North American News
US Stocks Rally Strongly Today; However, Monthly Indices Projected to Record Declines
- Major indices are lower for the month of August
It was a strong day for the major indices with the S&P and NASDAQ having their best day of the trading month:
- Dow Industrial Average headed to the best day since August 7 with a gain of 292.69 points or 0.85% at 34852.66
- S&P had its best day since June 2. Each of those days rose 1.45%. Today the index rose 64.32 points or 1.45% at 4497.64
- NASDAQ index at its best day since July 28 with a gain of 238.62 points or 1.74% at 13943.75
For the month of August, the major indices are still on pace for a down month:
- Dow Industrial Average is down -2.80%
- S&P index is down -1.99%
- NASDAQ index is a down -2.80%.
Some of the large big winners today included:
- Nvidia +4.16%
- Adobe +2.03%
- AMD +3.25%
- Intel +2.01%
- Google plus a 2.72%
- Apple +2.23%
- Stryker +2.46%
- Unity Software +6.57%
- Oracle +3.26%
- tesla +7.69%
- Netflix +2.86%
- Meta +2.64%
- Broadcom, +3.36%
- Caterpillar +1.93%
- Goldman Sachs +2.06%
- Shopify, +4.42%
US sells 7-year notes at 4.212% vs 4.232% WI
- 2 basis point stop through
The US sale of $36 billion in 7-year notes met strong demand as bonds are bid on recession worries and expectations the Fed is at the end of the rate hiking cycle.
JOLTs job openings for July 8.827M versus 9.465M estimate
- The JOLTs job openings for July 2023 details
- Prior report 9.582M revised down to 9.165M
Job Openings:
- Job openings 8.827M versus 9.465M estimate. This is the smallest since March 2021.
- Professional and business services -198K
- Healthcare and social assistance -130K
- State and local government excluding education -67K
- State and local government education -62K
- Federal government -27K
- information +101K
- transportation, warehousing, and utilities +70 5K
Hires:
- Hires 5.773M vs 5.940M last month
Separations including quits, layoffs, and discharges, and other separations:
- Total separations 5.483M versus 5.691M last month
- Quits decreased to 3.549 million (-253K) versus 3.802M last month
US August consumer confidence 106.1 vs 116.0 expected
- US consumer confidence from the Conference Board
- The July reading at 117.0 was the highest since July 2021 (revised to 114.0)
Details:
- Present situation index 144.8 vs 160.0 prior
- Expectations index 80.2 vs 88.3 prior
- 1 year Inflation 5.8% vs 5.7% prior
- Jobs hard-to-get 14.1 vs 9.7 prior
“Consumer confidence fell in August 2023, erasing back-to-back increases in June and July,” said Dana Peterson, Chief Economist at The Conference Board. “August’s disappointing headline number reflected dips in both the current conditions and expectations indexes. Write-in responses showed that consumers were once again preoccupied with rising prices in general, and for groceries and gasoline in particular. The pullback in consumer confidence was evident across all age groups—and most notable among consumers with household incomes of $100,000 or more, as well as those earning less than $50,000. Confidence held relatively steady for consumers with incomes between $50,000 and $99,999.”
US June CaseShiller 20-city home price index +0.9% m/m vs +0.8% expected
- June US CaseShiller house price index
- Prior was +1.0%
- Home prices -1.2% y/y vs -1.3% expected
- Prior was -1.7% y/y
Separate housing data from the FHFA:
- +3.1% y/y vs +2.8% expected
- Prices +0.3% vs +0.7% expected
Apple sends invite for September 12 launch event. Stock is up 1.7%
- Apple shares are trading up over $3 or 1.68%
Apple traditionally has a product launch in the early fall and the invites have gone out.
The event will take place on September 12. Shortly after the event the new products are offered for sale going into the key Christmas season.
Shares of Apple are currently trading up $3.02 or 1.68% at $183.21. It shares are moving away from its 100-day moving average at $179.43. The high for the year was up near $200 at $198.19 back on July 19. That was a new record high. The 50-day moving average is up at $186.48. That is the next key target.
