North American News
Nasdaq Extends Winning Streak, Notching Fourth Consecutive Day of Gains
- Nasdaq leads US equity markets
Contrary to grim forecasts following the sharp reversal prompted by Nvidia’s earnings last Friday, the Nasdaq has defied expectations by mounting an impressive ascent over the course of four consecutive days. Remarkably, the index concluded today at its peak since August 1, showcasing a remarkable recovery. While earlier predictions hinted at extended pain for the Nasdaq, its recent performance has been nothing short of remarkable. The prospects of a substantial rally this Friday might even propel the index into positive terrain for the entire month, marking a potential turnaround that many had not anticipated.
Closing changes:
- S&P 500 +0.4%
- DJIA +0.1%
- Nasdaq +0.5%
- Russell 2000 +0.5%
US pending home sales for July +0.9% versus -0.6% estimate
- US pending home sales for July 2023
- Prior month 0.3% revised to 0.4%
- Pending home sales for July 0.9% versus -0.6% estimate
- Pending home sales index 77.6 vs 76.8 last month.
US Q2 GDP +2.1% vs +2.4% expected
- The second reading on Q2 growth
- The advance Q1 reading was +2.4%
- Final Q1 reading was +2.0% annualized
- Q4 was +2.6% annualized
Details:
- Consumer spending +1.7% vs +1.6% advance
- Consumer spending on durables -0.3% vs +16.3% prior
- GDP final sales +2.2% vs +2.3% advance
- GDP deflator +2.0% vs +2.2% advance
- Core PCE +3.7% vs +3.8% advance
- Exports -10.6 vs -10.8% advance
- Imports -7.0% vs -7.8% advance
- Business investment +3.9% vs +4.9% advance
- Corporate profits -10.6% vs -5.9% advance
Percentage point changes:
- Net trade -0.12 pp vs -0.12 pp advance
- Inventories -0.09 pp vs +0.14 pp advance
- Govt +0.58 pp vs +0.06 pp advance
ADP US August employment +177K vs +195K expected
- The August 2023 employment reading from ADP
- Prior was +324K (revised to 371K)
Details:
- small (less than 50 employees) +18K vs +237K prior
- medium firms (500 – 499) +79K vs +138K prior
- large (greater than 499 employees) +83K vs -67K prior
- Job stayers 5.9% vs 6.2%
- Job changers 9.5% vs 10.2%
US advanced goods trade balance for July -$91.18 billion versus $-90.0 billion estimate
- US advanced goods trade balance for July 2023
- Prior month $-87.84 billion revised to $88.8 billion in June
- Advanced goods trade balance for July 2023 -$91.2B versus -$90.0 billion estimate
- Exports $164.8B versus $162.4 billion last month. Up $2.4 billion from June
- Imports $256.0B versus $251.3 billion last month. Up $4.7 billion from June
US July advanced wholesale inventories -0.1% versus 0.2% estimate
- US wholesale inventories for July 2023
- Prior report -0.7%
- Advance Wholesale Inventories
- July inventories: $903.1 billion
- Change from June 2023: Down 0.1%
- Change from July 2022: Up 0.5%
- May-June 2023 change: Revised from -0.5% to -0.7%
- Advance Retail Inventories
- July inventories: $784.1 billion
- Change from June 2023: Up 0.3%
- Change from July 2022: Up 4.5%
- May-June 2023 change: Revised from +0.7% to +0.5%
US MBA mortgage applications w.e. 25 August +2.3% vs -4.2% prior
- Latest data from the Mortgage Bankers Association for the week ending 25 August 2023
- Prior -4.2%
- Market index 189.0 vs 184.8 prior
- Purchase index 144.9 vs 142.0 prior
- Refinance index 407.1 vs 397.1 prior
- 30-year mortgage rate 7.31% vs 7.31% prior
Morgan Stanley Investment Management say US stocks set for a “strong rally” into year end
Morgan Stanley Investment Management’s managing director and senior portfolio manager Andrew Slimmon on US stocks:
- believes markets are set for a “strong rally” by the end of the year
- believes the S&P 500 will be “closer” to 5,000 by then
Reuters poll: High risk that Bank of Canada will raise rates at least once more
- Reuters poll outlines expectations for Bank of Canada
- High risk that Bank of Canada will raise the key rate at least once more.12 of 20 economists
- Bank of Canada to hold overnight interest rates steady at 5.0% on September 6.31 of 34 economists.
