North American News
Dow Jones Posts Gains, but Nasdaq Continues Its Fourth Consecutive Day of Decline
Closing changes:
- S&P 500 down 0.4%
- DJIA +0.2%
- Russell 2000 -0.9%
- Nasdaq Comp -0.9%
US weekly initial jobless claims 216K vs 234K expected
- US initial jobless claims and continuing claims for the week ending Sept 2
- Prior was 228K
- four-week moving average vs 237.5K prior
- Continuing claims 1.679m vs 1.715m expected
- Prior continuing claims 1.725m
UAW calls GM proposal ‘insulting’ again threatens September the 15th strike
- A strike looks highly likely
UAW President Shawn Fain released the following statement:
“After refusing to bargain in good faith for the past six weeks, only after having federal labor board charges filed against them, GM has come to the table with an insulting proposal that doesn’t come close to an equitable agreement for America’s autoworkers. GM either doesn’t care or isn’t listening when we say we need economic justice at GM by 11:59pm on September 14th. The clock is ticking. Stop wasting our members’ time. Tick tock.”
Fed’s Williams: Labor market balances are evening out
- Comments from Williams
- There’s still more data to come before next FOMC meeting
- Inflation is far too high but moving down
- Policy is in a good place, is data dependent
- We are seeing movement in the right direction for the economy
- It’s an open question whether monetary policy is restrictive enough
- The latest consumer spending data has been strong
- Expects unemployment rate to rise to low 4% range
Walmart tweaks pay structure for some new hires
- A sign of wage disinflation?
The WSJ reports that Walmart has tweaked its pay structure so some new hires get less.
Under the new structure most new hires will make the lowest possible hourly wage for that store. In the past, some new hires, such as those who collect items for online orders, would have made slightly more than other new hires such as cashiers.
Senate votes to confirm Adriana Kugler as Federal Reserve Governor
- Kugler was the former Chief Economist of the United States Department of Labor
The latest member of the Federal Reserve’s board of governors is Adriana Kugler, a 53-year-old Colombian-American.
She was a professor of public policy at Georgetown University’s McCourt School of Public Policy and formerly chief economist at the department of labour. She studied at McGill University in Montreal, then at the University of California at Berkeley, where one of her advisors was George Akerlof, the husband of Janet Yellen.
The focus of her research has been on the labor market, healthcare policy, immigration and economic development.
“An important part of my work focuses on cost-benefit analyses, whichinform how to best spend taxpayers’ money in programs with the highest return,” she said at a Senate confirmation hearing for a World Bank role.
Canada August Ivey PMI 53.5 vs 48.6 prior
- Canadian manufacturing survey
- Prior was 48.6
- Non-seasonally adjusted vs 45.2 prior
BOC’s Macklem: We are concerned that progress in bringing down inflation has slowed
- Comments from Macklem
- We are prepared to raise rates again but don’t want to raise rates more than we have to
- The longer we wait, the harder it is likely to be to reduce inflation
- Monetary policy might not be restrictive enough to restore price stability
- Bank is concerned that larger-than-normal price increases for goods and services remain broad based
- We are not trying to kill economic growth
Macklem Q&A: Maybe we don’t need to do more, maybe we do’ on interest rates
- Macklem takes audience questions
- We will take decisions meeting by meeting
- Expecting growth of ‘a little less than 1%’ over the next few quarters
- You can expect headline inflation is going to go up in the near term, before it eases
Commodities
Silver tumbles as strong US jobs data fuels Fed tightening speculation
- Silver falls 0.83% despite a pause in US Treasury bond yield uptrend, as strong US jobless claims data hints at further Fed action.
- Money markets currently rule out rate hikes for the remainder of the year, but upcoming CPI data could reignite discussions.
- Traders eye US real yields and upcoming inflation data, as any upward revisions could signal headwinds for precious metals.
Silver price plunged 0.83%, although US Treasury bond yields paused their uptrend after data from the United States sponsored speculations the US Federal Reserve is not done raising interest rates. Despite this, the Greenback is rising a headwind for the white metal. Silver is trading at $22.97 per troy ounce after hitting a daily high of $23.18.
WTI crude oil ends 9-day winning streak, settles 67-cents lower
- Oil down 67-cents to $86.87 after 9 days of gains
WTI crude settled lower by 67-cents to $86.87 per barrel.
There’s a technical case to retest the old range top at $84-85 before continuing the move higher.