Best Buy warns on continuing consumer softness
- Comments from the Best Buy CEO
Here are some comments from the conference call:
- Comp sales in the first few weeks of Q3 have been down 6%
- Company guides to FY comp sales down 4.5-6.0% vs prior guidance of down 3-6%
- “Our industry continues to experience lower consumer demand due to the pandemic pull forward of tech purchases and the shift back into services spend outside the home, like travel and entertainment.”
- “TV sales trends improved in Q2 and units returned to growth”
- For holiday season expect consumers to look for great deals and convenience and traffic will be weighted toward promotional events
- Back to school has been slightly better than we expected as we get into Q3
US equities – Goldman Sachs says the tech sector is not going up for the right reasons
- Adds that there is a reason it’ll rise further anyway
Snippet comments from Goldman Sachs on technology stocks in the US … but there is still reason to go higher:
- tech stocks are coming off a good week
- not going up on ‘good’ news
- not going up for the right reasons
- “The bad news for the sector right now = stocks not going up on ‘good’ news .. which raises obvious questions around positioning & valuation”
- “This has been a key frustration all month long – the latest being NVDA (.. which follows META, UBER, SPOT, AMZN & DASH all down in August despite beat/raise prints), which created a bit of a “if Nvidia can’t work, what else can” type of feeling out there.”
- “The good news for the sector right now = there also appears to be growing angst in pockets of the market outside of Big Tech (think China exposure or Specialty Retail or Payments), which could create a bit of a ‘TINA’ dynamic for Big Tech (again)”
Bank of America still look for 1 more Fed rate hike, +25bp in November (75bp cuts in 2024)
Bank of America says hawks and doves both got something from Jackson Hole:
BoA’s main takeaways:
- Fed Chair Powell’s speech at Jackson Hole was somewhat balanced, with hawkish and dovish elements.
- Markets took the comments as slightly hawkish, moving closer to our call for a 25bp hike in Nov & only 75bp of cuts in 2024.
- We remain comfortable with our call for one more 25bp hike in November and 75bp of cuts next year, starting in June and proceeding at a quarterly cadence.
Federal Reserve policy rates have likely peaked, first cut only likely middle of 2024
A snippet from US financial firm Principal Asset Management, says that while the FOMC has likely hit peak Fed Funds the message from Powell doesn’t rule out further hikes if necessary.
- “As long as economic growth is strong, a resurgence in inflation is a risk”
- “As such, the first Fed rate cut will likely only come in late 2Q 2024, once job losses have risen and growth has clearly slowed.”
Commodities
Silver soars on weaker Job Openings, US Dollar cracks
- Silver price strengthens after US JOLTS Job Openings were recorded lower at 8.827M vs. expectations of 9.465M.
- The US Dollar drops vertically to near 103.80 as investors hope that labor market conditions are losing resilience.
- Silver price comes out of the consolidation forms in a narrow range around $24.40
Silver strengthens as the United States Bureau of Labor Statistics reported significantly lower fresh Job Openings in July. US firms invited fresh applications for 8.827M vacancies against June’s reading of 9.165M while investors anticipated 9.465M openings. This indicates that the hiring process has slowed down.
The US Dollar Index (DXY) comes under extreme pressure and drops vertically to near 103.80 as investors hope that labor market conditions are losing resilience.
Brent crude oil climbs $1 to settle at the highest in a week
- Brent up $1.04 to $84.46
A falling US dollar and hopes for a soft landing in the US led to a third rally in brent crude in the past four trading days.Oil climbed $1.04 to settle at $85.48, which is the highest intraday since August 21 and the highest settlement since Aug 14.
There is something of a ‘buy everything’ mode in markets today despite a round of poor US economic data today, including job openings and consumer confidence.
Oil – China weekly flights are 13% above pre-COVID levels
This snippet from ANZ on oil demand in China, some better news:
- signs of strength in China’s jet fuel market are likely to boost sentiment.
- China weekly flights have surged 13% above pre-COVID levels in the week ending 20 August.
- International travel is picking up, with bookings for overseas group tours during the National Day holiday in October more than tripled from a month ago. This comes amid increasing tightness in aviation fuel.
