Before the Open (Aug 19-23)

Good morning. Happy Friday.

The Asian/Pacific markets leaned to the upside. Japan, New Zealand, Indonesia and Thailand did well; Malaysia was weak. Europe, Africa and the Middle East currently lean to the upside. France, Germany, South Africa, Finland, Spain, Italy, Austria and Sweden are up; Turkey is down. Futures in the States point toward a moderate gap up open for the cash market.

————— MoneyShow Presentation: How I use RSI, MACD and Stochastic to Identify Trades —————

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

Stories/News from Seeking Alpha…

Jackson Hole

Investors today are looking to Wyoming, and it’s not to book a national park getaway before the summer comes to an end. The annual Jackson Hole symposium hosted by the Kansas City Fed is underway, with Chairman Jerome Powell set to take the stage at 10 AM ET. The theme of the 2024 conference is titled “Reassessing the Effectiveness and Transmission of Monetary Policy,” and could provide further clues on the magnitude of policy easing with the next cycle that’s slated to start in September.

Some history: Back at Jackson Hole in 2020, Powell unveiled a policy of “Flexible Average Inflation Targeting,” which basically stated that the central bank would accept higher inflation to allow for a quick labor market recovery from the pandemic. As price pressures spiraled out of control in 2021, the Fed Chair doubled down on his infamous “transitory” call before making a serious U-turn that led to an aggressive tightening cycle. A technical recession ensued in the first half of 2022, but the U.S. economy has been resilient since then despite bearish fears and countless calls for a recession. Here’s a recap of Powell’s Jackson Hole speeches

The equation has changed in recent months as inflation moved closer to the Fed’s 2% target. Instead of putting a focus on the “price stability” portion of the central bank’s dual mandate, attention has turned to the “maximum employment” part, given an uptick in the unemployment rate. Add to that this week’s major downward revision in non-farm payrolls data, which was the biggest since the global financial crisis, and will give Powell plenty to talk about when discussing expectations for the broader economy.

SA commentary: “I believe the theme of this year’s event suggests the possibility of more comprehensive discussions on how supply-side factors influence monetary policy,” Analyst Justin Purohit adds in a 2024 Jackson Hole Preview. “While the restrictive effects of short-term rates are evident in certain areas, like credit conditions, the broader economy’s continued growth despite these restrictive measures presents a puzzling challenge to traditional views on monetary policy transmission. I can see this paradox being a potential focal point at this year’s symposium.” (14 comments)

Hollywood drama

Skydance Media, which inked a deal to merge with Paramount (PARA) last month, is accusing the company of breaching the terms of their agreement by extending the time it has to engage with other bidders. “While Skydance is not currently exercising its right to terminate the agreement, we reserve the right to do so in the future,” its attorneys wrote in a letter. Paramount extended the go-shop period to solicit other offers from its original deadline to Sept. 5, after Edgar Bronfman sweetened his offer for National Amusements and a minority stake in Paramount from $4.3B to $6B. (34 comments)

Go-Go Robo!

Uber (UBER) has announced a multiyear strategic partnership to bring General Motors’ (GM) Cruise robotaxis to the ride-sharing company’s platform. Last October, Cruise paused operations of its autonomous vehicles in San Francisco after the California Department of Motor Vehicles suspended its driverless testing permits following a hit-and-run incident. However, Cruise said it plans to resume fully autonomous rides in 2024 after improving its technology, repairing relationships with regulators and meeting tougher safety standards. (8 comments)

Forced arbitration

Canada’s government has ordered the country’s two main railroads to enter binding arbitration to resolve their disagreements with a labor union that disrupted North American freight traffic. Canadian National Railway (CNI) and Canadian Pacific Kansas City (CP) rail networks could resume work “within days,” Labor Minister Steve MacKinnon said, although the parties “remain very, very far apart.” In response, CN ended its staff lockout and initiated its recovery plan, while CPKC is prepared to resume service once the Canada Industrial Relations Board issues its order. (15 comments)

Today’s Economic Calendar
Jackson Hole Economic Symposium
10:00 AM New Home Sales
10:00 AM Jerome Powell Speech
01:00 PM Baker Hughes Rig Count

What else is happening…

Moderna, Pfizer (PFE) updated mRNA COVID shots get FDA nod.

