Baltic
Dry Index. 1675 +07 Brent
Crude 76.81
Spot
Gold 2443 U S 2 Year Yield 3.88 -0.28
“Men, it has been well said, think in herds; it will be seen
that they go mad in herds, while they only recover their senses slowly, and one
by one.”
Charles MacKay, Extraordinary Popular Delusions & the
Madness of Crowds
With
US recession signals, this morning we are spoilt for choice.
The
super fast McKelvey Rule triggered last October.
Graeme’s
fast version of the Sahm Rule, dropping the use of 3 month moving averages,
triggered in early May.
The
Schannep Rule, signalled US recession on July 7th.
The
Fed’s official Sahm Rule triggered yesterday August 2nd, with yesterday’s
terrible US employment report.
Each
Rule triggers late on the previous month’s data, the August 2nd
signal is based on July’s employment data, and the same for all others being
based on the previous month’s data.
This
was behind my thinking in speeding up the Sahm Rule by dropping the need for a
three month moving average on an already one month delayed data input.
While
“as goes America, so goes the world” is a little less effective than it was a
few decades ago, it’s still pretty accurate today. Britain, Canada, most of the
EU and much of east Asia will drop into recession behind the US economy.
Of
course, none of these “Rules” have to be right, this time could be different,
but that’s not the way to bet. Why would
this time be different, short of nuclear war, but that’s not a calamity that
helps.
Note,
Claudia Sahm, inventor of the Sahm Rule for the Fed, was quoted on Friday as
saying that the US economy is not in recession, that this time round US labor
statistics are distorted.
Well
maybe, but probably not. That’s not the way the US bond market and oil market see
it.
Get
ready for Margin Call Monday in Asia, Europe and America and Canada.
Bubble
over, get ready for the Great Stock Casino reconnect to reality.
Dow
closes down 600 points, Nasdaq enters correction after weak jobs report: Live
updates
Fri,
Aug 2 20244:35 PM EDT
Stocks
fell sharply on Friday as a much weaker-than-anticipated
jobs report for July ignited worries that the economy could be falling
into a recession.
The
broad market index dropped 1.84% to end at 5,346.56. The Nasdaq Composite lost 2.43%
to close at 16,776.16, bringing the decline for the tech-heavy index from its
recent all-time high to more than 10%. The Dow Jones Industrial Average fell
610.71 points, or 1.51%, to finish at 39,737.26. At its session low, the
30-stock index was down 989 points.
Stocks
sank after July job growth in the U.S. slowed more than expected, while the
unemployment rate rose to the highest since October 2021. Nonfarm payrolls grew
by just 114,000 last month, the Labor Department reported, a slowing from
179,000 jobs added in June and below the 185,000 expected by economists polled
by Dow Jones. The unemployment rate increased to 4.3%.
The
10-year Treasury yield fell to its lowest since December as investors flooded
into bonds for safety on the fear the Federal Reserve made a mistake this week
by keeping interest rates at current levels.
Some
megacap names saw steep losses during the day, as Amazon’s second-quarter results
sparked investor concerns about Big Tech’s blowout levels of artificial
intelligence-related capital spending. The e-commerce giant slid 8.8%
after missing
the Street’s revenue estimates and issuing a disappointing
forecast. Intel,
meanwhile, cratered 26% after announcing weak
guidance and layoffs. Nvidia lost
1.8%, following a 6% loss a day before.
The
Nasdaq is the first of the three major benchmarks to enter correction
territory, down more than 10% from its record high. The S&P 500 and Dow
were 5.7% and 3.9% below their all-time highs, respectively.
---- But it was more than just technology stocks that saw
selling on Friday. Bank stocks were slammed on the recession fears with Bank of
America off 4.9% and Wells Fargo down 6.4%.
It
has been a volatile week with the S&P 500 moving more than 1% in each of
the past three trading sessions. The stock market had rallied Wednesday when
the Fed gave a strong hint that a rate cut was coming at its next meeting in
September. After Friday’s weak job figures, many investors are starting to
believe the central bank should have acted on Wednesday.
Stocks
end Friday in the red
Stocks
extended their steep declines on Friday.
The Dow Jones Industrial Average dropped
610.71 points, or 1.51%, to finish at 39,737.26. The S&P 500 lost 1.84% to end
at 5,346.56, while the Nasdaq
Composite shed 2.43% to close at 16,776.16.
