Before the Open (Sep 6-9)

Good morning. Happy Friday.

The Asian/Pacific markets did great. China, Hong Kong, Taiwan, Australia, New Zealand, Singapore and Thailand led Europe, Africa and the Middle East currently up big, The UK, Denmark, Poland, France, Turkey, Germany, Greece, South Africa, Finland, Switzerland, Norway, Hungary, Spain, the Netherlands, Italy, Austria, Sweden, and the Czech Republic are up 1% or more. Futures in the States point towards a big gap up open for the cash market.

————— VIDEO –>> Day Trading with 5-min Charts —————

The dollar is down. Oil and copper are up. Gold and silver are up; Bonds are up.

Stories/News from Seeking Alpha…

The energy edition

Weekend Bite, a Seeking Alpha original series: This week we’re joined by Katie Stockton, Founder and Managing Partner at Fairlead Strategies, to dive into what the technicals are telling her about where U.S. markets are heading from here. We also explore the Fairlead Tactical Sector ETF (TACK), while Kim Khan covers next week’s potential market-moving events in Catalyst Watch.

European energy ministers are convening in Brussels today as a deepening energy crisis confounds the bloc. Set to be discussed are a series of emergency intervention measures to stave off runaway prices, or more painful cuts that could result in de-industrialization and even social unrest. While ministers will debate the effectiveness of the actions, and their related consequences, a bigger part of the equation will be to maintain a consensus and preserve the unity of the European Union. Here is what’s on the table:

Government support: Looking to prevent ballooning collateral requirements, emergency credit lines would be offered to energy market participants that are facing high margin calls.

Rationing: Proposals range from setting mandatory targets on reducing electricity consumption during peak hours to cutbacks in electricity utilization.

Price caps: The most controversial of the measures is putting a price ceiling on gas imported from Russia, and how the caps would impact different regions and countries.

Trading suspensions: Caps may also be imposed on the margin limits that energy exchanges can ask for, or other temporary suspensions of European power market derivatives.

Windfall revenues: Levies would be imposed on European electricity producers by setting a threshold at less than the current market rate and using the cash to help reduce households’ soaring energy bills.

Clock is ticking: The Czech Republic, which holds the EU’s rotating presidency, called the extraordinary meeting, with Industry Minister Jozef Sikela outlining the current timetable. “I already see points where I’m pretty sure we will align. There’s no time to lose,” he declared, saying that direction must be agreed to by the end of Friday and a legislative proposal sent to the European Commission by the end of the month. (4 comments)

Role of the ECB

As the energy situation in Europe grows dimmer, ECB officials are preparing to double down on their aggressive monetary stance, loading up the policy rifle with more gunpowder. The central bank delivered a monster 75 basis point increase on Thursday, which was the largest hike in the institution’s 24-year history. The cost of energy was the biggest factor in sending the eurozone inflation rate to 9.1% in August, which the central bank is trying to put a lid on lest it spirals out of control.

Transcript: “We want all economic actors to understand that the ECB is serious. We expect to raise interest rates further, because inflation remains far too high and is likely to stay above our target for an extended period,” ECB President Christine Lagarde declared. “We think it will take several meetings… How many is several? It’s probably more than two, including this one, but it’s probably also going to be less than five,” meaning rate hikes could continue into early 2023.

“I cannot reduce the price of energy,” continued Lagarde. “I cannot convince the big players of this world to reduce gas prices. I cannot reform the electricity market… monetary policy is not going to reduce the price of energy.” The messaging leaves many to wonder about the role and strategy of the ECB, especially if it cannot fight structural energy issues and the supply-side problems. Rising borrowing costs will only increase the risk the eurozone slides into recession, and the central bank has even sharply reduced growth projections for next year. What is going on?