Mpox outbreak: Thailand reports first case in Asia linked to new strain.

CAVA (CAVA) soars to all-time high as comp sales, margins stun.

Peloton (PTON) shares race higher on progress towards profitability.

Oil tanker attacked by Houthis in Red Sea poses environmental risk.

India passes China to become Russia’s top oil buyer amid sanctions.

Disney, Reliance mull ways to get antitrust nod for $8.5B India deal.

Baidu (BIDU) dips on sales miss as online marketing revenue falls.

Workday (WDAY) spikes after earnings beat; inks Equifax (EFX) deal.

Nestlé (OTCPK:NSRGY) CEO to quit, company veteran to take over.

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Good morning. Happy Thursday.

The Asian/Pacific markets were mixed. Japan, Hong Kong and the Philippines did well; China, New Zealand and Indonesia were weak. Europe, Africa and the Middle East currently lean to the upside. Denmark, Turkey, Switzerland, Spain and Sweden are up; the Czech Republic is down. Futures in the States point toward a positive open for the cash market.

————— MoneyShow Presentation: How I use RSI, MACD and Stochastic to Identify Trades —————

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

Stories/News from Seeking Alpha…

It’s gone

There’s still ongoing chatter about the huge revision to U.S. job growth seen yesterday and what it might signify for the economy and markets. 818,000 jobs were wiped out in the 12 months through March 2024 (or 68,000 per month), resulting in the biggest downward adjustment since the global financial crisis. Data revisions are common, but usually not to that degree, even with the large standard deviation typically assigned to non-farm payroll figures.

Not an exact science: The Bureau of Labor Statistics usually surveys 100K-150K businesses each month, but the department then extrapolates from those surveys to get an estimate of how many jobs were created in the entire economy. Later on, the quarterly re-estimation process looks at 60M business records, many of which were not available at the time of the initial monthly payroll releases. The records can include unemployment benefits, seasonal hiring for the holidays, and unavoidable lags, such as delayed payroll data, which can give a better picture of overall economic activity.

Technically, the BLS could publish the data once it has all the reports to avoid revisions. However, many participants need access to the earliest possible read on labor market developments, like policymakers and lawmakers, as well as business owners and investors. Initial estimates are generally in line with trends, but the accuracy of the BLS data has been called into question more recently, with requests to revise the birth-death models of corporations or other influential factors including undocumented migrants.

What it means: Despite the major revision that had largely been expected, trends still appear to be positive. Instead of 250K payroll additions per month, the figure was around the 185K-200K mark on average, which likely would have led to the same monetary policy regime from the Fed over the past year. That might look different going forward given the rising unemployment rate, thereby cementing a Fed rate cut in September. The dovishness even got markets excited on Wednesday, especially after FOMC minutes showed such an action was likely, with stocks rising amid chatter of deeper rate cuts.

See a full breakdown of the industry revisions, which largely focused on the most cyclically sensitive sectors.

Union lockout

It’s official! Canada’s two main freight rail companies, Canadian Pacific Kansas City (CP) and Canadian National Railway (CNI), have shut down their rail networks in the country after contract negotiations broke down. Rating agency Moody’s projected that the lockout, which will take 75% of Canada’s freight rail traffic offline, could cost the economy over C$341M ($251M) per day, which is equal to more than 4% of its GDP. About a third of the traffic moved by CN Rail and CPKC also makes its way into the U.S., likely impacting cross-border trade and disrupting North American supply chains. (3 comments)

Succession planning

Disney (DIS) has chosen board member and Morgan Stanley (MS) executive chairman James Gorman to lead the committee that will find a successor for top boss Bob Iger. Other executives in the group include Disney chairman Mark Parker, as well as board members like GM (GM) CEO Mary Barra. The move marks a significant step forward in the succession process for Iger since Disney formed the committee last January. Iger left Disney in 2020 and picked Bob Chapek as his successor, but was brought back to the company in November 2022. (5 comments)

