Friday 30 August 2024

Is AI Dot.con 2.0? PCE Inflation Day. Dress Up Friday.

Baltic Dry Index. 1827  +72     Brent Crude  80.18

Spot Gold 2514            US 2 Year Yield 3.87  +0.04

In general, corruption tends to exist whenever governments have favors to extend, or something to sell.

Alan Greenspan.

Another end of month, time to dress up stocks and stock indexes once again. The latest spin and hype, no US or global recession. Ignore Nvidia, it will bounce back.

Well maybe, but maybe not, AI is starting to look like the dot.con bubble all over again.

Later today, the US central bank’s favourite measure of US inflation.

Hong Kong leads Asia markets climb after U.S. data calms recession fears; Australia nears all time high

Published Thu, Aug 29 2024 7:58 PM EDT

Asia-Pacific markets climbed Friday after economic data from the U.S. calmed recessionary fears, while investors also assessed a slew of data from Japan.

Initial jobless claims in the U.S. fell to 231,000 from the prior week’s 232,000, but were slightly higher than the 230,000 expected by Dow Jones.

In addition, the second-quarter gross domestic product growth was revised higher to 3% from the initial 2.8% rate.

Inflation rate in Japan’s capital city of Tokyo rose to 2.6% from June’s 2.2%, hitting its highest since March.

The core inflation rate — which strips out prices of fresh food — rose 2.4%, higher than the 2.2% expected from a Reuters poll of economists. Tokyo’s inflation is widely considered to be a leading indicator of nationwide trends.

Stronger inflation numbers offer the Bank of Japan more room too tighten its monetary policy.

Unemployment in Japan rose to 2.7%, more than the Reuters estimate of 2.5%.

Retail sales in the country rose 2.6% year on year, lower than the 2.9% growth expected by Reuters and the revised 3.8% increase seen in June.

Japan’s Nikkei 225 rose 0.3%, and the Topix also climbed 0.37% after the data release.

Hong Kong Hang Seng index gained 1.81%, leading markets in Asia, while mainland China’s CSI 300 rose 1.72%.

South Korea’s Kospi gained 0.6%, while the small-cap Kosdaq advanced 0.92%. South Korea’s retail sales dipped 1.9% month on month compared to June. On a year-on-year basis, retail sales fell 2.1%.

Australia’s S&P/ASX 200 rose 0.35%, coming within 30 points of its all-time closing high of 8,114.7.

Overnight in the U.S., the Dow Jones Industrial Average climbed to a new record, up 0.59% and closing at 41,335.05. Gains in Goldman SachsIntel and Visa helped lift the blue-chip average to a new high.

The S&P 500 ended the session just below the flatline, but the Nasdaq Composite slid 0.23%, dragged by shares of chipmaker Nvidia, which slid 6.4%.

Asia stock markets: Japan CPI, unemployment, US GDP (cnbc.com)

S&P 500 futures are little changed as traders brace for key inflation report: Live updates

Updated Fri, Aug 30 2024 8:05 PM EDT

S&P 500 futures were near the flatline Thursday night as investors prepared for a crucial inflation reading that’s closely watched by the Federal Reserve.

Futures linked to the broad market index ticked up by 0.06%, while Nasdaq 100 futures added 0.2%. Dow Jones Industrial Average futures were little changed.

In extended trading, Ulta dropped about 7% after missing top and bottom line expectations in the second quarter, while athletic apparel retailer Lululemon Athletica gained 4% on better-than-expected earningsDell Technologies added 3% as its fiscal second quarter results beat estimates, aided by server sales.

The market has seen choppy trading action this week leading up to Nvidia’s quarterly results. The artificial intelligence darling slumped on Thursday, weighing on the S&P 500 and dragging the Nasdaq Composite lower. The Dow was the outlier among the three major averages, adding more than 240 points to close at a fresh record.

A new catalyst for stocks awaits on Friday at 8:30 a.m. ET: the personal consumption expenditures price index. Economists polled by Dow Jones anticipate a 0.2% monthly increase in July for headline prices, or 2.5% on an annual basis. The core reading is expected to have gained 0.2% from the prior month, or 2.7% from 12 months earlier.