Economic communicator: Ultimately, government interventions are needed to shield energy users from some of the pain, but “the ECB has to see to it that these price pressures do not get embedded,” said Holger Schmieding, chief economist at Berenberg Bank. “They have to signal for workers and companies that the environment will be tough and that this is not a backdrop for huge wage increases, which in turn would add to inflation. The central bank wants to make sure that inflation expectations – after the current surge in energy prices has run through the system – stay modest by sending the signal of [front-loading rate hikes].” (6 comments)

Another approach

Britain is dealing with similar problems to the European Union – but is dealing with them alone – after its Brexit vote and formal departure from the bloc in 2020. New Prime Minister Liz Truss announced a new energy plan on Thursday to tackle the issues, shortly after taking up residence at 10 Downing Street. The country is also digesting the death of Queen Elizabeth II, who was Britain’s longest-reigning monarch and passed away at the age of 96.

The plan: Starting from Oct. 1, the average U.K. household “will pay no more than £2,500 ($2,880) per year for each of the next two years,” resulting in “a £1,000 saving per year.” A similar guarantee will be provided for businesses over the next six months, with further support available for vulnerable industries like hospitality. In terms of the reaction, some constituents applauded the long-awaited relief, while others wondered if it would be paid by taxpayers in the long-term, or give utilities free rein to charge exorbitant prices.

The announcement is just the first part of a broader energy plan that will be detailed by Britain’s Chancellor of the Exchequer, Kwasi Kwarteng, later this month. “Far from being dependent on the global energy market and the actions of malign actors, we will make sure the UK a net energy exporter by 2040,” continued Truss. “Secure energy supply is vital to growth and prosperity, yet it has been ignored for too long. I will end the U.K.’s short-termist approach to energy supply once and for all.”

Elsewhere in Europe: Some EU countries are not waiting on determinations from the bloc, and are making attempts at shoring up their own energy infrastructure. Two floating liquefied natural gas terminals have just set up shop in the Netherlands, which can convert LNG into gas to be pumped across onshore networks. Germany, which previously received more than a half of its gas from Russia, is also chartering five “floating storage and regasification units,” or FSRUs, as well as Italy, France and the Baltics.

Trading the news

While the price of gas in Europe is surging, another energy source is going in the opposite direction. A barrel of Brent crude is now under $90 a barrel, while West Texas Intermediate is under $85, which is nearly 10% below the level at which the benchmarks traded before Russia’s invasion of Ukraine. Brent and WTI ended up hitting a high of around $130 a barrel during the crisis, and while the two are still up 13% YTD, they have been on a steady decline since mid-June.

What’s happening? The EU is the largest importer of natural gas in the world, and has built much of its grid based on the fossil fuel. Natural gas is used for everything, like cooking and heating for consumers, as well as electricity and power generation for heavy industry. The bloc used to be mostly resource-independent back in the 1960s and 70s, but North Sea gas fields have since been depleted, while the bloc has reduced its dependence on coal and rejected investments in nuclear energy. As a result, there has been a tremendous reliance on Russia, which has threatened to cut off supplies completely and sent benchmark Dutch TTF natural gas futures soaring.

Brent and WTI crude oil, on the other hand, are highly linked to forces of the global economy. Those forces, which at the beginning of the year were showing much promise due to the pandemic recovery, have recently soured. Recession talk is everywhere, while demand concerns, rising stockpiles, China lockdowns and the possibility of another release from the U.S. Strategic Petroleum Reserve are weighing on prices. In fact, crude is headed for a back-to-back weekly loss and is down over 4% since Monday.

Commentary: “This is the financial market selling off on the back of recession fears, it’s the continuation of the bearish macro backdrop,” noted Bjarne Schieldrop, chief commodities analyst at SEB. “We have extremely broad-based negative sentiment, which we have also seen in industrial metals.” (7 comments)

Today’s Economic Calendar
10:00 Fed’s Evans Speech
10:00 Wholesale Inventories (Preliminary)
12:00 PM Fed’s Waller Speech
12:00 PM Fed’s George Speech
1:00 PM Baker-Hughes Rig Count

What else is happening…

Fed needs to act ‘forthrightly and strong’ to avoid ’70s inflation – Powell.

U.S. mortgage rates near 6%, highest since the financial crisis.

DocuSign (DOCU) surges as results, outlook show sales not slowing down.

Annaly Capital Management (NLY) to implement 1-for-4 reverse stock split.

China will not invade Taiwan within the next 5 years – Intel (INTC) CEO.

Trump SPAC (DWAC) adjourns holders vote on merger until Oct. 10.

Report: Twitter (TWTR) reached $7M settlement with whistleblower in June.

Revance Therapeutics (RVNC) surges as Botox rival gets FDA approval.

Rivian (RIVN) partners with Mercedes on electric van production.

Coming up: Check out five things to watch at the Detroit Auto Show.


Good morning. Happy Thursday.

The Asian/Pacific markets close mostly up. Japan, India, Taiwan, Australia, New Zealand, Indonesia and Singapore did great; China and Hong Kong were weak. Europe, Africa and the Middle East currently lean up. Poland, Turkey, Greece, South Africa, Israel and the Czech Republic are doing well; Germany is down. Futures in the States point towards a down open for the cash market.

————— VIDEO –>> Day Trading with 5-min Charts —————

The dollar is down. Oil and copper are up. Gold is flat; silver is up; Bonds are up.

Stories/News from Seeking Alpha…

Trouble in Europe

Facing headwinds and crises on all sides, the European Central Bank is likely to begin a super aggressive phase of monetary policy today, with the largest hike in the institution’s 24-year history. Most economists see a jumbo-sized 0.75 percentage point increase in the cards, after the bank raised interest rates by a half percentage point in July. That hike was its first in more than a decade (and the first since the pandemic), and highlighted how severely the ECB is behind its central bank peers.

Bigger picture: Playing catch-up won’t be easy, with the eurozone staring down the barrel of a severe economic crisis. The common currency is plunging amid surging inflation, which hit a new all-time high of 9.1% in August, while a damaging recession is in the works due to an energy crisis. Things aren’t getting any better as Russia threatens to cut off all gas supplies to the “collective West” ahead of what might be a harsh winter, and retaliate if the G7 imposes a price cap on Russian oil.

“At Jackson Hole, ECB executive board member Isabel Schnabel acknowledged a trade off between taming inflation and maintaining growth,” noted Jean Boivin of BlackRock Investment Institute. “Yet she stressed a ‘robust control’ approach to monetary policy, focused on getting inflation down at whatever cost.”

Thought bubble: Many are wondering if the ECB can even play catch-up, or if it is caught in a Catch-22. Raise rates to stave off entrenched inflation, only to find that energy prices are keeping costs elevated and weighing on economic output. In that situation, inflation may not decline, or can at least take quite a while to decline, risking a nightmare stagflation scenario. The ECB will announce its policy decision and growth projections at 8:15 ET, followed by President Christine Lagarde’s news conference a half-hour later. (8 comments)

Meet the new iFamily

Apple (AAPL) unveiled updates to its iPhone, AirPods and Apple Watch product lines on Wednesday, including the new Apple Watch Series 8 and iPhone 14 with satellite connectivity. Chief Executive Tim Cook kicked off the event, noting that all three products are “essential in our lives,” and work seamlessly together. “This type of integration is something only Apple can do and we’re going to make these products and experiences even better,” he related in a pre-recorded video.

The biggest surprise? No price hikes. The new iPhone 14 and iPhone 14 Plus start at $799 and $899, respectively, while the iPhone 14 Pro and iPhone 14 Pro Max start at $999 and $1,099. While the fresh iPhone lineup looks similar to existing models, it adds features like Globalstar (GSAT) satellite messaging for emergency use. Most of the upgrades were on the new high-end models, including 48MP camera sensors, and a pill-like space at the top of the screen – known as the Dynamic Island – that changes based on the type of notification or action that is occurring, like charging or playing music.

“They did enough to keep iPhone growth going,” said Gene Munster, managing partner with Loup Ventures. “Maintaining pricing is the new price cut, and that should be good for demand.”

Far Out: The new Apple Watch Series 8 ($399 for GPS and $499 for cellular) comes with a new temperature sensor and additional cycle tracking features for women’s health, along with new accelerometers that can detect if a person has been in a car crash and call for help. Apple also took the wraps off of the widely anticipated Apple Watch Ultra ($799 for GPS and cellular), geared towards extreme fitness and sports enthusiasts. New versions of the tech giant’s wireless earphones, the AirPods Pro 2 (costs $249), have a new H2 chip inside, giving users new audio experiences, including better sound quality, a custom amplifier and spatial audio. (194 comments)

Moment of truth

There’s some trouble circling former President Donald Trump’s media company and the SPAC aiming to take it public. The two have so far failed to complete a merger, while federal investigations surrounding the deal are making headlines. However, results of a shareholder vote that will be announced today at 12 p.m. ET could provide some clarity on what’s next for Digital World Acquisition Corp. (DWAC), whose stock has gone on a wild ride since it first debuted in October 2021.

What’s at stake? A failure to approve the deal’s extension deadline could result in DWAC’s liquidation, and while it’s possible to postpone the merger without 65% of shareholder approval, it would cost some big bucks. SPAC sponsor ARC Global Investments II, led by CEO Patrick Orlando, said if the vote fails to lead to an extension it plans to contribute $2.88M to DWAC’s trust account for a three-month period, until December 8, with the contribution being made as a loan.

“Google is coming along nicely (I think?). SEC trying to hurt company doing financing (SPAC),” Trump wrote to his 4M Truth Social followers. “Who knows? In any event, I don’t need financing, ‘I’m really rich!’ Private company anyone???”

Go deeper: Shareholders should want to vote in favor of an extension, with DWAC trading above $20, nearly double the value of cash held in trust and $10 SPAC level. However, a large portion of DWAC is held by retail investors, who usually have lower voter turnout compared to the institutions. Truth Social was created in the aftermath of the Jan. 6 U.S. Capitol attack, which saw Trump first restricted, and then banned, by social media giants like Twitter (TWTR), Facebook (META), Snapchat (SNAP) and YouTube (GOOG, GOOGL). (2 comments)

Wallet watching

Inflation is changing spending patterns in the U.S., with some 40% of consumers expecting to start their holiday shopping by the end of October, according to a YouGov survey commissioned by The distribution of timing for when consumers predict to begin shopping ranges from the 11% that already started by the end of August to the 12% that say they’ll wait until December to start their gift buying. The survey was carried out online between Aug. 17-19, 2022, with a total sample size as 2,415 adults.

Details: Overall, 40% of consumers said inflation will change the way they shop, with the biggest proportion (45%) being in the lowest-income bracket (under $50K in annual household income). 41% of shoppers with annual income of $50K-$79,999K said they’ll change how they shop because of inflation.

More than 4 out of 5 (84%) holiday shoppers said they’ll also use money-saving tactics this year, including coupons, sales and discounts (41%), buying fewer items (40%), starting shopping earlier (27%); buying cheaper brands (21%), using credit card rewards to offset costs (17%), shopping at stores where they have loyalty accounts or store-specific cards (17%), making gifts or crafts (14%), and obtaining second-hand items (11%).

Payment method: Some 21% will pay for purchases with a credit card over time and 10% plan to use “buy now, pay later” options. While the latter services are interest-free loans, they can eventually turn into late fees, deferred interest or other penalties. Overall, the most popular payment method for holiday shoppers is by credit card (54%), with 38% planning to pay in full and 21% in multiple billing cycles. 50% will use debit cards, 43% cash, and 7% checks (but respondents could choose more than one answer for how they’ll pay for purchases).

Today’s Economic Calendar
8:30 Initial Jobless Claims
9:10 Jerome Powell Speech
10:00 Quarterly Services Report
10:30 EIA Natural Gas Inventory
10:30 EIA Petroleum Inventories
12:00 PM Fed’s Evans Speech
3:00 PM Consumer Credit
4:30 PM Fed Balance Sheet

What else is happening…

Nasdaq breaks losing streak with 2% rise; Will it last?

Big Short’s Michael Burry: ‘We have not hit bottom yet.’

Report: Google (GOOGL) to restrict travel to ‘business critical’ needs.

Snap (SNAP) CEO memo lays out response to ‘punch in the face.’

Tech production at risk with new Chinese lockdowns in Chengdu.

