“If you have an approach that makes money, then money management can make the difference between success and failure… … I try to be conservative in my risk management. I want to make sure I’ll be around to play tomorrow. Risk control is essential.” – Monroe Trout

1. China’s Export Curb on Chip-Making Metals Prompt Countries to Explore Supply-Chain Diversification — China produces around 60% of the world’s germanium and around 80% of its gallium, according to the Critical Raw Materials Alliance, an industry body. China mines and exports large quantities of gallium and germanium, providing the raw materials to countries such as the U.S. and Japan that process them into high-end products, which can then be used in manufacturing advanced semiconductors, military radars, LED panels, solar panels, electric vehicles and wind turbines. By contrast, China processes other minerals like cobalt, which are mined elsewhere. More export control measures are likely to come. The U.S. is likely to release in the coming weeks final and upgraded regulations related to export curbs of advanced chips and equipment that it announced in October, The Wall Street Journal has reported.
2. US Services Activity Expand by Most in Four Months on Stronger Demand — The Institute for Supply Management’s overall gauge of services increased 3.6 points — the most since the start of the year — to 53.9 last month. Readings above 50 represent expansion, and the index exceeded all forecasts in a Bloomberg survey of an economists. In a welcome sign on inflation, the group’s measure of prices paid for materials and services dropped to the lowest level since March 2020.
3. Wage Gains, Low Unemployment Keep Pressure on Fed; Hiring Cooled in June — U.S. employers added 209,000 workers in June, a solid monthly gain but down from May’s revised 306,000. In the first half of this year, payrolls grew by an average of 278,000 a month, down from nearly 400,000 last year.
The unemployment rate fell to 3.6% last month from 3.7% in May. Employers ramped up wages as they competed for a limited pool of workers. Average hourly earnings grew 4.4% in June from a year earlier, matching gains in the preceding two months and remaining well above the prepandemic pace. The latest jobs and wage data add to evidence that economic activity hasn’t slowed as much as Fed officials expected, and leaves them likely to lift interest rates to a 22-year high at their July 25-26 meeting. Inflation has eased from its recent peak a year ago, but remains roughly double the Fed’s 2% target.

The week ahead — Economic data from Econoday.com: