Good morning. Happy Friday.
The Asian/Pacific markets leaned to the downside. Taiwan, Indonesia and Thailand did well; Japan, China, South Korea, India and Malaysia were weak. Europe, Africa and the Middle East currently lean down, but losses are small. Germany, Greece, Finland, Norway, Portugal and Austria are donw. 45 min before the open, futures in the States point toward a down open for the cash market.
————— VIDEO: Let’s Face it – August was a Terrible Month —————
The dollar is down. Oil and copper are up. Gold and silver are up. Bonds are up.
Stories/News from Seeking Alpha…
The final print
With the Federal Reserve gaining confidence that inflation is heading toward its 2% goal, the employment side of the central bank’s dual mandate has jumped into focus. That puts today’s jobs report in the spotlight and may help FOMC policymakers decide by how much to cut their benchmark rate at the next Fed meeting. The highly-watched gathering is only two weeks away, and it’s one of the last remaining data points before then, along with the CPI reading next week.
Stimulate the economy? Traders are leaning toward a 25 basis-point cut at the powwow on Sept. 17-18, with a 59% probability that the rate will drop to 5.00%-5.25% from the current 5.25%-5.50%. That puts the odds of a 50 bps cut at 41%, according to the CME’s FedWatch Tool. Those probabilities have fluctuated largely over the past month as data has continuously been digested, but things are now getting extremely close to showtime, especially after the big revisions seen only two weeks ago.
Today’s consensus estimate for the number of jobs added to U.S. nonfarm payrolls in August is 164K, up from July’s initial estimate of 114K, which spooked markets as it was well below the consensus of 180K. However, a couple of temporary factors that led to the soft numbers are no longer in the equation, like Hurricane Beryl in Texas and the retooling of vehicle factories in Michigan. The unemployment rate is also expected to have inched down to 4.2% last month, from a nearly three-year high of 4.3%, while wage growth doesn’t appear to be as much of a concern as it was a year ago.
What to watch: SA Analyst Damir Tokic will be looking at three facets of the August report: 1) the change in labor force vs. the change in unemployed people in the household survey. As long as the number of unemployed people doesn’t increase, the recession continues to be delayed; 2) jobs in the leisure/hospitality and construction sectors. Both added ~25K jobs in July. As long as those cyclical sectors add jobs, the recession is delayed; 3) revision to the nonfarm payrolls. If the nonfarm payroll number is revised lower, that’s a negative signal. (5 comments)
No slurpees yet
Seven & i (OTCPK:SVNDY), the Japanese owner of 7-Eleven stores, has rejected a $39B takeover offer by Canadian firm Alimentation Couche-Tard (ATD:CA) as it deemed the proposal was too low. Couche-Tard, which operates Circle K convenience stores, offered to acquire Seven & i for $14.86 per share in cash, in a transaction that would’ve made it the largest-ever Japanese target of a foreign buyout. Seven & i said the offer “grossly undervalues” its standalone path and does not “adequately acknowledge” the challenges the deal would face from U.S. competition regulators.
Panic buttons
Looking to step up worker safety, New York Governor Kathy Hochul has signed a new law that requires retailers with over 500 employees to add panic buttons in all locations in the state by 2027. “The real-time solutions in this law will save lives and make shopping safer for all,” said the Retail, Wholesale and Department Store Union. However, the industry isn’t convinced about panic button effectiveness, with Walmart (WMT) opposing it over false alarm concerns. The NYPD Community Affairs Bureau previously said 911 calls would be more useful to communicate with law enforcement. (8 comments)
In control
The keys to Paramount Global (PARA) will ultimately fall into the hands of Larry Ellison, the billionaire co-founder of Oracle (ORCL). It’ll be made possible through a series of trusts and companies after a group led by his son David’s firm Skydance Media took over the Redstone empire. Meanwhile, Shari Redstone, current chair and majority shareholder of Paramount, will rake in $180M in severance and other benefits in addition to about $350M from the sale of her 20% stake in the Skydance deal. (3 comments)
Today’s Economic Calendar
08:30 AM Employment Situation
08:45 AM Fed’s Williams Speech
11:00 AM Fed’s Waller Speech
01:00 PM Baker Hughes Rig Count
What else is happening…
Broadcom (AVGO) slides as forecast falls short of expectations.