GameStop (GME) soars after earnings satisfy, new FTX partnership.

Kim Kardashian co-founds new private equity firm called SKKY.

Howard Schultz: ‘Never coming back again’ as Starbucks (SBUX) CEO.

Fed needs several months of lower inflation to pull back – Brainard.

Antitrust bill appears to be stalling on tech industry opposition.

Good morning. Happy Wednesday.

The Asian/Pacific markets were weak. Hong Kong, South Korea, Taiwan, Australia and the Philippines dropped more than 1%. Europe, Africa and the Middle East are currently mostly down. Hungary, Portugal, Austria and the Czech Republic are doing well, but the UK, France, Germany, Greece, South Africa Switzerland, Norway, the Netherlands, Israel, Sweden and Saudi Arabia are down either moderately or big. Futures in the States point towards a flat-to-down open for the cash market.

————— VIDEO –>> Day Trading with 5-min Charts —————

The dollar is up. Oil and copper are down. Gold is up; silver is down; Bonds are up.

Stories/News from Seeking Alpha…

Far Out

Apple (AAPL) is set to host its first product event of the fall, where the tech giant is expected to unveil a wide swath of products, including updates to three of its most popular product lines. The iPhone 14 is expected to be the star of the show, with Apple likely showing off four new versions of the iconic smartphone: a 6.1-inch model, a 6.7-inch model, a 6.1-inch iPhone 14 Pro and a 6.7-inch iPhone 14 Pro Max. Some analysts have forecast the new iPhone 14 Pro and iPhone 14 Pro Max to see a $100 price increase over last year’s models, which started at $999 and $1,099, respectively.

Bigger picture: Apple’s Pro models have been big profit drivers (accounting for 54% of revenue) since late 2020, when the company announced its first 5G-capable devices. “Around the world, 5G penetration is still low,” according to CEO Tim Cook, “so I think there’s reason to be optimistic.” Wedbush Securities has called the unveiling of the new iPhone family another “pivotal moment,” especially in light of the weakening global economy, while reports suggest the company could announce a new subscription plan that lets people pay for the device on a per-month basis.

In addition to the new iPhones, which are expected to have better cameras, video and processors, Apple is expected to unveil new versions of the Apple Watch, including one that is geared towards extreme sports enthusiasts. The new wearable, which is likely to compete with a similar offering from Garmin (GRMN), will have a larger display than previous watch versions, as well as a larger battery and a titanium casing. The tech giant is also widely speculated to unveil at least one version of its wireless earbuds, the AirPods Pro 2.

Grab the popcorn: The announcements will be streamed on Apple’s website, with the event, dubbed “Far Out,” starting at 1:00 p.m. ET. Investors will also be watching Apple’s stock price during the show, with shares going on a roller coaster ride since an all-time high of $182 in January. At the time of writing, Apple shares are largely unchanged at $154, with a market capitalization of $2.5T.

Good news is bad news?

There has sure been a lot of choppy trading since the beginning of September, with the bears taking the bulls by the horns in an intense fight over market direction. Traders continue to assess market data – before the FOMC meeting at the end of the month – to see how far the central bank will go in its battle against inflation. The more positive the economic figures, the less the Fed will have to worry its aggressive hiking cycle will trigger a downturn… or so the thinking goes.

The latest: The S&P 500, along with the major indices, fell Tuesday for its seventh consecutive day of losses, marking the longest losing streak since November 2016. It followed an ISM survey that showed the U.S. services industry picking up for the second straight month in August due to increases in business activity, new orders and employment. The focus now turns to Fed Chair Jerome Powell’s speech tomorrow, after the central bank telegraphed that it would be extremely data dependent given a road ahead that’ll “bring some pain to households and businesses.”

Traders now see a 70% chance of a third 75-basis-point move in September, up from 57% a week ago, according to the CME Group’s FedWatch tool that measures pricing in the fed funds futures markets.

