Archive

Bonds Tank on Fed Governor Firing,

taking ten-year bonds down $1.50 and yields up to 4.30%. Bonds also delivered a feeble response to Jay Powell’s speech last week when every other asset class was set on fire. It all highlights the declining credit quality of US long bonds in response to the soaring national debt.

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Capital Spending Rises by 1.1%.

New orders for key U.S.-manufactured capital goods increased more than expected in July, suggesting business spending on equipment got off to a strong start in the third quarter. However, consumers’ deteriorating assessment of the labor market cast a pall over the economy. The report from the Commerce Department on Tuesday also showed shipments of non-defense capital goods excluding aircraft, a closely watched proxy for business spending, surged by the most in more than two years last month. The strength in both orders and shipments of these so-called core capital goods was despite independent surveys indicating that businesses were hunkering down amid rising costs from tariffs on imports.

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Rare Earth Prices Hit Two-Year High,

after U.S. miner MP Materials (MP) stopped raw material exports to the leading magnet maker China amid rising demand. China dominates the global supply chain for rare earths, accounting for 90% of refining capacity and around 70% of mined output, but the U.S. has pushed back, signing a deal with its biggest producer, MP, in July to refine its output domestically.

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Germany and Australia Halt Overnight Shipments to the US,

along with many other countries. Chaos at the US border is the reason. Companies don’t want to get hit with tariffs that change by the day or return costs when tariffs aren’t paid. Good luck shipping anything abroad. This will cost the US economy dearly.

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Bitcoin is Tanking.

The world’s largest token was down 2.6% to $109,628 over the past 24 hours, according to data from CoinDesk. It is now trading 11% off the record price it hit earlier this month. It was down 0.7% over the past 24 hours. Digital-asset investors have pivoted out of Bitcoin and into Ethereum in recent weeks, with the latter token hitting a new high on Sunday after Federal Reserve Chair Jerome Powell signaled that the central bank could soon cut interest rates.

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Netflix Goes Ballistic,

up $30, on news that it is close to a contract to stream major league baseball. It also has the world’s number one streaming program, “KPOP Demon Hunters Sing Along”. No kidding! Buy (NFLX) on dips.

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Sales of New US Homes Exceeded Forecasts in July

after an upward revision to the prior month, as prices eased and heavy incentives enticed more buyers off the fence. Contract signings on new single-family homes ticked down to a 652,000 annualized rate, with the strongest demand in the West, according to a government report issued Monday. The median estimate in a Bloomberg survey of economists was a 630,000 pace.

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Keurig Dr. Pepper Buys Peet’s Coffee for $18 Billion.

Shares of Keurig Dr Pepper fell roughly 8% in early trading, while shares of Peet’s climbed 17%, on pace for its best day ever. Keurig Dr Pepper will pay JDE Peet’s shareholders 31.85 euros ($37.3) per share in cash, representing a 33% premium on the Dutch firm’s 90-day volume-weighted average stock price, which represents a total equity purchase of 15.7 billion euros ($18.4 billion).

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China Gets Tough on Rare Earths Again.

China, the world’s dominant rare earth supplier, issued on Friday measures to regulate the mining, smelting, and separation of the critical minerals key to the energy transition, further tightening its grip over supply. Beijing already regulates and manages rare earth mining, smelting, and separation via a quota system. The new rules will include imported raw materials in that quota system, the Ministry of Industry and Information Technology said in a statement.

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JP Morgan Gets Hit with $330 Million Settlement.

JPMorgan Chase will pay the Malaysian government $330 million to settle matters related to its role in the multibillion-dollar scandal at state fund 1MDB, both parties said on Friday. The settlement was announced as Swiss authorities separately found the U.S. bank guilty and fined it for failing to prevent money laundering in its dealings related to 1Malaysia Development Berhad.

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Jay Powell Surprises,

with a perceived lean towards an interest rate cut in September. Federal Reserve Chair Jerome Powell carefully opened the door to an interest-rate cut in September, pointing to rising risks for the labor market even as worries over inflation remain. It was another one of those “on the one hand and the other hand” type of speeches. I listened to the speech carefully, and Powell wasn’t as dovish as the Perma bulls believe. I still give the chance of a September rate cut at 50/50.