US weekly EIA crude oil inventories -6307K vs -2064K expected
- Weekly US petroleum stockpile data
- Prior crude -10584K
- Gasoline -2666K vs -950K expected
- Distillates +679K vs +239K expected
- Refinery utilization -0.2% vs +0.1% expected
- Production estimate 12.8 mbpd vs 12.8 mbpd prior
- Impld mogas demand: 9.32 mbpd vs 9.07 mbpd prior
- Cushing: -1.750M
US weekly natural gas inventories +33 bcf vs +43 bcf expected
- Weekly US natural gas inventory data
- Prior was +32 bcf
EU News
European equity close: DAX slides again but closes above the lows
- No decisive move in European equities today
Closing changes:
- Stoxx 600 -0.2%
- German DAX -0.2%
- UK FTSE 100 +0.2%
- French CAC flat
- Italy MIB -0.2%
- Spain IBEX flat
Eurozone Q2 final GDP +0.1% vs +0.3% q/q second estimate
- Latest data released by Eurostat – 7 September 2023
The negative revisions paints an even bleaker picture for the euro area economy as even Q2 growth was marginal at best. Looking at the breakdown:
- Household consumption flat
- Government expenditure +0.1%
- Gross fixed capital formation +0.1%
- External balance -0.4%
- Changes in inventories +0.4%
Germany July industrial production -0.8% vs -0.5% m/m expected
- Latest data released by Destatis – 7 September 2023
- Prior -1.5%; revised to -1.4%
Looking at the breakdown:
- Capital goods production -2.9%
- Consumer goods production -1.0%
- Intermediate goods production -0.7%
- Energy production +2.2%
- Construction production +2.6%
France July trade balance -€8.09 billion vs -€6.71 billion prior
- Latest data released by INSEE – 7 September 2023
- Prior -€6.71 billion; revised to -€6.80 billion
Switzerland August seasonally adjusted unemployment rate 2.1% vs 2.1% expected
- Latest data released by SECO – 7 September 2023
- Prior 2.1%
UK August Halifax house prices -1.9% vs -0.3% m/m expected
- Latest data released by Halifax – 7 September 2023
- Prior -0.3%; revised to -0.4%
- House prices -4.6% y/y
- Prior -2.4%; revised to -2.5%
Halifax notes that:
“It’s fair to say that house prices have proven more resilient than expected so far this year, despite higher interest rates weighing on buyer demand.However, there is always a lag-effect where rate increases are concerned, and we may now be seeing a greater impact from higher mortgage costs flowing through to house prices. Increased volatility month-to-month is also to be expected when activity levels are lower, though overall the pace of decline remains in line with our outlook for the year as a whole.”
UK businesses see lower inflation expectations for the year-ahead in August
- The latest findings from the BOE’s Decision Maker Panel (DMP) survey
- One-year ahead inflation expectations seen at 4.8% (previously 5.4% in July)
- Three-year ahead inflation expectations seen at 3.2% (previously 3.3%)
- Current CPI perception seen at 7.8% (previously 8.4%)
Other News
China has widened existing curbs on use of iPhones by state employees – report
- Reuters reports, citing two sources familiar with the matter
The report says that China has in recent weeks widened existing curbs on iPhone usage by state employees, telling some central government agencies to stop using the Apple product at work. It is said that staff in at least three ministries and government bodies were told not to use their iPhones at work.
The “ban” doesn’t seem to be widespread just yet with a third source at one of the three ministries saying he was still using an iPhone at work. Meanwhile, a fourth source at a Chinese regulatory body did say they had not been barred but were warned that they will be held responsible if there would be any issues arising from their iPhone usage.
Some more Chinese banks are once again lowering mortgage rates today
Agricultural Bank of China and Bank of China have announced they are adjusting rates for some existing first-home mortgages.
There has been a wave of supportive moves such as this after instructions were given by authorities in the country. The property sector has been slow under the debt implosion, relief measures are ongoing.
China August trade data, Exports -8.8% y/y (expected -9.2%) & Imports -7.3% (exp -9.0%)
For the period January – August (that is, YTD):
- USD denominated exports are down 5.6% y/y and imports are down 7.6% y/y
- In CNY terms for the YTD exports +0.8% and imports -1.3%
China’s forex reserves fell by roughly $44 billion in August
- That’s just a drip from a bucket of water really
The country’s foreign exchange reserves fell to $3.16 trillion in August, down from $3.204 trillion in July – indicative of a $44.2 billion fall.
Needless to say, they’re not really burning through reserves to defend the yuan currency. That considering Beijing has alternative means to maintain control over flows and actions by major state-owned banks as well. In any case, at $3.16 trillion, they’re still comfortably holding the world’s largest forex reserves – nearly three times more than Japan which is the second-largest.