Commentary: “The Fed will be surprised by the growth damage caused by its tightening, in our view,” wrote analysts at Blackrock. “When the Fed sees this pain, we think it will stop raising rates. It will be too late to avoid a contraction in economic activity by then, we think, but the decrease won’t be deep enough to bring PCE inflation down to the Fed’s target of 2%… That’s a big deal. We think getting inflation back to central bank targets means crushing demand with a recession. That’s bad news for risk assets in the near term.” (4 comments)


Juul Labs (JUUL) has struck a fresh settlement with 33 states and Puerto Rico that will see the once high-flying e-cigarette maker shell out $440M over a period of six to 10 years. The deal will resolve allegations that it marketed its products to underage users, and follows an investigation that began back in 2020. Juul already agreed to pay a total of $87M in settlements with four other states, and is fighting an FDA order from June that required the company to pull its products from the U.S. market.

Quote: “They relentlessly marketed vaping products to underage youth, manipulated their chemical composition to be palatable to inexperienced users, employed an inadequate age verification process, and misled consumers about the nicotine content and addictiveness of its products,” Connecticut Attorney General William Tong said at a news conference.

The terms of the deal include restrictions on youth marketing, paid product placement, advertising on public transportation, funding education programs, or using cartoon characters or people under 35 years old in advertisements. Juul also agreed not to advertise on billboards or use paid influencers to promote products, which will severely limit its marketing and sales practices.

Valuation up in smoke: Marlboro owner Altria (MO) bought a 35% stake in Juul for $12.8B in late 2018 to diversify its portfolio and join forces with a company that was threatening its traditional cigarette business. Things didn’t go so well, with the FDA banning flavored e-cigs in 2020, prompting JUUL’s market share to tumble from 70% to 42%, and then to 36% as of March 2022. Earlier this year, Altria valued its JUUL stake at $1.6B, an eighth of its original investment, and that’s before the FDA threatened its entire U.S. business (Altria shares are down 40% since the acquisition). (34 comments)

Annual boosters

COVID-19 immunization will become an annual event similar to the yearly rollout of flu vaccines, according to top health officials in the U.S. The announcement didn’t come as a surprise to many as new Omicron boosters were just cleared by the FDA – under emergency approval – given the rapid mutation rate of coronavirus. Updates to the jabs were also approved before their human testing was complete – using data from earlier iterations of the shots and other sources – suggesting that the vaccines will be sticking around for a while.

Snapshot: The “bivalent” messenger RNA vaccines address both the original strain of the virus and Omicron subvariants BA.4 and BA.5, which together account for an estimated ~99% of circulating COVID-19 strains. “In the absence of a dramatically different variants, we likely are moving towards a path with a vaccination cadence similar to that of the annual influenza vaccine, with annual updated Covid-19 shots matched to the currently circulating strains for most of the population,” declared White House Chief Medical Adviser Dr. Anthony Fauci.

CDC Director Dr. Rochelle Walensky recently added that the seven-day average of COVID hospitalizations had dropped 14% to 4,500, and new vaccines could prevent as many as 100,000 hospitalizations and 9,000 deaths per year. She also forecasts that the shots could save billions in medical costs if people adopt them at the same level as annual flu vaccine coverage. Pharmacy retailers CVS Health (CVS) and Walgreens (WBA) announced the availability of Omicron-adjusted boosters last Friday.

Go deeper: People need to have completed a primary vaccination series to be eligible for the new boosters, and be at least two months out from their last dose of any COVID vaccine. The CDC also advises that one should consider waiting three months after recently having COVID (and testing negative) before getting an updated booster. However, Fauci pointed out that there may be situations where people with underlying medical conditions might have to get immunized more than once a year. (23 comments)

What else is happening…
7:00 MBA Mortgage Applications
8:30 Goods and Services Trade
10:00 Fed’s Mester Speech
11:55 Fed’s Brainard Speech
2:00 PM Fed’s Barr Speech
2:00 PM Fed’s Beige Book

What else is happening…

‘Top Gun’ sequel (PARA) wins Labor Day, becomes No. 5 of all-time.

U.S. government gives details of $50B CHIPS for America program.

Bed Bath & Beyond (BBBY) appoints interim CFO after Arnal death.

Now is not the time to fight the market ‘whoosh’ – Canaccord.