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Fed Minutes Come in Neutral,

with no immediate demand for an interest rate cut at their most recent meeting six weeks ago. The concern about tariff-driven inflation overwhelms any worries about rising joblessness. Does not augur well for a September rate cut.

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Dollar Tanks on Powell Speech.

Lower interest rates always lead to a lower currency. Traders now see 89% odds of a Fed rate cut next month. The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, was last down 0.89% on the day at 97.73, after trading around 98.7 before Powell’s comment.

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Tesla’s Berlin Factory Catches on Fire.

Tesla has since Monday evacuated part of its plant in Germany after a fire broke out in a building processing battery packs, the Handelsblatt newspaper reported on Thursday, adding there were no injuries or environmental damage.

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It’s the Year of the Waitlisted Applicant.

Some top US colleges, including Stanford University and Duke, sent acceptances to waitlisted students just weeks before classes started due to financial pressure and uncertainty over international student enrollment. The waitlist invites are a response to the potential loss of revenue from a decline in international students, who typically pay full tuition, with foreign student enrollment projected to decrease about 30% this fall. Colleges are trying to fill empty spots to plug existing or future budget gaps, with some schools offering incentives like a one-time grant to late enrollees to offset financial investments in other institutions. The decline of American education continues.

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Manufacturing Flash PMI Comes in Red Hot,

at 55.2, a 39-month high. US business activity grew at the fastest rate recorded so far this year in August, according to early ‘flash’ PMI data, adding to signs of a strong third quarter. Growth was seen across both manufacturing and service sectors of the economy. Hiring also picked up. Job creation reached one of the highest rates seen over the past three years as companies reported the largest build-up in uncompleted work since May 2022.

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Existing Home Sales Rise 2%,

in July, to a seasonally adjusted 4.01 million units. Sales were up 0.8% YOY. Some 1.55 million homes are for sale, up 15.77% YOY, and represent a 4.6-month supply. The median price of a home is $422,400, up only 0.2% YOY. First buyers were 28%, while all cash buyers were a near record 31%.

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Walmart Disappoints,

slammed on all sides by tariffs, taking the shares down by 5%. Second-quarter profit below expectations, first miss in 3 years. Walmart’s e-commerce sales jump 25%, aiding overall growth. The CEO warns that tariff costs are increasing as inventory is replenished. Sell (WMT).

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Weekly Jobless Claims Jump 11,000,

to 235,000. The number of Americans filing new applications for jobless benefits rose by the most in about three months last week in an initial signal that layoffs may be picking up and adding to signs the labor market is weakening.

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The Labor Force is Shrinking,

due to mass deportations and Hispanics hiding from ICE. High inflation will be the inevitable result. The size of the foreign-born labor force has declined by about 1.2 million people since January, to 32.1 million total people in July, according to the Bureau of Labor Statistics. That explains the rush to cut interest rates, before inflation really accelerates.

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Big Tech has Topped Out,

with fears of a major market selloff if the Fed doesn’t cut interest rates. AI is trash. Some of the falls have been quite dramatic, with Palantir (PLTR) down 26% in a week and Strategy (MSTR) off 30% in a month. Sell into rallies. 90-day US Treasury bills are looking good. Oh, how the mighty have fallen!

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Housing Starts Rise,

with Single-family housing starts up 2.8% in July, the Census Bureau reports. Thirty-year fixed-rate mortgages hit their lowest level since October, according to Freddie Mac. Residential investment contracts, impacting US economic output.

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MIT Tanks the Market,

the August University is publishing a report claiming that 95% of companies using AI lose money on it. Only the top mega caps are actually making money on AI. Despite the rush to integrate powerful new models, about 5% of AI pilot programs achieve rapid revenue acceleration; the vast majority stall, delivering little to no measurable impact on P&L.

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Sales of Foreign Branded Cell Phones in Chins Plunge 31.3%,

a fallout from the trade war. Apple is the biggest victim as Chinese consumers shun American brands. The shipments of foreign-branded phones had slid to 1.971 million units in June, from 2.869 million handsets the same month a year earlier.

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Softbank Invests $2 Billion in Intel (INTC),

popping the shares by 7%. The equity investment, announced by the companies on Monday, is a lifeline for the once-iconic U.S. firm, which has struggled to compete after years of management blunders that left it with virtually no foothold in the booming artificial intelligence chip industry. Avoid (INTC).

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