Dug out of Jackson Hole

U.S. stock index futures continue to point green, albeit slightly, following an eventful meeting in Jackson Hole on Friday. Investors were quick to highlight the dovish stance of Fed Chair Jerome Powell, who said he was in no rush to raise rates and would be guided by data and risks posed by the Delta variant. That effectively shut out noise from several Fed speakers who had made some hawkish noises within the same time frame.

Powell also continued to make the case that inflationary pressures were "transitory" and there had been "clear progress" toward maximum employment. While the Fed may start paring its bond purchases in the next few months, Powell didn't give a specific timeline for scaling back stimulus, and even if it comes this year, it won't necessarily start the shot clock on hiking interest rates. Traders took the news in stride, with a fresh round of stock market highs.

Quotes: "The central bank has been able to successfully divorce the idea of 'tapering' from interest rate hikes in order to avoid a repeat taper tantrum," wrote Tracy Alloway at Bloomberg, while the WSJ's Jon Hilsenrath expressed similar sentiment: "The Fed has done a better job of preparing investors for a shift in its policies than it did in 2013 and the market largely agrees with its approach."

Risks remain: If inflation persists longer than anticipated or if the pressures continue to escalate, the Fed might have to throw out its gradual approach to normalizing monetary policy. That could see a swifter pace of interest rate increases and spark a flashback of 2013. Last time around, there was a two-year gap between when the Fed started winding down QE and when it began upping rates, however, the current time frame could demand a much shorter gap given the sharp rebound in the U.S. economy. (5 comments)

Look out Tesla

Rivian (RIVN) has reportedly filed for an IPO and is looking to go public around Thanksgiving after it lands SEC approval. According to Bloomberg, the electric vehicle startup is looking for a valuation of around $80B, which is an astounding jump from the $27.6B valuation when it raised new funds from T. Rowe Price, Fidelity Investments and Amazon (AMZN) at the beginning of the year. Ford (F) was also an early investor in Rivian.

Sticker shock: The $80B valuation is higher than the market caps of Nio (NIO) $61B, Fisker (FSR) $4B, Canoo (GOEV) $2B, Workhorse Group (WKHS) $1.1B and Lordstown Motors (RIDE) $1.1B - combined.

Last month, Rivian founder RJ Scaringe told customers he expected the company's truck to ship in September (following supply chain delays) and its highly anticipated SUV to follow soon after. The R1T truck will have an over 300-mile range when it launches, while the R1S SUV will feature towing capacity of 7,700 pounds. Amazon is also tied pretty close to Rivian with a goal to have a delivery fleet of 10,000 Rivian vehicles on the road making deliveries by 2030.

Analyst commentary: "Rivian is one of the best-positioned electric vehicle start-ups," said Asad Hussain, senior mobility analyst at PitchBook. "The company’s focus on the relatively untapped premium electric truck market should allow it to gain rapid market adoption." (200 comments)

No longer safe

In a potential blow to the travel industry, the European Union today is expected to recommend that member states reinstate COVID-related travel restrictions and halt nonessential travel from the U.S. That could mean quarantine and testing requirements for unvaccinated travelers, sources told the WSJ. EU officials have been debating the move for much of the last month, with the average U.S. infection rate now above that of the EU.

Fine print: EU countries are not obligated to follow the EU Safe Travel List, which is reviewed every two weeks. However, the list has generally set the pattern over the past few months for who can visit the bloc.

The European Union lifted travel restrictions for U.S. visitors in June, shortly after President Biden visited Brussels to speak with EU leaders. The motion was seen as an effort to reset transatlantic relations, and at the time, European officials said Biden's team told them they would make it a priority to lift the ban on EU visitors. The latter never arrived, and in early in August, European Commission President Ursula von der Leyen warned that the bloc wouldn't allow the lack of reciprocity to "drag on for weeks."

Outlook: Flights between the U.S. and Europe soared after Europe reopened its doors to American visitors at the start of July, especially for visits to Spain and Portugal, according to aviation analytics firm Cirium. EU countries are also eager to keep their doors open during the summer tourist season to bring in whatever revenue they can during the pandemic.

Today's Markets

In Asia, Japan +0.5%. Hong Kong +0.5%. China +0.2%. India +1.4%.
In Europe, at midday, London closed. Paris +0.1%. Frankfurt +0.2%.
Futures at 6:20, Dow +0.1%. S&P +0.1%. Nasdaq +0.2%. Crude -1.1% at $68.01. Gold -0.1% at $1818.30. Bitcoin -1.2% at $47932.
Ten-year Treasury Yield -1 bps to 1.3%

Today's Economic Calendar

10:00 Pending Home Sales
10:30 Dallas Fed Manufacturing Survey

Companies reporting earnings today »

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