Morning Reads
- China’s Country Garden Narrowly Avoids Default
- Argentina, in Dollar Love Affair, Agonizes Over Divorcing the Peso
- European Asset Managers Reject Plans for Tighter Liquidity Rules
- US Banks Hold $3.3 Trillion Cash Amid Banking Crisis, Slowdown Worries
- Rising Demand for Fed Bank Lending Program Not a Sign of Stress
- Goldman Cuts US Recession Chances to 15% on Improved Inflation
- How Slowing Inflation Can Hit Corporate Profits
- Crypto Market-Making Profit Margins Sink 30%
- A $700 Million Bonanza for the Winners of Crypto’s Collapse: Lawyers
- SoftBank’s Arm Seeks to Raise Up to $4.87 Billion in Anticipated IPO
- What Huawei’s Comeback Says About US-China Tech War
- Mercedes CEO Changes Tune on China as ‘Economic Wonder’ Stalls
- In EV Transition, German Carmakers Lag Behind Tesla and China
- Housing Market Inventory Is So Scarce That Builders Will Be in the Driver’s Seat for Years to Come, Says KB Home’s CEO
- Why the U.S. Labor Movement Is So Popular But Union Membership Is Dwindling
- Return-to-Office Is a $1.3 Trillion Problem Few Have Figured Out
- OpenAI CEO Sam Altman First Person to Get Indonesian Golden Visa
- Messi Drives Jump in Apple TV+ and MLS Subscriptions
- Tyson Foods Couldn’t Produce Enough Chicken. Now It Has Too Much
Todays Open Interest Change
PREMIUM
Prepper
There continues to be some uncertainty surrounding global grain prices as Russia and Turkey wrapped up talks discussing a resumption of the Black Sea Grain Initiative. On shaky ground since first signed in July 2022, the U.N.-backed agreement sought to guarantee the safety of the food supply chain despite attacks on grain export facilities, slow ship inspections and uncertain renewal deadlines. It's a big deal, as Ukraine is one of the world's largest suppliers of wheat and corn, and produces about half of the globe's sunflower oil.
Snapshot: The war contributed to an extremely volatile environment for global grain prices in 2022, with crises and shortages popping up in regions across Asia, Africa, the Middle East and Latin America. At their latest meeting, Vladimir Putin told Recep Tayyip Erdogan that he wouldn't revive the grain deal unless restrictions on Russia's agricultural exports were removed - including on food and fertilizer - that have been hampered by sanctions on financing and shipping. "We are ready to immediately return to it as soon as the promises made to us are fulfilled," Putin declared at a joint press conference.
It's also a matter of leverage. The scrapping of the Black Sea Grain Initiative hasn't stopped Russia from exporting record volumes of wheat, while its fertilizer exports are also recovering to pre-war levels. Moscow also just inked a deal to send 1M tons of grain to African nations via Turkey (which has offered to process them into flour), and many state grain buyers like Egypt are inking private transactions instead of traditional tenders. Ukrainian grain can also make it to market without a new deal, but higher transport costs weigh on profit margins and could lead to fewer plantings and supplies in the long term.
More diplomacy: The White House National Security Council expects Putin to hold talks with North Korea's Kim Jong Un later this month as the two countries seek closer military ties. Under discussion is the exchange of artillery shells and anti-tank missiles for advanced technology for satellites and nuclear-powered submarines, according to several reports. Russia's Defense Minister Sergei Shoigu also confirmed that Moscow is considering joint naval exercises with China and North Korea, in what would be a first for the regime in Pyongyang.
Hosts scramble
Airbnb (ABNB) hosts in New York are bracing for a new regulation that goes into effect today, effectively banning short-term rentals. The city argues that short-term rentals take away much-needed affordable housing stock, and hotels are surely no big fans. This may not have a material adverse effect on Airbnb's results, but many hosts fear that the stringent rules could set a precedent that destroys the benefits of its sharing economy. Note that analysts widely expect Airbnb's revenue growth to slow further, but Investing Group Leader JR Research said the stock's pending addition to the S&P 500 has strengthened the market's confidence in its growth story. (83 comments)
Sitting tight
A lack of U.S. homes for sale has pushed up home prices to the highest level since October, according to real estate brokerage Redfin (RDFN), as homeowners don’t want to give up their relatively low mortgage rates. "Another reason for the big year-over-year price increase is that prices came down rapidly at this time last year, with rising mortgage rates sidelining buyers." The inventory shortage is causing competition for desirable homes, with the median home-sale price climbing 5% Y/Y to $380K during the four weeks that ended August 27. Miami, Florida, saw the most significant Y/Y increase in home prices among the 50 most populous metropolitan areas, with the city’s median home-sale price jumping 17% from a year ago. (143 comments)
AI budget
Artificial intelligence is making waves across Wall Street, leading to sky-high valuations in chipmakers. Even biopharma firms with AI connections have benefited, including Recursion Pharmaceuticals (RXRX). As AI adoption increases across industries, Morgan Stanley projected that the healthcare sector's 2024 budgetary allocation for the technology will nearly double from 2022. It said the potential use of AI could be transformational for the healthcare sector, advising investors to focus on four key areas. Investing Group leader Lyn Alden Schwartzer also delved into certain AI themes, including how the technology can lower the costs of developing new drugs. (51 comments)
Today's Markets
In Asia, Japan +0.3%. Hong Kong -2.1%. China -0.7%. India +0.2%.
In Europe, at midday, London +0.1%. Paris -0.4%. Frankfurt -0.3%.
Futures at 7:00, Dow flat. S&P -0.1%. Nasdaq -0.2%. Crude -0.4% to $85.23. Gold -0.5% to $1,956.60. Bitcoin -0.6% to $25,754.
Ten-year Treasury Yield +2 bps to 4.23%
Today's Economic Calendar
Auto Sales
10:00 Factory Orders
12:30 PM Investor Movement Index
Companies reporting earnings today »
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