EV strategy

Ford (F) is overhauling its electric vehicle strategy, which includes dropping a plan for a new electric SUV and pivoting toward hybrid versions. The Detroit automaker’s EV business has continued to bleed money, with prior forecasts that it would lose between $5B and $5.5B in 2024. The strategy shift is expected to cost Ford up to $1.9B, including a $400M non-cash charge for the write-down of SUV manufacturing assets. It will also delay the successor to the F-150 Lightning, trim capex on pure EVs, and ramp up U.S. battery production. (2 comments)

Today’s Economic Calendar
Jackson Hole Economic Symposium
08:30 AM Jobless Claims
08:30 AM Chicago Fed National Activity Index
09:45 AM PMI Composite Flash
10:00 AM Existing Home Sales
10:30 AM EIA Natural Gas Report
11:00 AM Kansas City Fed Mfg Index
04:30 PM Fed Balance Sheet

What else is happening…

Report: Bronfman sweetens Paramount (PARA) offer to $6B.

Apple (AAPL) App Store head Matt Fischer to leave in October.

Macy’s (M) shares see worst day in a year on bearish outlook.

TD sets aside $2.6B to settle U.S. probe, sells Schwab shares.

Big investment from McDonald’s (MCD) in the U.K. and Ireland.

Microsoft (MSFT) updates 2025 investor metrics and segments.

Snowflake (SNOW) boosts guidance, but billings disappoint.

Zoom (ZM) results, outlook crush estimates; CFO to resign.

Enbridge cuts pipeline tolls as Trans Mountain adds competition.

RFK Jr. planning to drop out of presidential race, endorse Trump.

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Good morning. Happy Wednesday.

The Asian/Pacific markets leaned to the downside. Thailand did well, but China, Hong Kong, South Korea, Taiwan, New Zealand and the Philippines were weak. Europe, Africa and the Middle East are currently mostly up. Poland, France, Germany, Greece, the UAE, Hungary, the Netherlands, Italy, Austria and Saudi Arabia are leading. Futures in the States point toward a positive open for the cash market.

————— VIDEO: State of the Market —————

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

Stories/News from Seeking Alpha…

Authorized personnel only

The Federal Trade Commission’s ban on non-competes has been struck down by a federal judge in Texas on grounds that the agency does not have the authority to issue such broad-based rules. Independent contractors and employees, whether paid or unpaid, were included under the ban, which also required employers to rescind existing non-competes and actively inform workers that they were no longer in effect. About 30M Americans are currently tied to non-competes, according to the FTC, representing 20% of the U.S. workforce.

Quote: “The commission’s lack of evidence as to why they chose to impose such a sweeping prohibition… instead of targeting specific, harmful non-competes, renders the rule arbitrary and capricious,” U.S. District Judge Ada Brown wrote in the ruling. “The role of an administrative agency is to do as told by Congress, not to do what the agency thinks it should do. The FTC exceeded its statutory authority and the rule would cause irreparable harm.”

Invalidating and banning the disclosures deeply divided many inside the business community. Led by the Chamber of Commerce, there were arguments that the agreements protect trade secrets and relationships, as well as investments needed to train or recruit employees. On the other side, claims were made that non-competes prevent workers from freely switching jobs, can deprive them of higher wages or better working conditions, and could constrict the talent pool for businesses that are looking to expand.

What’s next? There had been some other attempts to invalidate the non-compete ban in Florida and Pennsylvania, but the latest court decision will “set aside” the ruling nationwide and bar it from “taking effect on September 4, 2024, or thereafter.” The FTC may take a new route by addressing non-compete agreements through “case-by-case” enforcement actions, but it could also consider appealing Judge Ada Brown’s decision. However, if lower courts remain split, the matter could be sent up the legal system, with the case eventually reaching the Supreme Court.

