- China Central Bank Cuts Key Interest Rate on Bank Lending
- Run It Cold: Why Xi Jinping Is Letting China’s Economy Flail
- As China Falls Into Deflation, the Mood Turns Dark
- China Is on Edge as Fallout From Its Real Estate Crisis Spreads
- Chinese E-Commerce Giants Pivot to Selling Inexpensive Goods
- JPMorgan Sees Japan’s Threshold for Yen Intervention at Around 150 Yen per Dollar
- The Unbearable Nothingness of Yield Curve Inversion
- Why the Era of Historically Low Interest Rates Could Be Over
- The Fed Can’t Celebrate at Jackson Hole Just Yet
- New York and California Each Lost $1 Trillion When Financial Firms Moved South
- Why PayPal’s Stablecoin Is Likely to Succeed Where Facebook’s Libra Failed
- Arm Listing Set to Be Turning Point for IPO Market, SoftBank
- Bond Bulls at JPMorgan, Allianz Keep Piling Into a Bet Gone Bad
- Wall Street All-Stars Including Weinstein, Ackman Bid for Hedge Fund
- Borrowers With $39 Billion in Student Loans Finally See Relief
- Retailers Are Fleeing Downtown San Francisco. IKEA Is Moving In
- The US Mall Is Not Dying
- Cargill Tests 123-Foot-Tall Sails in Effort to Slash Fuel Burn
- Kraft Heinz Sees a $25 Billion Opportunity—in Schools
- Meta’s Threads App to Launch Web Version as Rivalry With X Enters New Stage
- Elon Musk Admitted X ‘Might Fail’—then the Social Network Accidentally Removed Swathes of Historic Content, Including Ellen’s Oscars Selfie that Broke Twitter
Todays Open Interest Change
PREMIUM
Prepper
Is there another alternative?
Investing since the global financial crisis and coronavirus pandemic has been heavily rooted in TINA, an acronym that stands for "there is no alternative." While the Fed's aggressive hiking cycle weighed on the performance of the stock market last year, stocks have been in rebound mode for most of 2023. The S&P 500 Index (SP500) is still up 14% YTD, but it has pulled back nearly 5% over the first three weeks of August, as the yield on the 10-year Treasury (US10Y) broke out of the 3.25%–4% band it had been trading in for much of the year.
Snapshot: Market pullbacks are common, especially when equities have been advancing at a rapid pace for months, but many are now assessing some new dynamics that could influence their investing strategies. There's a fresh realization that rates could stay higher for longer despite some initial forecasts and hopes of cuts starting in 2024. The Bank of Japan recently lifted the bands on its long-term yields, giving the country - which is the largest foreign holder of U.S. Treasurys pegged at $1.1T - less of a reason to buy U.S. debt. Bill Ackman's Pershing Square, as well as other hedge funds, have also been shorting Treasuries en masse after the Treasury increased the size of longer-term debt sales to address mounting borrowing needs.
Another factor prompting the "higher for longer" outlook is that economic growth still seems to be running well above Fed estimates even under the current market forces. Fears of higher government deficits, which resulted in a downgrade by Fitch, as well as sticky inflation, could also extend the cautious tone of the U.S. central bank. Investors will get the latest dose of Fed commentary later this week as Chair Jerome Powell takes the stage at the Jackson Hole Economic Symposium in Wyoming.
Outlook: "Doom and gloom" and "stocks only go up" predictions are a dime a dozen in the market, and while it is important to be aware of volatility, it is more important to revisit portfolios at regular intervals. That could include diversification, or staying in long-term positions and not getting too emotional. Investors that do want to try out new areas or sectors of the market are advised to conduct research analysis before making any decision, or use comparison tools, screeners, analyst rankings or even joining an investing group to discover real-time investing or trading ideas. Take the WSB survey.
Advanced weapons
The Netherlands and Denmark have confirmed that they will deliver dozens of F-16 fighter jets to Ukraine, days after the U.S. approved the transfer of the aircraft to Kyiv. It remains unclear when the first Lockheed-built (LMT) F-16s will fly, but officials said Ukrainian pilots would need at least six months of training on the aircraft. U.S. Air Force General James Hecker also noted that this may not be an immediate game-changer for Ukraine as getting F-16 squadrons ready for battle could take 4-5 years. The U.S. has previously made other U-turns on supplying more advanced weapons to Kyiv, including heavy artillery, M1 Abrams tanks and the Patriot missile defense system. (8 comments)
Speed bump
General Motors' (GM) Cruise may need to tap the brakes in California as the state's DMV directed the automaker to cut its robotaxi fleet by 50% following a crash involving a fire truck. The state agency is also investigating other recent incidents involving Cruise vehicles in San Francisco. Cruise explained the crash, saying "The AV identified the emergency vehicle almost immediately... the confines of this intersection make visual identification more challenging as it is significantly occluded by buildings." Cruise's robotaxis were cleared for operation in San Francisco earlier this month, which SA analyst Michael McGrath said proved the technology's viability and market acceptance, while presenting a unique investment opportunity. (43 comments)
Shipping wars
Amazon (AMZN) is restarting a shipping service it had paused in the early days of the pandemic, a development that could add competitive pressure for FedEx (FDX) and UPS (UPS). Amazon Shipping allows sellers to ship Amazon orders or products sold on other sites, while businesses must sell on Amazon (AMZN) to be eligible for the service, a spokesperson confirmed to Seeking Alpha. Amazon has already been making gains with delivery speeds, with more than half of Prime orders across the top 60 U.S. metro areas arriving the same day or the next during Q2. Meanwhile, a surge in transportation and labor costs prompted the three shipping giants to encourage customers to use access points to pick up packages, instead of having them delivered to a home address. (76 comments)
Today's Markets
In Asia, Japan +0.3%. Hong Kong -1.8%. China -1.2%. India +0.4%.
In Europe, at midday, London +0.5%. Paris +1.1%. Frankfurt +0.7%.
Futures at 7:00, Dow +0.3%. S&P +0.4%. Nasdaq +0.6%. Crude +0.9% to $81.42. Gold flat at $1,917.20. Bitcoin -0.8% to $25,942.
Ten-year Treasury Yield +5 bps to 4.30%.
Today's Economic Calendar
No events scheduled
Companies reporting earnings today »
What else is happening...
China stimulus: Central bank modestly cuts one-year loan prime rate.
Bill Ackman, Boaz Weinstein make rival bid for Sculptor Capital (SCU).
Goldman Sachs (GS) board to discuss dissent over CEO next month.
DuPont (DD) to sell 80.1% stake in Delrin business, valuing unit at $1.8B.
Union at General Dynamics' (GD) Bath Iron Works OKs new labor deal.
Palo Alto Networks (PANW) pops as Q4 results overpower guidance.
Meta Platforms (META) could launch Threads web version this week.
Here’s what Maui wildfires mean for Allstate (ALL), other P&C insurers.
RSV jab sales for elderly expected to top $10B by 2030 in G7 nations.
EU hits gas storage target early, but prices surge on Australia strike fears.