Stock
market today: Live updates (cnbc.com)
Europe
stocks close 2.8% lower, extending losses after weaker-than-expected U.S. jobs
report
Published
Fri, Aug 2 20241:43 AM EDT
LONDON
— European stocks extended losses on Friday amid a global downturn, as weak
U.S. economic data sparked fears of a recession.
The
regional Stoxx 600 index
provisionally closed 2.82% lower, its worst day since December 2022 according
to LSEG data. The index also fell below the 500 point mark for the first time
since April, LSEG data showed.
All
major bourses and almost all sectors were in the red, with tech stocks closing
nearly 6% lower. U.S. giant Intel fell as much as 28% in
morning trading after reporting
a big earnings miss.
Financial
services were down another 5.22% Friday, as banks fell 4.35%.
Global
markets have been pulled lower by a flurry of central bank action — with
the Bank
of England cutting interest rates for the first time since 2020 on
Thursday, the U.S.
Federal Reserve holding rates and the Bank
of Japan raising them this week — along with shaky corporate earnings and data
releases.
----
Asia-Pacific
markets logged steep losses Friday, with Japan’s benchmark indexes
tanking as much as 5%.
More
European
markets: Global sell-off, FTSE 100, Bank of England rate cut (cnbc.com)
Intel
has worst day on Wall Street in 50 years, falls to lowest price in over a
decade
Published
Fri, Aug 2 2024 4:38 AM EDT
Intel shares plunged the most
in 50 years on Friday, reaching a price not seen since 2013, after the
chipmaker reported a big
earnings miss and announced a massive restructuring.
The
stock plummeted 26% to $21.48 at the close. It was the second worst day ever
for the shares, behind only a 31% drop in July 1974, which was three years
after Intel’s IPO. The company’s market cap is now below $100 billion.
The
dramatic selloff contributed to a 2.4% drop in the Nasdaq and pulled down
global semiconductor stocks. Taiwan
Semiconductor Manufacturing Co. — known as TSMC — closed 4.6% lower in
Taiwan, and Samsung was down more than 4% at the end of the session in South
Korea. TSMC is the world’s biggest manufacturer of chips, while Samsung is
the largest
memory semiconductor firm globally.
Intel’s
numbers were bad across the board.
The
company swung to a $1.61 billion net loss after reporting net income of $1.48
billion in the year-earlier period. Adjusted earnings per share of 2 cents fell
way short of the average analyst estimate of 10 cents, according to LSEG.
Revenue also missed expectations.
Intel
said it won’t pay its dividend in the fiscal fourth quarter of 2024 and lowered
its forecast for full-year capital expenditures by over 20%. The company said
it would lay off more than 15% of its employees as part of a $10 billion
cost-reduction plan.
“This
is the most substantial restructuring of Intel since the memory microprocessor
transition four decades ago,” Intel CEO Pat Gelsinger told CNBC’s Jon Fortt in
an interview that aired on Friday. “We have laid out an audacious journey of
rebuilding this company, and we’re going to get that done.”
---- The
job cuts will mainly take place this year, Gelsinger wrote in a memo. It’s the largest of any single job cut listed on
Layoffs.fyi, an industry tracker that’s been operating since March 2020.
Adding
pressure to the chip sector is a report from The Information that AI chipmaker Nvidia is the subject of a
U.S. Department of Justice antitrust investigation.
The
DOJ is looking at complaints that the company allegedly abused its market
dominance in AI, The Information reported.
More
Intel
share plunge drags down global chip stocks from TSMC to Samsung (cnbc.com)
1
big thing: Economic red flags
August
02, 2024
Today's
jobs numbers confirm
that something is going wrong in the American economy — and may suggest that a
recession is imminent.
- The new data
is a sign that
the Fed should have started cutting interest rates months ago, Axios
Macro co-author Neil Irwin writes.
- "Yellow
flags had started to pop up in the labor market data over the
past few months, but now the flags are turning red," Nick Bunker, of
Indeed Hiring Lab, wrote in a note.
The big picture: The July
employment numbers showed weak job creation and the highest unemployment rate
since October 2021. The jobless rate is still low, but in a healthy economy,
the kind of increase we've seen this year — a gain of 0.6 percentage points
since January — simply doesn't happen.
- When it does, it's
usually a warning sign that a recession is imminent.
What we're watching: Ten-year U.S.
