Morning reads
- Team for Investor Talks in New York
- China Stimulus Rally Lasts Just 10 Minutes, Showing Trader Gloom
- US Budget Deficits Are Exploding Like Never Before
- How Jackson Hole Became an Economic Obsession
- One Year Later, Powell Faces a Changed Economy and Market
- Why the Stock Market’s Summer Doldrums Are Not a Problem
- Stockpickers Aren’t Stupid. The Market Is Just Stacked Against Them
- Crypto Is Dead? Or Is That Just ‘Fud’?
- Pro Take: Corporate Venture Capital Provides Path for Long-Term Tech Strategy
- Heineken Sells Russia Business…for $1
- These Are 5 Ways Surging Mortgage Rates Are Reshaping the Housing Market
- Zillow Offers 1% Down Payment to Lure Struggling Homebuyers
- This Is Public Housing. Just Don’t Call It That
- AstraZeneca Fights Back Against Biden’s Move to Cap Drug Prices
- Justice Department Sues SpaceX, Alleging Discrimination Against Refugees
- Wagers on the Weather? Insurers Offer a Way for Businesses to Hedge Climate Risks
- Seafood Is Safe After Fukushima Water Dump, but Some Won’t Eat It
- Coach and Michael Kors Tie-Up Shows Limits of Accessible Luxury
- Shein and Forever 21 Team Up in Fast-Fashion Deal
- New US Private-Jet King Crowned After Cessna Model’s Long Reign
Todays Open Interest Change
PREMIUM
Prepper
Investors today are looking to Wyoming, and it's not to book a national park getaway before the summer comes to an end. The annual Jackson Hole Symposium hosted by the Kansas City Fed is underway, with Chairman Jerome Powell set to take the stage at 10:05 AM ET. The theme of the 2023 conference is titled "Structural Shifts in the Global Economy," which will likely explore whether the U.S. will return to a pre-pandemic low-interest rate environment, or if the higher-for-longer attitude will prevail. Bulls vs. Bears: SA analysts weigh in on a hawkish or dovish Powell
Bigger picture: Nervousness going into the summit appears to be drowning out any market optimism seen following Nvidia's (NVDA) blowout results. Some traders still have flashbacks of last year's Jackson Hole hangover, when all three major averages slumped between 3%-4% after Chair Jerome Powell shot down any hopes that the Fed would telegraph a "pivot" on its aggressive policy tightening. "Restoring price stability will take some time and is likely to require a sustained period of below-trend growth and softer labor market conditions," he said at the time, adding that the road ahead would "bring some pain to households and businesses."
The interesting thing is that economic growth has shockingly expanded at an impressive clip since that speech, while the unemployment rate has stuck to record lows. Only a month after Powell spoke in 2022, the S&P 500 (SP500) reached its bear market low, and while stocks hit the August blues in recent weeks, the benchmark index has pretty much been on the rise since then - climbing a total of 22%. "Recession" warnings have also been supplanted by "soft landing" talk, though there is still plenty to be cautious about with Treasury yields hitting fresh highs and regional banks suggesting risks to the downside. S&P 500 flashing a correction signal not seen since early 2000s
What to watch: Back at Jackson Hole in 2020, Powell unveiled a policy of "Flexible Average Inflation Targeting," which basically stated that the central bank would accept higher inflation to allow for a quick labor market recovery from the pandemic. As price pressures spiraled out of control in 2021, the Fed Chair doubled down on his infamous "transitory" call, before making a serious U-turn that led to an aggressive tightening cycle. A technical recession ensued in the first half of 2022, but the U.S. economy has been resilient since then, with quarterly GDP recently growing nearly a full percentage point stronger than expected, and the Atlanta Fed's GDPNow model forecasting a whopping 5.9% expansion for Q3. Things could have also turned out differently for the economy with a different set of policies, but are more "structural shifts" in the making? (6 comments)
New lows
Investors are betting against Disney (DIS) amid concerns over CEO Bob Iger's turnaround plan, with the stock ending 3.9% lower on Thursday to mark its lowest close since October 2014. KeyBanc's Brandon Nispel even believes the stock is still expensive relative to peers, given challenges across "just about every one of its businesses." Disney, which has fallen over 17% since Iger's return last year, is in the midst of a revamp that includes streaming price hikes, more ads and cost cuts. Investing Group Leader Tech Stock Pros warned that Disney's comeback story will take longer, although JR Research believes the market has been overly pessimistic, given Disney's high-quality asset base. (24 comments)
Invites sent
The BRICS nations have invited six countries to join the group next year as the bloc seeks to unseat the West's dominance on the global stage. The latest news also caught the attention of investors with three of the invites sent to the top oil-producing countries. The expansion would mark a major victory for Russia and China, which are advocating for a new world order that would level the global playing field and reduce dependence on the greenback (DXY). "News of this faster expansion - especially among the oil exporters - clearly adds some momentum to the de-dollarization debate," noted ING Economic and Financial Analysis. (6 comments)
Maui sues
Lawsuits are piling up against Hawaiian Electric (HE). Maui County has alleged that the utility's power lines caused the recent wildfire devastation on the island, while investors have claimed that its stock price dropped due to compromised safety protocols. Shares ended at $11.86/share on Thursday, marking their lowest close since 1985. Hawaiian Electric, which has also been accused of compromising evidence in the wildfire probe, decided to suspend its quarterly dividend as it needs to allocate cash for restoring power on fire-ravaged Maui. Seeking Alpha analyst Vlae Kershner expects a PG&E-type outcome, with claimants getting much-diluted equity along with cash. (31 comments)
Today's Markets
In Asia, Japan -2%. Hong Kong -1.4%. China -0.6%. India -0.6%.
In Europe, at midday, London +0.5%. Paris +0.7%. Frankfurt +0.5%.
Futures at 7:00, Dow +0.3%. S&P +0.3%. Nasdaq +0.1%. Crude +1.2% to $79.99. Gold -0.1% at $1,944.50. Bitcoin -1.4% to $26,091.
Ten-year Treasury Yield +2 bps to 4.25%.
Today's Economic Calendar
10:00 Consumer Sentiment
10:05 Powell speaks on Economic Outlook before Jackson Hole Economic Symposium
1:00 PM Baker Hughes Rig Count
2:00 PM Fed’s Lagarde: "Structural Shifts in the Global Economy"
Companies reporting earnings today »
What else is happening...
Two major U.S. power grids at risk for blackouts in latest heat wave.
Dollar Tree (DLTR) falls after earnings highlight margin pressures.
T-Mobile (TMUS) to cut workforce by nearly 7%, guidance reiterated.
Tesla approaches Cybertruck rollout cautiously due to unique design.
Coming up: Ukrainian pilots to start F-16 fighter jet training in the U.S.
Affirm (AFRM) maintains profit outlook, revenue beats consensus.
Heineken (OTCQX:HEINY) completes deal for full exit from Russia.
BlackRock, hedge funds hold talks on WeWork (WE) restructuring.
JetBlue (JBLU) plans to hike Spirit Airlines (SAVE) fares up to 40%.
Sandwich chain giant Subway confirms sale to Roark Capital.