Stake dump

Walmart (WMT) has fully exited its near 10% holding in JD.com (JD), sending the Chinese e-commerce firm’s shares down 7% premarket on Wednesday. The stake, worth billions of dollars and offloaded in one go, may add to the Chinese tech slump and create new dynamics in the foreign market. “This decision allows us to focus on our strong China operations for Walmart China and Sam’s Club, and deploy capital towards other priorities,” Walmart said in a statement. Meanwhile, JD conducted a $390M stock buyback, fully utilizing the amount authorized under its $3B repurchase program. (5 comments)

Robo momentum

Alphabet’s (GOOG, GOOGL) autonomous vehicle unit Waymo has surpassed 100,000 trips per week, doubling the volume reported in May. Waymo’s product chief Saswat Panigrahi said the company hit the target by scaling deliberately, optimizing costs, and delivering a strong consumer experience. The milestone arrives less than two months before Tesla (TSLA) is scheduled to hold its robotaxi event. The company is one of the most vocal in the industry, and has expressed ambitions about creating a fleet that allows drivers to rent out their personal vehicles. (130 comments)

Revisions get serious

Job growth in the U.S. for the 12 months ending March is expected to have been much weaker than estimated. Some fear the preliminary benchmark revision, which will be published by the Bureau of Labor Statistics this morning, may even be as large as a million, which would translate into over 80K payrolls per month. It could also spur calls for deeper interest rate cuts amid concerns that the Fed may have waited too long to start its easing cycle, putting another spotlight on Jerome Powell’s Jackson Hole speech on Friday. (8 comments)

Today’s Economic Calendar
07:00 AM MBA Mortgage Applications
10:00 AM Atlanta Fed’s Business Inflation Expectations
10:00 AM Quarterly Services Survey
10:30 AM EIA Petroleum Status Report
01:00 PM 20-Year Bond Auction
02:00 PM FOMC Minutes
02:00 PM Treasury Buyback Results

What else is happening…

Twitter buyout was worst deal for banks since the financial crisis.

Retail: Target (TGT) rallies after topping earnings expectations.

Lowe’s (LOW) slips on guidance cut due to soft DIY demand.

EU plans to slash tariff on China-made Tesla (TSLA) cars to 9%.

Biden said to approve nuclear weapons strategy for Chinese threat.

Teucrium: Corn below $4/bushel a potential investment opportunity.

Warner Bros. to spend billions on Vegas studio… on one condition.

Fed’s Bowman remains wary of future rate cuts amid inflation risks.

NIO (NIO) unveils plan to expand charging stations across China.

Oppenheimer lists its top 32 stock picks for August-September.

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Good morning. Happy Tuesday.

The Asian/Pacific markets leaned to the upside. Japan, South Korea, India, Indonesia and the Philippines did well; China, Hong Kong and New Zealand were weak. Europe, Africa and the Middle East currently lean down. Saudi Arabia is up, but the UK, Denmark, Poland, Greece and Norway are weak. Futures in the States point toward a positive open for the cash market.

————— VIDEO: State of the Market —————

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

Stories/News from Seeking Alpha…

Goodbye DEI?

Harley-Davidson (HOG) is the latest corporation to back away from DEI initiatives following a backlash kickstarted by activist and political commentator Robby Starbuck. An online campaign against the 120-year-old motorcycle company accused the firm and its CEO, Jochen Zeitz, of embracing a “woke agenda of the very far left” that does not align with the business’s core customers. It follows similar campaigns against Deere (DE) and Tractor Supply (TSCO), which both shelved their DEI protocols earlier in the summer.

Quote: “We did it again. 3 for 3,” Starbuck wrote on X. “People are sick of the lunacy in their workplace. They just want to go to work and have it be work again. I’m not asking you to become a conservative company. I’m asking you for it to be neutral and to make it a welcoming place for everybody.” He also pledged to continue his anti-woke campaign against another major U.S. corporation but hasn’t disclosed the name of the company.