- 3 economists say a 25 basis point rate hike to 5.25% in September
- 8 of 34 economists expect one more rate hike to 5.25% by the end of the year (up from 1 in the July poll)
- 24 of 34 expect the central bank will keep its policy rate or higher until at least the end of 2024
- The median shows 50 basis points worth of cuts by the end of June next year
- House prices to fall -5% in 2023 and rise by 2% in 2024.That compares to -8.9% and +2% in the June poll
Mexican central bank boosts growth forecasts
- Mexico’s outlook is improving
The move to re-shore production to North America has been a tailwind for Mexico and for the Mexican peso.
The central bank boosted its forecast for growth this yer and slightly raised inflation as well:
- Sees 2023 GDP at 3.0% vs 2.3% prior
- Sees 2024 GDP at 2.1% vs 1.6% prior
- Sees core inflation for Q4 at 5.1% vs 5.0% prior
Commodities
Gold price jumps as labor market loses resilience
- Gold price breaks above $1,940.00 as US ADP Employment data turns out softer than expected.
- US firms invited fewer applications for jobs in July as resignations dropped.
- Investors hope that the Fed will not raise interest rates further this year.
Gold extended it’s rally as ADP reported that Employment Change for August missed estimates. The US private sector recorded fresh additions of 177K payrolls, lower than estimates of 195K and July’s print of 324K. Four-month outperformance streak by US private employment comes to a halt as firms’ hiring slows due to poor economic outlook.
The precious metal capitalized on softer job openings data on Tuesday, which accelerated hopes of an unchanged interest rate decision to be taken at the September monetary policy meeting by the Federal Reserve (Fed). Employees’ declining confidence in the labor market gave comfort to Fed policymakers for keeping current interest rates at 5.25-5.50%.
WTI crude futures settle at $81.63
- Up $0.47 or 0.58%
Crude oil futures are settling at $81.63.That’s up $0.47 or 0.58%. The high price reached $82.05. The low price was at $80.88.
The weekly cruel inventory data was released earlier today and showed a huge drawdown of -10.584M versus expectations of -3.267M. That comes after a -6.135M draw last week.
Gasoline stocks fell by -0.214M which was better than the expected draw of -0.933M.
US weekly EIA crude oil inventories -10584K vs -3267K expected
- Weekly US petroleum stockpile data
- Prior crude -6135KK
- Gasoline -214K vs -933K expected
- Distillates +1235K vs +189K expected
- Refinery utilization -1.2% vs +0.0% expected
- Production estimate 12.8 mbpd vs 12.8 mbpd prior
- Impld mogas demand: 9.07 mbpd vs 8.91 mbpd prior
Chinese refining giant Sinopec sees Chinese economy extending recovery, fuel demand up
Chinese refining giant Sinopec Corp says its planning to maintain steady refinery output during the second half of 2023. The firm is expecting domestic fuel demand to further recover.
