Calm in financial markets, corporate, stock exchange and international news for today
Market Reviews
• It was a surprisingly quiet start to the week, with Japan taking a weekend off for Mountain Day after the Nikkei index fell sharply last week and rocked global markets. Most other Asian stock markets stabilized, led by a 2% rise in Taiwan, while Wall Street futures remained steady. The dollar hovered around 147.00 yen and the collapse of the yen trade appears to be complete for now. IMM data last week showed net short interest in USDJPY now stands at 11,354, down from 184,000 in early July. Treasury futures were also little changed, while fed funds futures suggested a 49% chance of a half-point rate cut in September, after hitting 100% a week ago.
• Fed officials have effectively dismissed talk of an intersession cut, with Fed Chair Michelle Bowman noting over the weekend that inflation is still uncomfortably above target. She has softened her typically hawkish tone enough to acknowledge that rates will have to be cut gradually if inflation continues to slow.
US consumer price data will be published on Wednesday. Annual core inflation is forecast to fall to 3.2%, the lowest since April 2021. Even lower numbers would prompt experts to again warn that the Fed is behind schedule for rate cuts.
There could be a surprise in July retail sales on Thursday, given that the median forecast is +0.3%, but the range is 0.0% to +0.9%. Results from Walmart and Home Depot this week will provide more insight into the state of demand. Weekly jobless claims could also move markets more than usual, given the unexpectedly sharp drop reported last week.
• Japanese corporate profits rose 10% due to weak yen and demand for AI. Japanese publicly traded companies have performed well, with combined net profit rising 10% year-on-year in the April-June period, supported by continued demand for AI and a weak yen.
• On the memcoin, which was associated with Trump, crypto traders lost more than $100 million / On rumors of involvement in the Trump family, the Restore the Republic (RTR) asset grew by 120%, but after the son of the presidential candidate denied this information, the token fell sharply within an hour by 80%, and traders who managed to invest $155 million in RTR lost their funds.
• Olympic gold medals are worth more than ever / Olympic gold medals at the current Paris Games are worth more than ever, and the raw materials from which they are made can fetch about $900 for each of them.
• Some of the largest US refineries are cutting production at their facilities this quarter,
adding to concerns about a global crude oil glut building.
• The recovery in markets is encouraging, but investors should not jump to the conclusion that we are in the clear. Instead, proceed with caution as top Wall Street strategists say we're not out of the woods yet. "Capital outflows will likely continue through September or October, leading up to the November elections," said investment market veteran Ed Yardeni.
• Zambia closes its border with DR Congo, blocking a key copper trade route. This could delay exports from Africa's largest copper producer. Copper futures are calm.
• Uber CEO is skeptical of Elon Musk's robotaxi idea. If he's wrong, Uber is in trouble. Khosrowshahi knows self-driving cars are coming and sees autonomous cars becoming a big part of Uber's business in 10 to 15 years.
According to Khosrowshahi, about 100 people die every day in traffic accidents in the United States. Thus, a robot driver that is 10 times better than a human would be responsible for approximately 10 deaths per day. Better, but “I don’t know if society is ready to accept it.”
Tesla will hold its robotaxi event in early October.
• US earnings growth is finally showing up outside of tech megacaps - Bloomberg. As corporate America's latest quarterly earnings season enters its final stages, it's clear that the long-awaited recovery at companies that have been left out of the AI frenzy has finally begun.
• Tesla has stopped accepting orders for the cheapest version of the Cybertruck - Reuters. The lowest threshold available for immediate order starts at $100,000 instead of the previous $61,000.
• Trump's Truth Social suffered a loss in the second quarter and lower revenue. Trump Media and Technology Group, owner of former President Donald Trump's social network Truth Social, lost more than $16 million last quarter and also saw revenue decline, according to an earnings report released Friday.
• Boeing received a $2.56 billion E-7A Wedgetail contract from the US Air Force. The contract includes life cycle development, training and support for the E-7A fleet.
• Hedge funds increased bearish bets on Japanese stocks at the fastest pace in five years during the week of August 2-8. As the Nikkei faces its worst period since Black Monday in 1987. Hedge Funds Most Bearish on Commodities Since at least 2011 - Bloomberg. Fears of a deeper economic downturn are calling into question demand for everything from crude oil to metals and grains.
• Rheinmetall buys South Africa's Resonant to expand its ammunition production. The German defense giant has acquired a majority stake in South African gunpowder manufacturer Resonant. The company is seeking to significantly expand the production of 155 mm shells.
• Economic data this week
- Producer Price Index will be released on Tuesday. It measures July changes in the prices of goods and services produced. In June, the Bureau of Labor Statistics reported that the index rose 2.6% year over year, with prices for services rising the most. The July report also forecast growth of 2.6% year on year.
- The consumer price index will be released on Wednesday. This measure of the prices consumers pay for all expenses is expected to remain little changed in July.
- Retail sales are due to be released Thursday from the Commerce Department. This is the report Wall Street is waiting for. The consensus is for an increase of 2% in July compared to July 2023.