The Fed keeps a close eye on this metric, and it could still influence policymakers’ rate decision in September.

“The market is set to absorb the results of the PCE release, with consensus estimates focused on the core year-over-year report inching slightly higher at 2.7% following 2.6% for the previous print,” said LPL Financial’s chief global strategist Quincy Krosby.

“Because there are some Fed members suggesting they need more data to confirm that inflation is continuing on a downward path before agreeing to cut rates, any surprise indicating a hotter report could be negative for the market,” she added.

As August’s trading winds down, the S&P 500 is on pace for a nearly 1.3% gain during the month, while the Dow is on track to add 1.2%. The Nasdaq Composite is the sole loser of the three major averages, off by nearly 0.5% this month.

On the week, the S&P 500 and the Nasdaq are on pace for declines of 0.8% and 2%, respectively — the first losing week in three for both indexes. The Dow is on pace for its third positive week, up 0.4% in the period.

Stock market today: Live updates (cnbc.com)

Friday’s PCE inflation report: Here’s how financial markets may react

Friday’s PCE report is set to reinforce the expectation that a first rate cut is imminent, but it may not provide much clarity on how fast and how far the Fed will ease: market analysts

Last Updated: Aug. 29, 2024 at 10:13 a.m. ET
First Published: Aug. 29, 2024 at 7:30 a.m. ET

The July personal consumption expenditures inflation report on Friday is likely to reassure investors that an initial interest-rate cut by the Federal Reserve is in store for next month — but don’t expect the stock market to celebrate, according to market experts.

The Fed’s preferred inflation gauge is expected to show that U.S. consumer prices ticked up slightly in July, complicating the timetable for the central bank to cut policy rates next month. Investors worry that the latest report may not provide enough clarity to the financial markets on how fast and how far the Fed will ease.

Economists polled by the Wall Street Journal expect the headline PCE price index to remain steady at 2.5% year over year in July, while the core PCE, a more closely watched measure that strips out volatile food and energy costs, is forecast to drift higher to 2.7%, from 2.6% in the previous month. 

“The September cut is firm enough that the PCE trend is not going to change that,” said Burns McKinney, managing director and portfolio manager at NFJ Investment Group. “The Fed has already made up their mind that they’ve already telegraphed very firmly and very dovishly that they are absolutely going to start the rate-cutting cycle in September.”

Fed Chair Jerome Powell last week gave his strongest signal yet, saying that “the time has come” for monetary easing as economic data over the past few months have convinced policy makers that inflation is firmly on the path back to the central bank’s 2% target. 

Some investors think the upcoming July inflation data, if in line with expectations, would make it hard to justify the Fed’s “sudden new embrace” of interest-rate cuts. “A single cut in September, okay. But to forecast multiple cuts off this [PCE] data seems unjustified,” said Barbara Rockefeller, president and chief economist at Rockefeller Treasury Services. 

But others say that the disinflation momentum could still be sustained despite the anticipated modest uptick in the core PCE. “Powell has always warned against getting too caught up in a single data point, and if you look at the trend, regardless of what [the data release] does, the [disinflation] trend has been pretty well locked in,” McKinney told MarketWatch via phone on Tuesday. 

More

Friday’s PCE inflation report: Here’s how financial markets may react - MarketWatch

Finally, yet more EV fire news.

Cybertruck Catches Fire After Running Into Fire Hydrant and Getting Wet

Wed 28 August 2024 at 9:18 pm BST

A Tesla Cybertruck burst into flames after crashing into a fire hydrant outside a Bass Pro Shop in Harlingen, Texas — and getting doused in copious amounts of water, igniting the battery.

As local news station Valley Central reports, first responders were optimistic that they had successfully battled the flames, only for the fire to resume after they stopped to spray the truck's battery with even more water.

It's unclear if any injuries resulted from the accident.

The incident highlights just how difficult it is to put out a burning EV — even if it happens to crash into a device intended to fight fires. Fire departments have had to change tactics, using full PPE due to toxic fumes, tapping multiple fire hydrants or multiple water tankers, and developing new solutions like EV fire-specific fire blankets.