- plans 127 million metric tons of crude throughput, about 5.04 million barrels per day, between July and December, versus 126.54 million tons during the first six months
- “The Chinese economy is seen extending its recovery.Domestic refined fuel demand is looking up and natural gas demand will maintain growth and that of chemical products will rebound gradually”
EU News
European equity close: A breather after a strong start to the week
- Closing changes for the main European bourses
- Stoxx 600 -0.1%
- German DAX -0.2%
- UK FTSE 100 +0.1%
- French CAC -0.1%
- Italy MIB +0.2%
- Spain IBEX -0.1%
Eurozone August final consumer confidence -16.0 vs -16.0 prelim
- Latest data released by the European Commission – 30 August 2023
- Economic confidence 93.3 vs 93.7 expected
- Prior 94.5
- Industrial confidence -10.3 vs -9.9 expected
- Prior -9.4; revised to -9.3
- Services confidence 3.9 vs 4.2 expected
- Prior 5.7; revised to 5.4
Spain August preliminary CPI +2.6% vs +2.6% y/y expected
- Latest data released by INE – 30 August 2023
- Prior +2.3%
- HICP +2.4% vs +2.5% y/y expected
- Prior +2.1%
UK July mortgage approvals 49.44k vs 51.00k expected
- Latest data released by the BOE – 30 August 2023
- Prior 54.66k; revised to 54.61k
Switzerland August Credit Suisse investor sentiment -38.6 vs -32.6 prior
- Latest data released by Credit Suisse and CFA Society Switzerland – 30 August 2023
- Prior -32.6
Switzerland August KOF leading indicator index 91.1 vs 91.5 expected
- Latest data released by KOF – 30 August 2023
- Prior 92.2; revised to 92.1
Germany August preliminary CPI +6.1% vs +6.0% y/y expected
- Latest data released by Destatis – 30 August 2023
- Prior +6.2%
- CPI +0.3% vs +0.3% m/m expected
- Prior +0.3%
- HICP +6.4% vs +6.3% y/y expected
- Prior +6.5%
- HICP +0.4% vs +0.3% m/m expected
- Prior +0.5%
Saxony August CPI +6.8% vs +6.7% y/y prior
- Latest data released by Destatis – 30 August 2023
It truly is a mixed bag for the inflation readings for German states today. But considering the latest one from Saxony here, at the balance it suggests a slightly stronger than expected annual headline inflation reading at the national level. The estimate for the German CPI later is 6.0% y/y, down from 6.2% y/y previously. But I reckon we should get something in the range of 6.2% to 6.4% y/y instead.
Bavaria August CPI +5.9% vs +6.1% y/y prior
- Latest data released by Destatis – 30 August 2023
Some other state readings released at the same time:
- Hesse CPI +6.0% y/y
- Prior +6.1%
- Baden Wuerttemberg CPI +7.0% y/y
- Prior +6.8%
Germany July import price index -0.6% vs 0.0% m/m expected
- Latest data release by Destatis – 30 August 2023
- Prior -1.6%
- Import price index -13.2% vs -12.9% y/y expected
- Prior -11.4%
North Rhine Westphalia August CPI +5.9% vs +5.8% y/y prior
- Latest data released by Destatis – 30 August 2023
Uh oh, that’s not a good look as Germany’s industrial state sees headline annual inflation come in higher in August relative to July. The monthly numbers also show a 0.5% increase in prices. Here’s the breakdown:
Germany’s Scholz: There are signs that economic upswing will start at some point
- Not a bad joke there by Scholz
- ECB is right to take decisions to combat inflation
- We need to be wary of stimulus measures, so as to not spur inflation
ECB’s Centeno: Growth indicators have been surprising to the downside recently
- Remarks by ECB policymaker, Mario Centeno
- The downside risks to growth outlined in June projections are materialising
- Even if we pause, saying we are done would be the wrong message
- Need to be very cautious about policy decisions
- A lot has already been done
Other News
BOJ’s Naoki Tamura says its appropriate to keep easy monetary policy at present
Bank of Japan monetary policy board member Naoki Tamura
- Personally feel sustained, stable achievement of 2% inflation target is clearly in sight
- Appropriate to keep easy policy now given uncertainty over prospects for hitting price goal
- We are in a phase where we need to humbly look at wage, price developments
- Hoping we will have further clarity around January-March next year on prospects for hitting price goal
- Don’t expect 10-year yield to rise to 1.0%, new cap is set as protective measure
- Uncertainty over Japan’s economic, price outlook very high
- BOJ’s step in July aimed at making operation of YCC more flexible