Australian data: July Exports -2% m/m (prior -2%) & Imports +3% m/m (prior -4%)
Trade balance data from Australia for July 2023
RBA Gov Lowe says risk if sticky inflation materialises would need tighter policy
Reserve Bank of Australia Governor Lowe in his final public speech as Governor.Deputy Governor Bullock takes over as the new head of the Bank on September 18.
- My recent focus is risk wages, profits run ahead of rates consistent with return to inflation target
- If this risk materialised and inflation became sticky, would require tighter monetary policy
- Will be difficult to return to the earlier world in which inflation tracked in a very narrow range
- Inflation is likely to be more variable around target
- Australia has been well served by a flexible inflation target
- Possible thatAustralia can sustain unemployment rates below what we have had overthe past 40 years
- Now in an environment of stronger growth in nominal wages, which is positive
- The recent productivity record isn’t encouraging; solution fundamentally a political problem
- Interest ratesinfluence housing prices, but are not reason Australia has some ofthe highest prices in the world
- Issue that defined my term more than any other was forward guidance on rates during the pandemic
- Guidance was widely interpreted as a commitment, rather than a conditional statement
- With the benefit of hindsight, my view is that we did do too much during pandemic
Australian Prime Minister Anthony Albanese confirms he will visit China later this year
Australian Prime Minister Anthony Albanese has confirmed he will visit China later this year
- “I confirmed the invitation from President Xi. That I would accept an invitation and will visit China later this year at a mutually agreeable time”
Albanese met with China’s Premier Li Qiang on the sidelines of a Southeast Asia summit in Indonesia earlier. He said a range of bilateral and other issues of importance were raised, including remaining trade impediments, consular cases and human rights. Albanese welcomed ongoing progress in stabilising the relationship with China.
Japan July leading indicator index 107.6 vs 108.8 prior
- Latest data released by the Japan Cabinet Office – 7 September 2023
- Coincident index 114.5
- Prior 115.6
BOJ’s Nakagawa: Further YCC tweak cannot be ruled out but is not an imminent issue now
- Remarks by BOJ policymaker, Junko Nakagawa
- Strong outcome in next year’s wage talks would be a necessary condition, though not a sufficient one to contemplate pursuing end of negative rates
- Want to look at various factors beyond wages in deciding future policy changes
- No preset idea on order or timing on how to phase out easy policy
- Sees equal degree of upside and downside risks to inflation
- Can exit NIRP when economy is strong enough
- But there is no preset idea on order or timing of that
- It depends on financial developments at the time
- Does not want to comment on FX levels
ICYMI – Japanese government set to announce a fresh economic stimulus package in October
Japanese media (Kyodo news agency) carried the report overnight. In summary:
- Japanese government set to announce a fresh economic stimulus package in October
- Aiming it to support wage hikes by firms and mitigate energy bills
- PM Kishida will order up a draft package by the end of September
- Will utilise an extra budget to fund the measures (more debt)
Cryptocurrency News
Bitcoin options traders are selling bear spreads without fear, eyeing BTC rally to $30,000
- BTC options traders are selling $22,000 put trades in BTC to buy calls above $25,000 and near $30,000.
- The move by nearly a quarter of the total volume of BTC options traders implies that large players expect Bitcoin to close the month profitably.
- Traders are selling bear spreads without fear while predicting a swing of 10% or higher in Bitcoin price in September.
Options market data can typically offer insights into price movements of Bitcoin.
BTC options allow traders to speculate the price of Bitcoin and use the investment product to leverage or hedge their existing trading positions. Analysts evaluated BTC options data recently.
Early on Thursday, they noted large put options transactions in Bitcoin and shared insights on the same. The data implies that large players in the BTC options market are safely selling bear market spread and expect the asset to close September at a profit.
Texas paid bitcoin miner Riot US$31.7 million to shut down during heat wave in August
CNBC report on a nice little earner for crypto miner Riot Platforms.
- During the crypto boom of 2021, Riot Platforms was raking in cash from bitcoin mining. Now the company is losing so much money that it’s counting on energy credits from selling power back to the Texas grid to keep its costs under control.
- Riot said on Wednesday that it earned $31.7 million in energy credits last month from Texas power grid operator ERCOT. The company generated the credits by voluntarily curtailing its energy consumption during a record-breaking heatwave.
- The total value of the credits dwarfed the 333 bitcoin the company mined in August, worth about $8.9 million dollars as of the end of the month.
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