OPEC+ to delay October oil output increase for two months.
Cleveland-Cliffs (CLF) working on bid for U.S. Steel (X) assets.
DocuSign (DOCU) results crush estimates, but shares slip.
DOT asks top four U.S. airlines for details on rewards program.
Salesforce (CRM) to buy data protection startup Own for $1.9B.
Chinese automakers add market share as foreign rivals struggle.
Toyota (TM) may be the next to slash aggressive EV targets.
Report: Qualcomm (QCOM) exploring mixed reality smart glasses.
Smith & Wesson (SWBI) swings to loss on sluggish summer sales.
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Good morning. Happy Thursday.
The Asian/Pacific markets leaned to the upside. China, Taiwan, New Zealand, Singapore and Thailand did well; Japan was weak. Europe, Africa and the Middle East are currently mixed. The UAE, Greece, Spain and Israel are up; Denmark, France, Turkey, Switzerland, Norway and Sweden are down. Futures in the States point toward a down open for the cash market.
————— VIDEO: Let’s Face it – August was a Terrible Month —————
The dollar is down. Oil and copper are up. Gold and silver are up. Bonds are up.
Stories/News from Seeking Alpha…
Ready for kickoff
The start of the 2024 NFL season will take place tonight as the reigning Super Bowl LVIII champions, the Kansas City Chiefs, host the Baltimore Ravens. It’s the second straight year in which opening night will take place at Arrowhead Stadium, and it’ll also mark a rematch of the prior season’s AFC Championship game. Football is by far the most popular sport in the U.S., which is having big ramifications for the sports betting market and its publicly traded industry players.
What’s the spread? Sports betting is now legal in 38 states, including newcomers like Maine, Vermont and North Carolina. Much of the trading is done via smartphone apps, with a sportsbook now available in the pockets of many Americans everywhere. There is also no league as important as the NFL, especially with increasing bets that extend beyond the outcome of games, and into player props, touchdown and yardage bets and even next team odds.
American adults are projected to legally wager $35B throughout this NFL season, according to the American Gaming Association, which would represent soaring growth of 30% Y/Y. Data also shows that public support for the industry continues to grow amid commitments to responsible gaming and consumer protection. Football fans are encouraged to set a budget, keep it social, know the odds, and only play with legal and regulated operators.
By the numbers: Bank of America estimates that two platforms control the majority of total money bet across the country, with FanDuel (NYSE:FLUT) at 42% and DraftKings (NASDAQ:DKNG) at 34%. The online sports betting handles of smaller players include a 7% share for BetMGM (NYSE:MGM) (OTCPK:GMVHF), 5% for Caesars Sportsbook (NASDAQ:CZR), and 3% for ESPN Bet (NASDAQ:PENN). While the latter just launched online sports betting in New York in an expansion push, others are also hoping to boost their national market share, like Fanatics and Rush Street Interactive (NYSE:RSI). See more analyst commentary here.
Un-inverted
U.S. Treasury yields fell across the board on Wednesday. Growth concerns and a softer-than-expected July job openings print lifted bets of a 50-basis point interest rate cut by the Federal Reserve this month. The yield curve between US10Y and US2Y briefly normalized for the second time in over two years, after un-inverting last month following 25 consecutive months of inversion. An inverted yield curve is widely seen as a recession indicator, but normalization of the curve is not necessarily a positive sign as the curve can un-invert before a recession hits. (3 comments)
Security risk?