Smoke Show

Ironically, Tesla had just released a detailed rescue sheet for its Cybertruck last week. The guide is designed for first responders, informing them where the vehicle's low and high-voltage power cables terminate.

In case of fire, Tesla advises responders not to "submerge vehicle to extinguish/cool battery fire."

"Use of firefighting foam is not recommended and only water should be used to cool the battery enclosure," the rescue sheet reads.

Over the years, first responders have found out the hard way that it takes far more water to put out an EV fire. In 2021, Austin Fire Department division chief Thayer Smith said that Tesla vehicles may take up to 30,000 to 40,000 gallons of water — roughly 40 times as much as is needed to put out a combustion engine car.

And with more EVs being produced than ever before, those kinds of incidents can be devastating. A lithium-ion battery fire is still extremely dangerous. In 2019, the family of a Tesla Model S owner, who died after being trapped inside his burning Model S, sued the carmaker, arguing that the car's retractable door handles malfunctioned.

While it's still unclear if anybody was hurt during the latest fire, we've already come across incidents involving the Cybertruck that didn't end well.

Earlier this month, a Texas driver died after his Cybertruck crashed into a culvert and caught fire.

Cybertruck Catches Fire After Running Into Fire Hydrant and Getting Wet (yahoo.com)

Global Inflation/Stagflation/Recession Watch.

Given our Magic Money Tree central banksters and our spendthrift politicians, inflation now needs an entire section of its own.

The US could enter a recession if the Fed doesn't cut rates, strategists say

Thu, Aug 29, 2024, 2:02 PM GMT+1

The US economy risks a recession if the US Federal Reserve does not cut rates, according to Macquarie strategists in a Wednesday note.

Their assessment is based on US jobs data and consumer sentiment.

"We're not saying that a recession is coming, but absent Fed rate cuts that will take place, a recession would be much likelier," wrote Thierry Wizman and Gareth Berry, FX and rates strategists at Macquarie, in a Wednesday note.

The US unemployment rate rose to 4.3% in July from 4.1% in June, according to the Bureau of Labor Statistics.

Meanwhile, the Conference Board consumer sentiment report released on Tuesday showed "mixed feelings."

"Consumers' assessments of the current labor situation, while still positive, continued to weaken, and assessments of the labor market going forward were more pessimistic. This likely reflects the recent increase in unemployment," said Dana M. Peterson, the chief economist at The Conference Board, in a press release.

Consumers were also a bit less positive about future income, Peterson added.

"What was worrisome was that respondents saying that jobs were hard to get inched higher, while those saying jobs were plentiful edged lower," wrote the Macquarie strategists.

The spread between the two measures tracks the unemployment rate very closely, according to Macquarie's analysis.

This spread pushed to a new year-to-date high in the August survey. It sits at the widest it has been since March 2021 — when the unemployment rate was 6.1%.

"We think that it would be highly unlikely that the unemployment rate would not be rising against the widening of this spread," the Macquarie strategists wrote.

Markets have been pricing in interest rate cuts following Fed Chair Jerome Powell's remarks at Jackson Hole last week that "the time has come for policy to adjust" — a clear signal that the central bank is poised to cut rates.

Macquarie is just one of the latest on Wall Street to weigh in on how the US jobs outlook could impact the Fed's rate decision, which could take down the current 5.25% to 5.50% target.

JPMorgan on Tuesday said the Fed is likely to deliver steep rate cuts because it's been "shaken" by a weakening labor market.

CME's FedWatch tool shows investors largely pricing in a 25-basis-point cut at the next Fed meeting held over two days from September 17.

The US could enter a recession if the Fed doesn't cut rates, strategists say (yahoo.com)

Covid-19 Corner

This section will continue until it becomes unneeded.

A new Covid vaccine is available. Here’s why some people might not want it right away

August 28, 2024

New Covid vaccines were approved by U.S. regulators last week amid a continuing surge of the virus.

The updated shots are designed to target the latest Omicron variants, and the Centers for Disease Control and Prevention has recommended them for Americans aged six months and older.