EU News
European equity close: UK returns from holiday with a flourish
- Closing changes for the main European bourses
- Stoxx 600 +1.0%
- German DAX +0.9%
- UK FTSE 100 +1.7%
- French CAC +0.7%
- Italy MIB +1.2%
- Spain IBEX +1.0%
France August consumer confidence 85 vs 85 expected
- Latest data released by INSEE – 29 August 2023
- Prior 85
Germany September GfK consumer sentiment -25.5 vs -24.3 expected
- Latest data released by GfK – 29 August 2023
- Prior -24.4; revised to -24.6
German consumer sentiment looks to fall further in September, with GfK noting that “the chances that it can sustainably recover before the end of this year are dwindling more and more”. Given the more subdued environment, GfK also says that private consumption is not likely to make any positive contributions to the overall economy in 2023 as a whole.
UK inflation indicator at a 10 month low
British Retail Consortium (BRC) data for UK shop price inflation has dropped to a 10-month low in August.
Annual shop price inflation 6.9%
- from 7.6% y/y in July
- +0.5% m/m
“These figures would have been lower still had thegovernment not increased alcohol duties earlier this month,” BRCChief Executive Helen Dickinson said.
ICYMI – Sweden’s Riksbank Deputy Governor said SEK is 20% undervalued
Sweden’s Riksbank Deputy Governor Martin Floden spoke on Monday, saying the crown is undervauled by 20%.
Also:
- “Inflation is heading in the right direction, but there is still a long way to go and monetary policy will probably need to remain tight for a fairly long period to come”
- a lot of new information on the economy has been incoming over the summer but that it was “too early to say” what it would mean for the Riksbank’s next rate announcement
Other News
FT report – Goldman Sachs bought US and UK companies using China state money
The UK’s Financial Times with the report that Goldman Sachs used Chinese state money to buy US and UK companies, including a cyber security business that provided services to the UK government.
Link (FT is gated)
China reportedly to cut borrowing costs on mortgages as soon as today
- Bloomberg reports, citing people familiar with the matter
More stimulus is coming for China as Beijing is reportedly poised to cut interest rates on some of the ¥38.6 trillion of existing mortgages. And that move could come as soon as today, with the reductions set to only affect loans on first homes.Once officially announced, it will be the first time that China has reduced the rates on outstanding home mortgages for the first time since the global financial crisis.
UBS on China’s latest supportive policy:- “we see reason for optimism” (and a weaker yuan)
A snippet from UBS, analysts there are optimistic on the developments. On more broader moves from Chinese policy makers:
China’s broader package of response measures is starting to take shape.
- This latest round of measures adds to a growing list of steps from China in recent weeks on the fiscal, monetary, and property front. Following several rate adjustments, we anticipate 1–2 more reserve requirement ratio cuts and 10–20bps in additional medium-term lending facility cuts into year-end. We anticipate more property-focused assistance, such as further easing of home purchase restrictions in select cities (especially top-tier cities), lowering down payments, allowing refinancing, or providing funding support for distressed developers, any of which would help rebuild investor and consumer confidence in the recovery.
- If policy measures continue to be unveiled in the coming weeks, the market narrative may shift from “too little, too late” to a more confident stance as policymakers regain credibility.
And, on the yuan:
- supportive policy now tracking closer to our base case scenario
- More convincing stimulus would be a tailwind for the yuan, but near-term dollar strength is the bigger driver now, with USDCNY set to trade near 7.4 by end-December
Australia data – ANZ Roy Morgan weekly consumer confidence 78.1 (prior 79.0)
Australian Weekly ANZ Roy Morgan Consumer Confidence survey
ANZ comment:
The resilient labour market and beginning of what we think will be an extended pause from the RBA is yet to result in a confidence above 80, which was achieved even during Delta lockdowns in 2021.
RBA’s Bullock: Inflation is still too high, that will be my first priority as governor
- Further remarks by Bullock
- May have to raise rates again, but watching data carefully
- All central banks are grappling with how much further to hike
RBA’s Bullock: Climate change likely to lead to more volatile inflation outcomes
- Remarks by incoming RBA governor, Michelle Bullock
- Impact of climate change on neutral interest rate is not clear cut
- Could put both upward and downward pressure on the neutral rate
RBA’s own staff could be signalling low faith in durably hitting the Bank’s CPI target
The RBA’s own staff may not believe the Bank can hit its CPI target:
Australia updates CPI for July on Tuesday evening (ET) ahead of the RBA’s expected hold on September 5th.
