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“The Edge… There is no honest way to explain it because the only people who really know where it is are the ones who have gone over.” – Hunter Thompson

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It’s another quiet morning in the markets today as futures are little changed with a positive bias.  Crude oil and yields are also higher, although overnight economic data out of China and Europe generally came up short of expectations, and mortgage applications in the US declined 1.4% versus the prior week. Bitcoin is also modestly lower on the morning, but given the SEC’s actions towards the industry this week, one might have thought the sector would be under even more pressure.

With every advancement, the negative side effects tend to get a disproportionate amount of attention even when the societal benefits of the breakthrough dwarf the costs.  The bank runs this spring were a perfect example.  How many times did we hear that a consumer’s ability to transfer large sums of capital with nothing more than a couple of taps on their smartphone was a threat to the banking system?

The list of benefits these same commentators fail to mention is long and includes the ability to effortlessly move funds around the world with just a couple of taps and how it has radically improved economic efficiency. Besides the benefits, if banks simply offered even something resembling a competitive deposit rate and didn’t load up on long-duration assets when interest rates were near zero, they never would have run into these problems in the first place. And anyway, is a business model built on a foundation of making it difficult for customers to take their business elsewhere really one we all want to get behind?  If that’s the case, why wasn’t anyone defending America Online back in the early 2000s when the company made it nearly impossible for customers to cancel their accounts?

The only reason for bringing this up now is that back on this day in 1962 Switzerland opened its first drive-through bank.  After seeing that, we wondered if, even with the added convenience, there were similar cries from the Luddite community railing against the fact that customers could now just drive up to the bank and withdraw funds…all while the car was still running. Talk about a bank run!

Regarding banks, we noticed yesterday that the S&P Regional Banking ETF (KRE) closed above its 50-day moving average for the third day in a row which hasn’t happened since late February/early March, before the onset of the regional banking crisis. Who knows if the worst is over, but if it is, it would have been one hell of a quick ‘crisis’.

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See what’s driving market performance around the world in today’s Morning Lineup.  Bespoke’s Morning Lineup is the best way to start your trading day.  Read it now by starting a two-week trial to Bespoke Premium.  CLICK HERE to learn more and start your trial.

“I’m not in this world to live up to your expectations and you’re not in this world to live up to mine.” – Bruce Lee

Below is a snippet of content from today’s Morning Lineup for Bespoke Premium members.  Start a two-week trial to Bespoke Premium now to access the full report.

Equity futures have had a quiet session overnight on little news flow.  The only major news of note was a surprise 25 bps rate hike in Australia. Investors are still digesting the virtual headset that Apple unveiled at WWDC yesterday, and while a charitable description is that it is a work in progress, hopes are that future versions will show improvement in form, function, and price.  After trading lower after the headset was unveiled, shares of AAPL are trading down over 2.5% this morning.  In case you missed it yesterday, we published a BIG Tips report on how AAPL stock historically performs before, during, and after the annual WWDC conference.

There’s no economic data to speak of in the US, but in Europe this morning, Retail Sales for the EU were unchanged, which was weaker than 0.2% m/m growth that was expected. Factory Orders in Germany declined 0.4% which was much worse than expectations for 2.8% growth. In Spain, Industrial Production also declined by 0.9% compared to consensus forecasts of 1.7%, so a weak showing overall. Maybe the lack of economic news in the US today is a good thing!

We discussed oil’s lack of ability to rally on what should be considered good news for prices last Wednesday, but considering the commodity’s action in reaction to the weekend news that Saudi Arabia would cut supply, it’s worth updating again.  First, OPEC+ announced a surprise production cut in early April which caused prices to immediately spike by over 8% and a total ultimate gain of just over 10%.  The gains didn’t last long, though.  The rally stalled out just shy of the 200-day moving average, and by the end of the month, the gains had all been erased.

In late May, a Saudi minister warned speculators who were short oil to ‘watch out’.  Those comments were good for a rally of less than 4% lasting less than two days, and after stalling out at the 50-day moving average (DMA) the gains were erased within a day.  That brings us to the past weekend when Saudi Arabia announced it would cut production by 1 million barrels per day in July.  That production cut was good for a 4%+ rally in crude oil when futures markets opened for trading Sunday evening, but by the end of the trading day Monday, crude oil was already below its Friday close, and this morning crude oil is down another 2%.

A key factor behind all three rallies and their ultimate bearish reversals is that they all ended abruptly at a key moving average.  During bull markets, moving averages tend to act as support in any pullback, during bear markets, they act to squash any rally right in its tracks.

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