the SEC considered to be securities, which must be registered with the agency.” RISING RENTS POSE RISKS TO FED’S INFLATION OUTLOOK — WSJ’s Nick Timiraos: “The biggest wildcard for U.S. inflation over the next year doesn’t come from used cars or airline fares. Instead, it is housing. Officials at the Federal Reserve and the White House have highlighted what many forecasters expect will be the temporary nature of elevated price readings stemming from the reopening of the economy following pandemic-related restrictions “But the degree to which 12-month inflation readings fall back to the central bank’s 2 percent goal could rest on the behavior of rents and home prices. In recent months, housing-cost trends point to more persistent, rather than transitory, upward price pressures in the coming years.” TRANSITIONS – Per email from Todd Phillips: “I'm leaving the FDIC and will soon be the Director of Financial Regulation and Corporate Governance at the Center for American Progress.
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