Trump SPAC (DWAC) tumbles on report of failed extension.

Instagram (META) cuts back shopping ambition amid ad-driven focus.

Judge criticizes Musk lawyer over Twitter (TWTR) discovery process.

Google’s (GOOGL) upcoming event expected to unveil its first watch.

European energy trading risks collapse over $1.5T in margin calls.

BlackRock’s (BLK) Fink says government spending, remote work fuel inflation.


Good morning. Happy Tuesday.

The Asian/Pacific markets were mixed. China, Thailand and the Philippines were up; Hong Kong was weak. Europe, Africa and the Middle East are currently mixed. Turkey, Germany, Greece, South Africa and the Czech Republic are up; Poland, Russia, Norway, Portugal and Saudi Arabia are down. Futures in the States point towards a moderate gap up open for the cash market.

————— VIDEO –>> Day Trading with 5-min Charts —————

The dollar is up. Oil is down; copper is up. Gold and silver are up. Bonds are down.

Stories/News from Seeking Alpha…

Energy shocks

The energy crisis across the world has taken a turn for worse, and is now set to impact nearly every corner of the global economy. Supply remains scarce and expensive, triggering knock-on effects throughout many industries that are already dealing with soaring inflation. The near-term outlook isn’t looking any better, as companies and consumers prepare for a coming recession without adequate energy sources to get them through the winter.

Natural gas: European benchmark Dutch TTF natural gas futures jumped as much as 35% to €290/MWhr on Monday after Russia said the key Nord Stream pipeline would remain shut beyond last week’s three-day maintenance halt. The Kremlin had originally insisted that the closure was due to a leak, but now says that supplies will be suspended until the “collective West” lifts sanctions (Moscow will also retaliate if the G7 imposes a price cap on Russian oil). EU energy ministers will gather for an emergency meeting in Brussels on Friday to discuss a coordinated response, with gas futures surging more than 280% YTD. More stimulus? Rationing? Price caps? Trading suspensions?

Crude oil: WTI futures climbed back towards $90 a barrel after OPEC+ recommended a 100K bbl/day production cut starting in October amid fears over demand and a global recession. The decision will have little effect on actual production, since the group’s output is already running well below target, but the psychological impact is clear. The small cut effectively reverses the 100K bbl/day increase that OPEC+ said it would add to the market after President Biden’s recent visit to Saudi Arabia.

The grid: California declared a power emergency on Monday and expects all-time record demand today, as a heatwave that has pushed temperatures past 110 degrees Fahrenheit threatens to stretch the state’s electricity system to its limit. Ukraine’s Zaporizhzhia, the largest nuclear plant in Europe, has also been fully disconnected from the electricity grid due to shelling from Russian forces. That’s not all. Plummeting water levels from drought and overuse are threatening many regions and countries, weighing on hydropower and nuclear power that needs water to cool reactors. (5 comments)

Truss takes over

British Foreign Secretary Liz Truss was named leader of the governing Conservative Party on Monday, making her the next U.K. prime minister after the scandal-plagued resignation of Boris Johnson. Truss edged out Rishi Sunak, who raised taxes following the pandemic and was seen as an instrumental force in bringing down Johnson’s government by resigning as Chancellor of the Exchequer back in July. The new U.K. leadership will have to contend with a serious cost of living crisis and skyrocketing inflation that’s running at a 40-year high of over 10%.

Platform: Truss has previously pledged to set “a clear direction of travel” for monetary policy, as well as a review of the Bank of England’s mandate that lead to greater oversight by members of parliament. She also wants to reverse corporate tax increases, and help low-income households and small businesses deal with spiraling energy costs. While she has declined to give details of those measures, she has promised to act quickly, coming up with a plan to tackle rising energy bills and securing future supplies within a week.

The stance has prompted investors to worry about more government debt at a time when borrowing costs are surging. Weakness in the pound has also been compounded and just hit the lowest level versus the U.S. dollar since 1985. Uncertainty over economic policies and the ability to control inflation, as well as a pledge to review the remit of the BoE and relentless rally in the greenback have all been factors in the descent of sterling, and some think the pound could even fall to parity with the dollar in 2023.