Treasury yields have plunged to 3.82% — down from 4.5% a month ago — because
markets now anticipate significant rate cuts to combat incipient economic
weakness.
- The big
question now
is how aggressively the Fed will react.
A
$1 Trillion Time Bomb Inside the US Housing Market
August
2, 2024 at 11:26 PM GMT+1
The
violent Wall Street rotation from Big Tech plunged the Nasdaq 100 Index
into correction territory, wiping out more than $2 trillion in value in just
over three weeks as traders unwound bets that had been minting money for over a
year. The index closed down 2.4% on Friday, taking its loss since early July to
more than 10%. That means it has passed the threshold that meets the definition
of a correction. But it’s still up nearly 10% for the year. So there’s that.
Here
are today’s top stories
Cassandras
seldom get
opportunities to be right about two disasters. Even the original Cassandra
scored no notable victories after predicting the fall of Troy. But as Mark
Gongloff writes in Bloomberg Opinion, when a seer who successfully
called one catastrophe warns of another coming, you might want to listen. Years
ahead of the financial crisis, David Burt saw trouble brewing in subprime
mortgages and started betting on a crisis, winning himself a cameo in The
Big Short in addition to lots of money. Now Burt runs DeltaTerra
Capital, a research firm he founded to warn investors about the next housing
crisis. This one, he warns, will be caused by climate change, and it could cost more than a $1 trillion.
Bloomberg Evening Briefing: A $1 Trillion Time Bomb Inside the US Housing Market - Bloomberg
Global Inflation/Stagflation/Recession
Watch.
Given our Magic Money
Tree central banksters and our spendthrift politicians, inflation/recession now needs an entire
section of its own.
Today, China. More
capitalist than Biden’s socialist bailout America.
China Rejects $1 Trillion Housing Rescue
Plan Pitched by IMF
August 2, 2024 at
11:00 AM GMT+1
Updated
on August 2, 2024 at 12:00 PM GMT+1
Chinese
authorities have rejected a proposal made by the International Monetary Fund to
use central government funds to complete unfinished housing, dealing a blow to
hopes for more forceful support to an industry that’s been a major drag on the
economy.
The IMF called
on China to deploy “one-off” fiscal resources to complete and deliver pre-sold
properties or compensate homebuyers, according to an annual review of the
world’s second-largest economy published Friday. It put the cost at the
equivalent of 5.5% of gross domestic product over four
years.
That would
amount to almost $1 trillion based on last year’s GDP, according to Bloomberg
calculations. It’s a solution that China all but ruled out in an official
response included in the report.
“We believe that
we should continue to apply market-based and rule-of-law principles in
completing and delivering these units,” said Zhang Zhengxin, the IMF’s
executive director for China who was elected to the fund by the government in
Beijing.
“It would be
inappropriate for the central government to directly provide fiscal support, as
it could lead to expectation of future government bail-out and therefore moral
hazards,” Zhang said.
----Drag on
Economy
China’s housing
travails have emerged as the largest obstacle to growth over the past two
years. Beijing’s approach has seemingly offered just enough help to make sure
the market adjustment doesn’t get out of control or trigger a financial crisis.
Authorities have
been unwilling to extend more support to the housing sector in part because of
top leaders’ determination to shift the economy’s growth driver away from
property to technology and manufacturing.
The government
has urged banks to lend to developers and stalled housing projects, while
stopping short of providing direct funding.
In May,
officials unveiled the biggest rescue package yet.
It contains a 300 billion-yuan ($42 billion) central bank fund that attempts to
help local governments buy finished but unsold homes and turn them into
subsidized housing.
That’s aimed to
reduce the massive housing inventory, but fell far
short of the 1 trillion to 5 trillion yuan that some analysts said was needed
to deliver a more decisive fix.
“The government
is very unlikely to flip its policy overnight,” said Serena Zhou, senior
China economist at Mizuho Securities Asia Ltd.
More
China Rejects $1 Trillion Housing Rescue Plan Pitched by IMF - Bloomberg
Covid-19
Corner
This section will
continue until it becomes unneeded.
The Science Behind Why COVID-19 Tends to Spike
During Summer Months
August 1, 2024
Fall and winter may be considered
cold and flu season, but the U.S. is in the midst of another
COVID-19 “summer surge.”
According to wastewater
surveillance data from the Centers for Disease Control and Prevention (CDC),
“high” levels of the virus have been detected across much of the country, with
the exception of 19 states—primarily in the western parts of the U.S.—where
levels are “very high.”