- Also coming out on Friday: data on new home starts and building permits, as well as the Michigan Consumer Sentiment Index (both on Friday). The start of housing construction is expected to reduce mortgage rates.
Earnings Reports Scheduled: Home Depot (HD), Cisco Systems (CSCO), Walmart Inc. (WMT), Applied Materials (AMAT), Deere (DE).
- OPEC will publish its monthly oil report
- Verizon (VZ), C3. AI (AI), Coinbase Global (COIN) and Cirrus Logic (CRUS) will participate in the two-day Oppenheimer conference on technology, internet and communications.
- MSCI will announce the results of the MSCI stock index survey for August 2024. Changes to the indices will be made as of the close of trading on August 30
- The three-day Ai4 conference will begin. Participants include Chegg (CHGG), Amazon (AMZN), Wells Fargo (WFC), Medtronic (MDT), who discuss innovation in AI and machine learning in business.
- Barrick Gold reports second quarter results.
In the morning, financial markets are calm. Investors are waiting for US inflation data on Tuesday-Wednesday.
Key events that could impact markets on Monday:
- German Minister of Economics Robert Habeck and RWE CEO Markus Krebber speak.
International reviews
• In geopolitics, the Middle East remains a powder keg: Israeli Defense Minister Yoav Gallant told US Defense Secretary Lloyd Austin that Iran is preparing for a large-scale attack on Israel. The Pentagon made the rare decision to publicly announce that Austin had ordered the deployment of a nuclear-powered guided missile submarine to the Middle East. The Pentagon added that Austin also ordered the Abraham Lincoln Strike Force to accelerate its deployment to the region.
• Trump said he will hold three rounds of televised debates with Harris in September, they will take place on September 4, 10 and 25 on Fox, ABC and NBC.
We are waiting for Harris' response. Kamala Harris joins Trump in calling for tip taxes to be repealed. Trump immediately complained that Harris was copying his proposal. "It was Trump's idea - she has no ideas, she can only steal from me."
• Vance supports Trump's idea that the Fed should have less independence. Monetary policy "should be fundamentally a political decision," says the GOP vice presidential nominee.
• Tim Walz created "the most progressive tax system in the country" for Minnesota. As Minnesota governor, Tim Walz signed an executive order providing tax breaks for low-income families while increasing state taxes on wealthy households and corporations. This could hint at Kamala Harris' 2025 tax plans. Harris' increased presidential chances with the threat of higher taxes may be one reason for the negative sentiment in the stock market.
• Hackers attacked the internal Internet networks of the campaign headquarters of US presidential candidate Donald Trump - Politico. The campaign blamed "foreign sources hostile to the United States," citing a Microsoft report released Friday that Iranian hackers "sent a phishing email to a senior official involved in the presidential campaign in June."
• The UK government is preparing large-scale censorship of social networks and will require the removal of not only fake posts, but also “legal but harmful content.” The UK police are threatening Americans with criminal charges and extradition, probably referring to the owner of the social network X, Elon Musk.
• Saudi Arabia is reforming investment laws in an attempt to attract foreigners. Saudi Arabia has announced new business rules aimed at increasing transparency and making it easier to invest in the kingdom as it seeks to attract more foreign investors.
• WSJ: The US offered Maduro an amnesty in exchange for giving up power. The United States has offered to grant amnesty to Venezuelan President Nicolas Maduro in exchange for his resignation before his term expires in January 2025, The Wall Street Journal writes. The source told the publication that during the secret negotiations they talked about releasing him from charges of involvement in narco-terrorism. The American Justice Department nominated them to Maduro and his associates back in 2020.
• Israel has killed another senior Hamas commander, this time in southern Lebanon. Samer al-Hajjah commanded Hamas forces in the Ain al-Hilweh camp for Palestinian refugees, located near Sidon, which is largely controlled by the militants.
• Poland purchased hundreds of air-to-air missiles from the United States. The contract value is about 783 million euros, the Polish National Armaments Agency reported. The missiles will be delivered between 2029 and 2033; they plan to equip Polish Air Force combat aircraft with them.
• Biden official on immigration: We're looking at a 'perfect storm' right now. Immigration remains a polarizing issue in the US and is expected to be a key factor in the upcoming elections. Progress has stalled because of a lack of bipartisanship and compromise, one Biden official said.
• Iran's new president reassigned an official subject to UN sanctions to the post of head of the country's nuclear department - AP. 67-year-old Mohammad Eslami will continue his work as head of Iran's civilian nuclear program.
• 'Forced' JPMorgan Chase seeks to end legal case against Russian VTB Bank in New York - Reuters. JPMorgan Chase asked a U.S. judge in Manhattan on Friday to dismiss its lawsuit against Russian bank VTB over a $439.5 million account frozen following Russia's invasion of Ukraine, saying VTB "coerced" him into seeking dismissal of the suit.
• The world's most expensive accident occurred in Italy: Steve Jobs' ex-wife's $120 million yacht collided with another $120 million vessel of an unknown billionaire.