There’s more drama enveloping the American steel industry. The Biden administration has reportedly concluded that the nearly $15B sale of U.S. Steel (X) to Nippon Steel (OTCPK:NPSCY) would pose a national security risk that can’t be mitigated by either company. U.S. Steel insisted that there were no such issues, outlining that it would “pursue all possible options under the law to ensure this transaction closes,” but its stock still plummeted nearly 18% on the news. CEO David Burritt also announced the firm would close steel mills and move its HQ out of Pittsburgh if the deal collapses. (186 comments)
Covid-era curbs
Singapore has announced that the close contacts of suspected mpox cases would be quarantined for a period of three-weeks, as the city-state takes up preventive measures to minimize the spread of the virus. Apart from this, Singaporean authorities have also put in place temperature and visual screening at airports and sea checkpoints. World Health Organization declared mpox as a global health emergency in mid-August following the appearance of the more lethal clade I strain of mpox virus.
Today’s Economic Calendar
07:30 AM Challenger Job-Cut Report
08:15 AM ADP Jobs Report
08:30 AM Jobless Claims
08:30 AM Productivity and Costs
09:45 AM PMI Composite Final
10:00 AM ISM Service Index
10:30 AM EIA Natural Gas Report
11:00 AM EIA Petroleum Status Report
02:00 PM Treasury Buyback Results
04:30 PM Fed Balance Sheet
What else is happening…
Verizon (VZ) scoops up Frontier Communications (FYBR) for $20B.
Golf spinoff: Topgolf Callaway (MODG) splits into separate businesses.
Jeep Wranglers and Grand Cherokees taken off the assembly line?
C3.ai plummets as guidance for full-year misses expectations.
Harris calls for 28% capital gains tax, topping Biden’s plan.
Nvidia says it did not receive DOJ subpoena despite reports.
Dollar Tree (DLTR) falls off a cliff after weak guidance.
Nordstrom family offers to buy department store chain for $3.8B.
Consumer Products Safety Commission inquires into SHEIN, Temu.
Firearm sector: Four dead, nine injured in Georgia high school shooting.
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Good morning. Happy Wednesday.
The Asian/Pacific markets were very weak. Japan, South Korea and Taiwan fell more than 3%; China, Hong Kong, Australia and Singapore were also weak. Europe, Africa and the Middle East are currently mostly down. Denmark, France, Turkey, Greece, Finland, Switzerland, the Netherlands, Israel, Austria and Sweden are down more than 1%. Futures in the States point toward a moderate gap down open for the cash market.
————— VIDEO: State of the Market —————
The dollar is down. Oil is up; copper is down. Gold is down; silver is up. Bonds are up.
Stories/News from Seeking Alpha…
Back to the 60s
West Texas Intermediate (CL1:COM) has wiped out all of its gains of the year after dropping into the $60/bbl range for the first time since the beginning of January. Ample inventories and the end of the summer driving season also put pressure on gasoline, which sunk to a near three-year low, in the latest headlines from the energy sector. “Oil recently formed a lower high, suggesting a potential retest of the descending trendline,” SA analyst Dean Popplewell wrote in a fresh technical analysis, while others are looking at the fundamentals.
Catalysts: There were several drivers that pushed crude below $70, where it has traded for much of the year. Reports pointed to progress towards a deal to resolve a dispute that has halted Libyan crude production and exports, as well as the likelihood that OPEC+ will boost production next month. Commodities also fell broadly after Goldman Sachs warned that copper prices would suffer a sharp correction, prompting fears for the industrial bellwether that is used in EVs, power transmission and AI data centers.
Renewed growth worries were another big factor prompting the big moves. Those included concerns about weak global demand, particularly in top oil importer China, which hasn’t been showing much signs of a revival. Over in the U.S., new data prompted concerns about an economic slowdown. American manufacturing production decreased for the first time in seven months in August, while the ISM’s Manufacturing PMI contracted for the fifth straight month.