Harley-Davidson will no longer have supplier diversity spending goals and is reviewing all sponsorships and affiliations to retain its “loyal riding community, first responders, activity military members and veterans.” It will also not participate in Human Rights Campaign scoring and will evaluate its training program to be absent of socially motivated content. “We are saddened by the negativity on social media over the last few weeks, designed to divide the Harley-Davidson community, and it is our responsibility to respond with clarity, action and facts,” HOG said in a press release.

From the SA comments section: “This really isn’t all that hard. Don’t take sides in the culture war. Why MBAs don’t understand this is beyond me. In the past, companies stayed silent and it offended no one,” writes Alfredo Martinez. The saying “go woke, go broke” is also under the microscope. “HOG went from above $70 to under $40 in the six years before the Floyd controversy,” adds Herbert Kornfeld. “Since then it has hung around the same under $40 level as before Floyd. In other words: it went ‘broke’ before it went ‘woke.'” (52 comments)

Ready for takeoff?

In a win for Alaska Air (ALK), the time period for the Department of Justice to complete its review of the carrier’s proposed $1.9B acquisition of Hawaiian Airlines has expired. “This is a significant milestone in the process to join our airlines,” said Alaska. “The proposed combination remains subject to other closing conditions, including approval from the Department of Transportation of an interim exemption application.” The news sent Hawaiian Holdings (HA) soaring 10% premarket on Tuesday. Recall that the DOJ review period had already been extended three times from the original Aug. 5 deadline.

The campaign trail

Democratic presidential candidate Kamala Harris has proposed raising the corporate tax rate to 28% from the current 21% to fund her other plans, including expanding the child tax credit and forgiving medical debt. That compares to former President Donald Trump, who wants to preserve the tax cut to 21% he implemented in 2017. Note that any changes need to be approved by both houses of Congress. Separately, Trump said he would consider ending a $7,500 tax credit for electric vehicle buyers, and would be open to naming Tesla’s (TSLA) Elon Musk to a cabinet or advisory role. (281 comments)

Trump Media hits six-month low with DNC underway in Chicago

A million dollars

A bar of gold is now worth $1M for the first time ever, with gold topping $2,500/oz on Monday and gold bars in the London market typically weighing about 400 oz. Gold futures have also been on the rise, driven by a weakening dollar and growing speculation about potential Federal Reserve rate cuts. Central bank purchases have supported gold’s rally, with net purchases totaling 483.3 tons in the first half of the year (equivalent to nearly 40K gold bars), but some analysts expect consolidation ahead, with the odds of further easing already baked in unless the Fed signals deeper rate cuts. (10 comments)

Today’s Economic Calendar
01:35 PM Fed’s Bostic Speech
02:45 PM Fed’s Barr Speech

What else is happening…

Elections have consequences: The latest sentiment survey results.

Bronfman bids $4.3B for Redstone’s share of NAI and Paramount.

Merger drama: Kroger files for injunction against FTC challenge.

Estée Lauder (EL) falls after warning on weak China demand.

U.S. jobseekers jump as wage and benefit satisfaction erodes.

Carl Icahn, IEP agree to pay $2M in SEC’s margin loans probe.

Intel (INTC) to reduce costs in sales, marketing division by 35%.

Boeing (BA) grounds 777X test fleet after finding structural damage.

Humanoid robots are getting ready for the factory spotlight.

Top S&P 500 gainers and losers a month after the index’s peak.

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Good morning. Happy Monday. Hope you had a good weekend.

The Asian/Pacific markets leaned to the upside. Hong Kong, Malaysia, Thailand and the Philippines did well; Japan and South Korea were weak. Europe, Africa and the Middle East are currently mostly up. France, Turkey, South Africa, Finland, Spain, Italy, Portugal, Austria and the Czech Republic are doing well; Israel is weak. Futures in the States point toward a positive open for the cash market.

————— VIDEO: State of the Market —————

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

Stories/News from Seeking Alpha…

Mpox watch

More cases of mpox, formerly known as monkeypox, are surfacing across the globe, with the virus spreading to Sweden, Pakistan and the Philippines. It was enough for the World Health Organization to declare a global public health emergency last week, which can accelerate vaccine access and distribution. “It’s clear that a coordinated international response is needed,” WHO Director-General Dr. Tedros Adhanom Ghebreyesus declared, adding that it will help “stop these outbreaks and save lives.”