Worst-case scenario: “The economic challenges facing the U.K. economy are probably of a magnitude as great as anything we’ve seen in living memory,” said Mark Dowding, chief investment officer of BlueBay Asset Management. “There’s a really bleak path in which you end up with the U.K. almost needing to go back to the IMF for a bailout as a quasi-emerging market crisis.” (15 comments)

CFO suicide

Beleaguered retailer Bed Bath & Beyond (BBBY) is back in the news after the passing of Chief Financial Officer Gustavo Arnal. The executive plunged to his death from the iconic new Tribeca building known as the “Jenga” tower, with New York City Medical Examiner’s Office ruling the death a suicide. The event comes days after the struggling chain announced it was closing stores and brands, laying off workers, and revealed plans for new financing and raising capital.

Quote: “The entire Bed Bath & Beyond organization is profoundly saddened by this shocking loss,” the firm said in a statement. “Mr. Arnal was instrumental in guiding the organization throughout the coronavirus pandemic, transforming the company’s financial foundation and building a strong and talented team. He was also an esteemed colleague in the financial community.”

The latest development comes at a time when Bed Bath & Beyond has been on a rollercoaster ride after becoming a meme-stock darling on Reddit’s Wall Street Bets. BBBY tumbled from more than $30 in March to less than $5 a share in July, then rocketed back to $30 intraday just weeks ago before sinking again to end Friday at $8.63. The stock is plunging again premarket, down 16% to $7.72.

Go deeper: Arnal and the company were sued on Aug. 23 over accusations of artificially inflating BBBY’s stock price in a “pump and dump” scheme. Bed Bath said it was “in the early stages of evaluating the complaint, but based on current knowledge the company believes the claims are without merit.” (148 comments)

Healthcare juggernaut

CVS Health (CVS) has agreed to acquire Signify Health (SGFY) for $30.50/share in cash, for a total value of about $8B, beating out other potential buyers including Amazon (AMZN) and UnitedHealth (UNH). Private equity funds affiliated with New Mountain Capital, which owns 60% of Signify Health (SGFY) shares, have also agreed to vote the shares they own in favor of the deal.

Bigger picture: The transaction will add 10,000 contracted doctors and clinicians and give CVS (CVS) a hand in coordinating medical care for millions of Americans. Signify’s in-home model is part of a broad analytics-and-technology platform, which sees providers go into homes equipped with connected tablets to assess patient needs and follow-up services. The clinicians “operate much like Uber drivers,” explained CEO Kyle Armbrester. “We’re in a gig economy and this is a flexible model.”

Many companies (even outside the sector) have recently been pivoting to healthcare services. CVS has acquired insurer Aetna and pharmacy benefits manager Caremark, while in July, Amazon announced it would scoop up primary-care provider One Medical for $3.9B. Don’t forget Walgreens’ (WBA) deal for CareCentrix, UnitedHealth’s $5.4B buyout of LHC Group, and Humana (HUM) taking full control of Kindred at Home.

Statement: “We expect the acquisition to be meaningfully accretive to earnings and, as a result, are increasingly confident we can achieve our long-term adjusted EPS goals as outlined at our Investor Day in December 2021,” declared Shawn Guertin, CFO at CVS Health. An analyst and investor call discussing the deal will take place today at 8:30 a.m. ET. (40 comments)

Today’s Economic Calendar
9:45 PMI Composite Final
10:00 ISM Service Index
12:30 PM Investor Movement Index

What else is happening…

Bankruptcy filings jump in August from historically low levels.

Reports suggest Shell (SHEL) CEO will step down next year.

New U.S. vehicle sales seen up 9% in August, used cars down 17%.

Volkswagen (OTCPK:VWAGY) set to launch Porsche IPO in Frankfurt.

Postponed again! NASA Artemis moon launch likely pushed to October.

Cannabis legalization wipes off market cap of pharma sector – PLOS One.

Sanofi (SNY), GSK (GSK) expecting EU regulatory decision on COVID shot.

Amazon (AMZN) eyeing prescription drug market in Japan – Nikkei.


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