Outlook: Growth worries haven’t been limited to oil. U.S. stocks sold off in the first trading session of September, with the Nasdaq closing down 3% following the Labor Day holiday. Leading the losses was Nvidia (NVDA), which recorded the “largest one-day market cap drop for a U.S. stock in history” given its staggering size. Remember that September is said to be a historically weak month, but the benchmark S&P 500 did recently recover from “Black Monday 2024,” with a steady rebound over the last few weeks that saw it even end August in positive territory. (76 comments)
More rollbacks
Molson Coors (TAP) has joined the growing list of companies that are ending some of their diversity, equity and inclusion program policies amid a social media backlash. The maker of Miller and Coors Light beers announced that it is working to evolve its culture from a primarily DEI focus to a broader view where all employees are welcomed. Activist and political commentator Robby Starbuck once again claimed credit for the DEI shift. Other companies that have revised their DEI policies in recent months include Tractor Supply, Deere, Harley-Davidson, Lowe’s, and Ford. (1 comment)
Dow status
After being a part of the blue-chip index for nearly a quarter of a century, Intel’s (INTC) recent slump could mean that the chipmaker may be replaced in the Dow Jones Industrial Average (DJI). INTC dropped 8.8% to near $20/share on Tuesday amid a decline in chip stocks, and lost more than half its value this year, making it the worst performer in the Dow with the lowest price in the index. “Intel being removed (from the Dow) was likely a long time coming,” noted Ryan Detrick, chief market strategist at the Carson Group. Take a look at the stocks experts think are well-positioned to replace Intel in the index.
Censorship efforts
In the wake of Meta (META) CEO Mark Zuckerberg’s explosive admission on government censorship, the Department of Justice will no longer attempt to block content on social media pertaining to foreign threats to national security or elections. DOJ and FBI officials will now leave it up to social media firms to decide whether to post shared information, remove content or block users, and will not retaliate against their decision to take action. Last week, Zuckerberg said it was wrong for Biden administration officials to pressure Meta to censor COVID-19 content in 2021. (109 comments)
Today’s Economic Calendar
08:30 AM International Trade in Goods and Services
10:00 AM Factory Orders
10:00 AM Job Openings and Labor Turnover Survey
11:00 AM Treasury Buyback Announcement
02:00 PM Fed’s Beige Book
02:00 PM Treasury Buyback Results
What else is happening…
Nokia to help AT&T (T) boost fiber network with U.S.-made components.
Boeing (BA) downgraded at Wells Fargo on cash-flow limitations.
Musk’s Starlink says it is complying with Brazil’s order to block X.
Airbnb urges NYC officials to overturn short-term rental restrictions.
vNvidia (NVDA) said to receive subpoena from DOJ over antitrust probe.
Super Micro CEO addresses financial delay, short seller statements.
CSX loses appeal in old antitrust case against Norfolk Southern (NSC).
US Steel to remain American and prioritize U.S. steel demands.
Next payout: Moody’s, S&P Global among firms to settle SEC charges.
Russian missiles blast Ukrainian military academy and hospital.
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Good morning. Happy Tuesday.
The Asian/Pacific markets leaned down. Japan, Thailand and Singapore did well; Hong Kong, South Korea, Taiwan, Indonesia and the Philippines were weak. Europe, Africa and the Middle East are currently mostly down. Denmark is up, but the UK, Poland, Turkey, South Africa, Switzerland, Norway, Spain, the Netherlands, Italy, Israel, Portugal and Austria are down. Futures in the States point toward a moderate gap down open for the cash market.
————— VIDEO: State of the Market —————
The dollar is up. Oil and copper are down. Gold and silver are down. Bonds are down.
Stories/News from Seeking Alpha…
BRICS+
Turkey has put in an application to join the BRICS group of emerging market nations, according to Bloomberg, ahead of the bloc’s next summit due to take place in Russia on Oct. 22-24. It follows the recent expansion that added four new members to the BRICS (Iran, the UAE, Ethiopia and Egypt) at the beginning of 2024. Along with the Shanghai Cooperation Organization, the steps are part of finding new trade and financial relationships to rival the G7, Trans-Atlantic, Industrialized World and the Global North, or whatever the latest monikers are for including the broader West.