After getting the OK from the Food and Drug Administration (FDA), major manufacturers Pfizer and Moderna are slated to begin shipping immediately. Pfizer said the vaccines will be available in pharmacies, hospitals, and clinics nationwide in the coming days.

In a blog post, Moderna echoed that timeframe. A third manufacturer, Novavax, said last week that it is working with the FDA as the agency considers authorizing its latest formula vaccine for emergency use.

“Novavax’s intent is to provide access to our vaccine as a choice for consumers this season,” President and CEO John Jacobs said, in a statement.

Covid cases have spiked around the country, ahead of peak season with CDC data showing testing positivity rates hovering at around 18 percent in August - although fewer Americans are testing. Emergency department visits and hospitalizations were also up this month.

---- Health officials say getting vaccinated is especially important for certain groups. This includes those 65 and older; people who have yet to receive a vaccine; people who live in long-term care facilities; those risk of severe infection; and women who are pregnant, may become pregnant, or are breastfeeding.

However, under specific circumstances, the CDC advises some Americans to wait before getting the new shots.

If you just recovered from Covid, you may consider delaying your vaccine by three months.

In addition, if you have, or have recently had, multisystem inflammatory syndrome, the CDC says you should wait to get vaccinated until after recovery and until 90 days have passed since the diagnosis of MIS-A or MIS-C: the types of the syndrome in adults and children.

There are other reasons to wait. Vaccine protection wanes over time, and people may choose to hit pause before the next Covid wave hits. Respiratory viruses spread more easily indoors and cold air may weaken resistance to such viruses, according to Johns Hopkins Medicine.

The variants that spread could still change in the next few months, too.

More

A new Covid vaccine is available. Here’s why some people might not want it right away (msn.com)

Technology Update.

With events happening fast in the development of solar power and graphene, among other things, I’ve added this section. Updates as they get reported.

Global solar generation overtakes wind for longest ever stretch

By Gavin Maguire  August 29, 2024 6:59 AM GMT+1

LITTLETON, Colorado, Aug 29 (Reuters) - Global electricity generation from solar farms has exceeded generation from wind farms since May, marking the longest ever stretch when solar power has been the top source of utility-scale renewable electricity worldwide.

Solar electricity generation exceeded wind generation in May by 1.65 terawatt hours (TWh), and in June by 9.57 TWh, according to energy think tank Ember.

The data on global generation for the month of July has not yet been released, but will most likely show an even larger generation surplus for solar assets given that July is the peak month for solar output across the northern hemisphere.

August data is also likely to show solar generation topping wind output, as August is usually the second highest solar generation month and also marks the typical annual low point for global wind generation due to low wind speeds at turbine level.

Previously, solar power generation only exceeded wind generation in August and June of 2023 and has never before strung together such a sustained stretch of higher generation.

However, once solar output levels dip from next month due to the changing angle of the sun's rays, wind output will regain its spot as the top renewable power globally, aided by rising wind speeds as winter sets in across Europe, North America and Northern Asia.

And for 2024 as a whole, total wind-powered electricity generation will likely be at least 30% greater than total solar generation, given that the peak wind generation period is during winter when wind output can be more than twice solar output.

Wind farms have been by far the largest source of renewable electricity output for over 20 years, and in 2023 generated 2,311 TWh of electricity compared to 1,632 TWh by solar assets.

However, solar generation has grown twice as quickly as wind generation over the past five years, due in large part to the far lower cost and speedier construction times of solar farms relative to wind projects.

Solar's stronger momentum has continued in 2024, with solar generation during the first half of 2024 climbing by 26.5% from the first half of 2023, compared to 8% growth in wind output.

More

Global solar generation overtakes wind for longest ever stretch | Reuters

Next, the world global debt clock. Nations debts to GDP compared.

World Debt Clocks (usdebtclock.org)

Another weekend and a holiday weekend in America. But what will September and October bring for stocks, the global economy, two continuing never ending wars, de-dollarisation, soaring US federal debt? Comedy showtime starts in the US presidential election from next week.  Have a great weekend everyone.

A cigarette is a pinch of tobacco rolled in paper with fire at one end and a fool at the other.

George Bernard Shaw.

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