While inconvenient, it’s
normal for COVID to spike in the summer months—in fact, summer surges have
happened every summer since COVID arrived on the scene. Here’s what to know
about this increase in cases, including why it tends to happen during summertime,
and how to protect yourself from the virus.
What Is a Summer Surge?
A COVID summer surge is
“when there’s an unexpected increase in the number of COVID cases” during the
summer months, according to Nikhil Bhayani, MD, an infectious disease physician and
assistant professor at Burnett School of Medicine at Texas Christian
University.
Other than allergies, we
tend to associate mild infectious illnesses like the cold, flu, and now COVID with fall and winter. But technically, those viruses
can surge any time of the year, said Bhayani.
“We see a surge in summer
because people are traveling more, gathering frequently indoors and not masking
as much,” he told Health. “The virus evolves and stays ahead of
our immune system. As new variants appear, the immune system
recognizes infection of past variants—so this can lead to an increase in new
infections.”
Vontrelle Roundtree, MD, board-certified family physician and
associate chief medical officer at MDLIVE, said that the telehealth clinic has
“seen a steep surge in COVID-19 cases since the beginning of the summer,” with
diagnoses up 108%. Paxlovid prescriptions also increased 130% in June over the
monthly average for April and May.
Related: How To Tell If You Have a
Summer Cold or COVID
More
The Science Behind Why COVID-19 Tends to Spike
During Summer Months (msn.com)
Technology Update.
With events happening
fast in the development of solar power and graphene, I’ve added this section.
National Graphene Institute to play key role in UK-India
Technology Security Initiative
1 August 2024
The National Graphene Institute (NGI) at The University of
Manchester has been identified as a key stakeholder in the UK-India Technology
Security Initiative (TSI) following its announcement on
24 July.
Upon his visit to India, Foreign Secretary David Lammy met Prime
Minister Narendra Modi and both governments committed to developing
collaboration between The University of Manchester National Graphene Institute, the
University of Cambridge Graphene Centre and the Indian Institute for Science
Bengaluru Centre for Nano Science & Engineering on advanced
(two-dimensional) 2D and atomically thin materials and nanotechnology.
The TSI will focus on boosting economic growth in both countries
and tackling issues such as telecoms security and semiconductor supply chain
resilience. For the University specifically, the collaboration will scope joint
research ventures, facilitate student and start-up exchanges, and open access
to world-leading laboratories and prototyping facilities.
The University of Manchester is already collaborating with a
number of established partners in India, which has resulted in joint PhD
programmes with the Indian Institute of Technology Kharagpur and the Indian
Institute of Science, Bengaluru, which include a number of projects on 2D
materials. The University is already immersed in the fields of Critical
Minerals and Artificial Intelligence highlighted in the TSI, and hosted a
UK-India Critical Minerals workshop in
November 2023.
“
The launch of the Technology Security Initiative further
strengthens The University of Manchester’s commitment to India as a high
priority country across all our key areas of activity. These include
partnerships in research in science and engineering, medicine and health and
humanities, involving graduate student training and shared taught course
delivery.
Professor Stephen Flint, Associate Vice-President International at
The University of Manchester
Lindy Cameron, British High Commissioner to India, said: “The
UK-India Technology Security Initiative will help shape the significant science
and technology capabilities of both countries to deliver greater security,
growth and wellbeing for our citizens. We are delighted to have The University
of Manchester play a key part in this, particularly in our collaboration on
advanced materials and critical minerals.”
More
Next, the
world global debt clock. Nations debts to GDP compared.
World Debt Clocks (usdebtclock.org)
This
weekend’s music diversion. Approx. 13 minutes.
Pasquale
Bini (1716-1770) - Concerto grosso con Violino Principale
Pasquale Bini
(1716-1770) - Concerto grosso con Violino Principale - YouTube
This
weekend’s chess update. Approx. 13 minutes.
You
Will Love Showing This One To Your Friends!
You Will Love
Showing This One To Your Friends! (youtube.com)
This
weekend’s final diversion. Approx. 14 minutes.
What's
inside Big Ben? (Elizabeth Tower)
What's inside Big
Ben? (Elizabeth Tower) - YouTube
“Nations, like individuals, cannot become desperate gamblers
with impunity. Punishment is sure to overtake them sooner or later.”
Charles MacKay, Extraordinary Popular Delusions and the
Madness of Crowds
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