Background: With America and its allies launching an economic war on Russia following the invasion of Ukraine, the appeal of challenging what many of the BRICS call “U.S. hegemony” has intensified. Alternatives have surfaced to circumvent the SWIFT payment system and towards a path of de-dollarization, as well as boosting the New Development Bank to counter Western-dominated institutions like the World Bank and the IMF. In May, the G7 went further by announcing its intention to use profits from frozen Russian assets to assist Ukraine, while Moscow has already effectively seized many Western corporations and said it could take further action.
“Turkey can become a strong, prosperous, prestigious and effective country if it improves its relations with the East and West simultaneously,” President Recep Tayyip Erdogan announced over the weekend. “We do not have to choose between the European Union and the Shanghai Cooperation Organization as some people claim. On the contrary, we have to develop our relations with both these and other organizations on a win-win basis.”
What to watch: Turkey has been upset over its paused bid to join the EU, which has been stalled since 2016 due to needed economic and political reforms. Ankara can still take advantage of its customs union with the EU, but the country is now looking to diversify international partnerships by forging alliances beyond its Western partners. Should Turkey join the BRICS, it would be the first NATO ally to join the bloc. It’s part of a dual strategy that Turkey hopes will give it outsized influence, unless its quest for extra leverage backfires and it is forced to take a side. (7 comments)
Historic closures
As competition among automakers intensifies, Volkswagen (OTCPK:VWAGY) is weighing shuttering plants in Germany for the first time and ending its job security program that has been in place since 1994. “The situation is extremely tense and cannot be overcome by simple cost-cutting measures,” warned brand CEO Thomas Schaefer, while group head Oliver Blume outlined the company needs comprehensive restructuring. Management is slated to speak to staff at a works council meeting on Wednesday, where employees are expected to strongly oppose the proposed steps. (71 comments)
Foreign ownership
U.S. Steel (X) should remain domestically owned, Vice President Kamala Harris declared during a stop in Pittsburgh on Monday, echoing the opinion of President Biden. It’s a notable stance as her running mate, Tim Walz, told a Nippon official in June that he supported the deal, but this was before he joined the Democratic presidential ticket. “I will always have the back of America’s steelworkers,” Harris exclaimed, in what could be a hurdle for Nippon Steel’s (OTCPK:NISTF) planned $14B deal. Donald Trump also plans on blocking the transaction if elected. (219 comments)
Starlink next?
Brazil’s telecom regulator has reportedly threatened to sanction Elon Musk’s Starlink, which could include canceling its license to operate in the country. That’s because Starlink, the satellite broadband unit of SpaceX (SPACE), refused to comply with a court order to block access to X in Brazil after a months-long feud over the social media platform. Brazil President Lula da Silva said the order signaled that “the world is not obliged to put up with Musk’s far-right ideology,” while hedge fund billionaire Bill Ackman outlined the ruling would make the country uninvestable. (30 comments)
Today’s Economic Calendar
09:45 AM PMI Manufacturing Final
10:00 AM ISM Manufacturing Index
10:00 AM Construction Spending
11:00 AM Treasury Buyback Announcement
What else is happening…
Elliott crosses threshold to call for Southwest (LUV) special meeting.
SA Asks: Which defense stocks are most attractive right now?
Walt Disney (DIS) pulls network access for DirecTV subscribers.
Huawei to unveil new phone hours after Apple (AAPL) iPhone event.
Report: Intel (INTC) chief to propose plan to trim assets, cut costs.
China warns of retaliation if Japan imposes new chip restrictions.
Electric vehicle adoption: A disappointment or still on track?
Boeing’s (BA) new CEO met with FAA head, discussed safety.
Airbus problems? Cathay Pacific cancels flights over engine issues.
Germany: AfD success piles new pressure on Scholz government.
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