New RBA Governor Michele Bullock will speak hours earlier and also faces the sticky situation presented by fighting inflation and counselling workers to behave responsibly, while its staff just rejected a proposed pay increase of 4% this year, 3.5% next year and 3% in 2025.
The RBA’s own staff could be viewed as either
- a) seeking to make up for a real wage cut to date,
- and/or b) signalling low faith in durably hitting the RBA’s 2–3% inflation target
Japan’s government says the country may be at an inflection point in its battle with deflation
The Japanese government’s annual economic white paper says “Japan has seen price and wage rises broaden since the spring of 2022. Such changes suggest the economy is reaching a turning point in its 25-year battle with deflation”.
- “We shouldn’t dismiss the fact a window of opportunity may be opening to exit deflation,” as inflation perks up and public perceptions about persistent price declines abate, it said.
Japan data – July unemployment rate 2.7% (expected 2.5%)
Japan data for the labour market in July 2023.
Slightly weaker with the jobless rate up. The BOJ focus is on inflation, the Bank continues expecting inflation to fall back and is thus maintaining loose policy.
Japan reportedly considers to extend fuel subsidies until year-end
- Reuters reports, citing three people with direct knowledge of the matter
The measure in question is one that is helping to keep gasoline prices below ¥180 a litre and it is being reported taht the government is working on a separate budget to finance the extension until year-end. This was introduced back in early 2022 amid rising fuel prices and unless extended, will expire at the end of September this year.
Toyota production halt now at 14 plants in Japan – ‘system glitch’
Japan’s industry minister says now he has received information that the output disruption has spread to 14 plants.
- a malfunction with its production system
- the malfunction has meant the company has not been able to order components
Cryptocurrency News
Bitcoin surges to the upside. What are the technicals telling us now?
- The price of bitcoin runs higher on positive fundamental news, but is running into retracement and moving average resistance
The price of bitcoin surged higher on positive results from a lawsuit between Grayscale and the SEC.
The ruling may open the door for ETF’s on bitcoin. We will see.
The run to the upside to the price above its 200-day moving average at $27,472, but short of its 38.2% retracement of the move down from the 2023 high at $27,821. The price run higher has stalled.
What next?
There is support near the $27,000 level. That level represents the 38.2% retracement of the spike higher. Correct to that level, should funds for buyers if the buyers are anxious to “buy a dip” and keep the buyers in firm control.
SEC resorts to rare tactic, files secret motion against Binance
- The US SEC has filed a sealed motion against Binance Exchange.
- The move allows the regulator to file sensitive or confidential information with a court and for it to be kept off any public record.
- Experts speculate the SEC filing likely relates to an existing US DOJ investigation of Binance.
The US Securities and Exchange Commission (SEC) has resorted to a rare tactic, filing a secret motion against Binance. It comes as the financial regulator continues in its clampdown against crypto exchanges, with Binance and its CEO Changpeng Zhao (CZ) falling victim to charges of securities laws violations, asset commingling, and diverting billions of Dollars of customer funds to a third-party entity owned by CZ.
SEC files sealed motion against Binance
The US SEC has filed a sealed (secret) motion for leave, a rare tactic often used in court when either the prosecution or defendants want to keep documents under seal. The court allows such a move to protect the integrity of sensitive or confidential information so that it is not in the public record while it is filed.
Bitcoin jumps as Grayscale wins lawsuit against the SEC
- Bitcoin quickly climbs $700
The D.C. court ruled that the SEC improperly rejected the Bitcoin spot ETF. The court ordered the petition for review be granted and the commission’s order be vacated.
Bitcoin has rallied to $26,800 from $26,000 just before the decision. I’m not entirely sure on the timeline here but this should clear the way for a bitcoin ETF.
CryptoQuant data shows that Bitcoin trading volume is at its lowest in more than 4 years
latest:
Bitcoin’s trading volume hit its lowest level in almost five years this month
Analysis of CryptoQuant data from both spot and derivatives exchanges shows the total volume of bitcoin held on all exchanges fell earlier this month to its lowest level since 2018 and has struggled to rebound
CNBC convey the info and add comments from the firm:
- “Trading volumes decrease in bear markets as retail investors leave,”
- “This happened during 2022 on most exchanges. As we progress further into a bull market, the trading volume may continue to pick up.”
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