- Corporate price-setting behaviour has changed from period of deflation
- Positive cycle between wages, inflation being seen as wage rises improve consumer sentiment
- Japan’s exports, output moving sideways, capex rising moderately
- Japan’s economy likely to keep recovering driven by domestic demand
BOJ’s Tamura: Timing of easy policy exit must not be too late, but not too early too
- Further Remarks by BOJ policymaker, Naoki Tamura
- Whether that happens next year will depend on various data at the time
- Ending negative rates, yield curve control are options in case BOJ were to exit easy policy
- Even if BOJ abandons negative rates, that is not the same as monetary policy tightening
- Monetary conditions will remain loose regardless
- It will take more time to judge whether will meet price target in a sustainable manner
Japan August consumer confidence index 36.2 vs 37.1 prior
- Latest data released by the Japanese Cabinet Office – 30 August 2023
Looking at the breakdown:
- Overall livelihood 32.9 (-1.0)
- Income growth: 39.0 (-0.2)
- Employment: 42.7 (-1.3)
- Willingness to purchase durable goods: 30.0 (-1.1)
Toyota resumed operations of 25 vehicle production lines at 12 of its 14 plants in Japan
Japanese media report now that output has resumed:
- Toyota resumed the operations of 25 vehicle production lines at 12 of its 14 plants in Japan on Wednesday morning
- A malfunction in the system that processes orders for vehicle parts occurred Monday and has not been fully resolved, Toyota said, adding a backup system had been activated.
- Toyota aims to put into operation a total of 28 production lines at all of its 14 domestic plants by Wednesday evening
Toyota is planning a huge increase in factory output, globally and domestically
Toyota is optimistic on economic growth as far as demand for its vehicles goes.
Reuters with the info, citing the Mid-Japan Economist newspaper
- Toyota plans Sep-Nov quarter global output increase of 10% year-on-year to about 2.74 million units
- Plans Sep-Nov quarter domestic production increase of 26% year-on-year to about 940,000 units
Australian July inflation data 4.9% y/y (vs. 5.2% expected)
- Monthly CPI reading from the Australian Bureau of Statistics
A nice surprise for the monthly inflation data point. While it was always likely that the Reserve Bank of Australia will be paying more attention to the quarterly CPI reading due just ahead of its November policy meeting this sign of slower inflation will be welcome and concretes in an ‘on hold’ RBA decision at the upcoming meeting on September 5.
Australian data – July building permits -8.1% m/m (vs. -0.8% expected)
Australian July building permits -8.1% m/m
- -0.8% expected, prior -7.7%
- the y/y is -6.4% vs. prior -7.3%
Australian data – Q2 Construction work done +0.4 q/q% (expected +1.0%)
Q2 Construction work done +0.4% q/q
- expected +1.0%, prior +1.8%
Standard Chartered cut their RBA terminal rate forecast by 25 basis points
Standard Chartered were forecasting a 25bp rate hike at the Reserve Bank of Australia’s September and November meetings but have dropped the September rate hike forecast.
Are now expecting just one further rate hike of 25bp in November.
Standard Chartered reasoning:
- We still expect a hike in November as inflation – while it may have peaked – likely remains too high. There is little marginfor error, in our view, considering the RBA’s already patient stance forecasting inflation to return to the upper bound of its 2-3%target only by 2025. Services CPI remains sticky.
- The job market may have peaked but remains tight and should support wage growth. This, along with the monthly rise in home prices, may prop up spending, especially if households dip into their significant excess savings. The lack of a productivity pick-up may also increase unit labour costs, adding to inflation.
- The last RBA policy meeting statement in August slanted dovish, noting that inflation was declining (versus inflation having passed its peak in July). On growth, the central bank indicated that the economy “is experiencing a period of below-trend growth and this is expected to continue for a while”. The meeting minutes were more balanced. Thecentral bank pointed out that the cost of inflation being higher thanexpected was greater than the cost of inflation being lower than expected, even as risks to inflation were balanced. The RBA also retained the option to hike further.