What is it? Mpox is a virus that can be fatal, causing fever, aches and pus-filled lesions. The virus has been sequenced into two types, including the severe clade I group (formerly known as the Congo Basin strain), as well as the clade II variant (previously known as the West African strain). The latter was behind an outbreak that resulted in around 100K cases worldwide in 2022, but clade I has now been spreading internationally following an outbreak in the Democratic Republic of the Congo that led to more than 1,100 deaths since January.

Compared to the 2022 wave that largely spread among men who have sex with men, a new variant of the Congo Basin strain, called clade Ib, now appears to be spreading more easily through routine close contact. While it’s usually mild, it can kill vulnerable people, like the immunocompromised and children. Some nations, like China, have put in place surveillance measures at ports of entry, screening people from areas with confirmed mpox cases and sanitizing goods entering the country, but others believe the impact of the virus will be low if certain precautions are taken.

Market movement: Danish biotech Bavarian Nordic (OTCPK:BVNKF) has been a big beneficiary since the announcement by the WHO, with its shares soaring in recent sessions amid plans to ramp up mpox vaccine production. Emergent BioSolutions (EBS), which has an approved jab and treatment for related-disease smallpox, is also up 7% in early trade on Monday, along with test maker Co-Diagnostics (CODX). Some mpox players have even gone to the moon (for now), such as Tonix Pharmaceuticals (TNXP), Virax Biolabs (VRAX) and GeoVax (GOVX), which are each up over 50% premarket, as well as Applied DNA Sciences (APDN) skyrocketing 186%. (6 comments)

Data blackout

Chinese stock exchanges have stopped releasing real-time data on foreign fund flows. That’ll deprive investors of a key sentiment gauge at a time when international traders have been net sellers of Chinese stocks for months. Foreign investors have been exiting China’s $8.3T stock market in droves, with the YTD tally reportedly reaching negative as of Friday. The dialing back of transparency has further dented foreign investors’ confidence in China, which already stopped disclosing intraday foreign flows data and real-time estimates of mutual fund products’ net value.

Union criticism

Get used to hearing the term “price gouging,” which is being tossed around on the campaign trail and in the business world. “For years, Stellantis (STLA) has sold fewer cars but made more in profits. What does that tell you? They’re price gouging,” United Auto Workers President Shawn Fain announced in a new video, accusing CEO Carlos Tavares for going back on commitments the company made in its last labor pact. Tavares recently pointed to issues with Stellantis’ U.S. operations, and has been cutting jobs at U.S. plants to rein in costs. (11 comments)

That was quick

Just days after heightening its recession gauge to 25% from 15%, Goldman Sachs has reduced its view on the probability of a U.S. recession next year. A slew of favorable macro data in recent days prompted the reversal, but it raises some doubts over generic forecasts when things are looking so fluid. “Now, we have moved it back down to 20% because the data released since August 2 – including retail sales and jobless claims – shows no sign of recession,” the team wrote, adding that they would probably cut recession probability back to 15% if the jobs report due on Sept. 6 “looks reasonably good.” (25 comments)

Today’s Economic Calendar
9:15 Fed’s Waller Speech
10:00 E-Commerce Retail Sales
10:00 Leading Indicators

What else is happening…

Take the latest Wall Street Breakfast Sentiment Survey here.

Boeing (BA), Lockheed (LMT) in talks to sell rocket-launch JV.

Rivian (RIVN) pauses Amazon (AMZN) delivery van production.

Powell tells banks to work with Fed on increased capital proposal.

Delays impact 40% of Biden administration’s biggest climate projects.

Work stoppage at Canada’s biggest railroads may affect U.S. trade.

Elon Musk’s X closing Brazil operations due to ‘censorship orders.’

FDA is said to clear updated COVID shots as early as next week.

Costco (COST) workers in Virginia vote to join Teamsters contract.

Evercore ISI screens banks likely to fare better when Fed cuts rates.

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