New Zealand July building permits -5.2% m/m (vs. +0.2% expected)
Data from New Zealand, Building Consents for July 2023
-5.2% m/m
- expected +0.2%, prior +3.5%
- For the y/y -14%
China’s economy isn’t as bad as the mood suggests, growth moving in the right direction
Via Bloomberg comes this piece on “China’s economy isn’t as bad as the prevailing mood suggests and growth is moving in the right direction as consumer spending picks up, according to an official at the British Chamber of Commerce in China.”
- While the recovery has slowed, “I don’t actually buy the notion that the Chinese economy is in serious systemic trouble,”
- “Sitting here in Beijing and traveling around China, I’m seeing more consumer spend,” he said. “We feel things are going in the right direction.”
Cryptocurrency News
Spot Bitcoin ETF has a 75% chance of approval in 2023, analysts say
- ETF analysts Eric Balchunas and James Seyffart tweeted that they are increasing their prediction of a spot Bitcoin ETF approval.
- The SEC was recently reprimanded for its arbitrary denial of Grayscale’s application to turn GBTC into an ETF.
- Over the next week, the SEC will be facing the deadlines of multiple spot Bitcoin ETF applications.
Spot Bitcoin Exchange Traded Funds (ETFs) have been the focus of the crypto industry for the past couple of weeks. As BlackRock filed its application, many other firms followed, but the Securities and Exchange Commission’s (SEC) stand kept the market skeptical of their approval. Regardless, senior ETF analysts have suddenly increased their odds of approval this week.
Grayscale ruling does not guarantee Bitcoin spot ETF approval, traders say
Bitcoin (BTC) prices surged some 7% on Tuesday after weeks of slumber as traders reacted to hopes of the long-contended Grayscale Bitcoin spot ETF getting approved in the U.S. following a court decision.
A federal appeals court ordered the U.S. Securities and Exchange Commission (SEC) to “vacate” its rejection of the trust issuer’s bid to convert the Grayscale Bitcoin Trust into an exchange-traded fund.
This could potentially open the door for a spot bitcoin ETF in the U.S – even as the SEC has disapproved every such ETF application it’s reviewed to date.
Grayscale and CoinDesk share the same parent company, Digital Currency Group (DCG).
But while most market participants are rejoicing, some remain cautious about the optimism, draining out the current euphoria amongst loyalists.
“Grayscale obtained the chance of seeing their filing re-evaluated by the SEC as the causes of rejection did not seem fair to the judge,” said Matteo Greco, research analyst at Fineqia International (CSE:FNQ), in a note to CoinDesk Wednesday.“It doesn’t mean that now Grayscale will be 100% able to list a spot Bitcoin ETF, nor that this will happen in the future.”
“Undoubtedly this development is a strong positive signal for the market. However, final decisions on when and if Grayscale will be able to list its product as an ETF are yet to be made,” Greco added, pointing out that some 2.5 million Bitcoin are held at a short-term loss that may serve as headwinds in the coming months.
“Looking at the bigger picture and analyzing the whole digital asset market, trading volume remains extremely low. The cumulated volume on centralized exchanges for the month of August totals roughly $400 billion, the lowest number since December 2020,” Greco stated.
DYDX price rally likely as community unanimously supports migration to dYdX chain
- DYDX price holds above support at $2.12 after the unlock of $14 million worth of tokens on Tuesday.
- The community unanimously supports the proposal for adoption of Version 4 of dYdX and its migration to the dYdX chain.
- The next token unlock event is scheduled for September 26, when $13.95 million worth of tokens will enter circulation.
DYDX price resisted selling pressure despite Tuesday’s token unlock in light of the migration to dYdX chain and the adoption of version 4 of the project. The proposal, shared by crypto market maker Wintermute, is likely to be approved as it has received 100% support from community members on a vote that is still under way.
Adding to the success of the vote, DYDX’s relative strength could also be attributed to increasing activity from Whales. On-chain data showes that large wallet addresses, or those holding between 10,000 and 10 million DYDX tokens, appear to be accumulating the DEX platform’s token.
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