Markets climb while demand for gold takes it to new heights

Dow went up 235, advancers over decliners 3-1 & NAZ gained 174.  The MLP index added 2+ to the 284s & the REIT index was up 1+ to the 438s.  Junk bond funds were essentially even & Treasuries had selling which raised yields.  Oil rose 1+ to 69 & gold jumped 40 to 2583 (more on both below).

Dow Jones Industrials 

Mortgage rates fell this week to the lowest levels in over 1½ years, but elevated rates & high home prices are still keeping would-be buyers & sellers out of the housing market.  Freddie Mac's latest Primary Mortgage Market Survey showed that the average rate on the benchmark 30-year fixed mortgage dropped to 6.20%, down from the 6.35% reading of the past 2 weeks & the average rate on a 30-year loan was 7.18% a year ago.  "Mortgage rates have fallen more than half a percent over the last 6 weeks & are at their lowest level since February 2023," said Sam Khater, Freddie Mac's chief economist.  "Rates continue to soften due to incoming economic data that is more sedate," Khater continued.  "But despite the improving mortgage rate environment, prospective buyers remain on the sidelines, as they negotiate a combination of high house prices and persistent supply shortages."  Many would-be buyers & sellers are holding out to see if rates fall further.  Currently, about 80% of mortgage holders have a rate below 5%, according to a Zillow survey.  The average rate on the 15-year fixed mortgage declined to 5.27% from 5.47% last week & 1 year ago, the rate on the 15-year fixed note averaged 6.51%.

Mortgage rates fall to lowest level in over 18 months but home prices remain high

Gilead (GILD) twice-yearly shot reduced HIV infections by 96% in a 2nd large study, the company said.  The positive phase-3 trial data on lenacapavir sets the stage for likely approval by the Food & Drug Administration for HIV prevention.  “Now that we have a comprehensive dataset across multiple study populations, Gilead will work urgently with regulatory, government, public health and community partners to ensure that, if approved, we can deliver twice-yearly lenacapavir for PrEP worldwide, for all those who want or need PrEP,” said CEO Daniel O'Day.  PrEP or, pre-exposure prophylaxis, is medication taken to prevent getting HIV, according to the Centers for Disease Control & Prevention.  The company said 99.9% of participants who received lenacapavir did not acquire HIV, with 2 cases among 2180 people.  The trial included cisgender men, transgender men, transgender women & gender non-binary people who have sex with partners assigned male at birth.  There were 9 cases of HIV in a group of more than 1000 people assigned to receive Truvada, its older daily pill used for prevention & treatment.  The company said lenacapavir was 89% more effective than Truvada in the study.  The trial results should lead to an FDA approval & launch in the market by 2025.  The stock rose 2.22.

Gilead says its twice-yearly shot cut HIV infections by 96% in trial

Stellantis' (STLA) US dealer network has joined the United Auto Workers union in criticizing CEO Carlos Tavares for the company's recent sales declines, factory production cuts & other decisions they deem detrimental to the automaker's business.  In an open letter to Tavares this week, the head of its US dealer council, Kevin Farrish, condemned the chief exec for prioritizing the company's profits at the cost of sales, market share & the reputations of its Chrysler, Dodge, Jeep and Ram brands.  The council represents the company's 2600 US dealers.  “The market share of your brands has been slashed nearly in half, Stellantis stock price is tumbling, plants are closing, layoffs are rampant, and key executives fleeing the company. Investor lawsuits, supplier lawsuits, strikes–the fallout is mounting. Your own distribution network, your dealer body, has been left in an anemic and diminished state,” Farrish wrote.  Farrish, a dealer in Virginia, said the dealer council has raised concerns about the company's operations for 2 years, & accused Tavares of “reckless short-term decision making” that boosted profits & padded his compensation but have led to the “rapid degradation” of its brands.  STLA said it takes “absolute exception to the letter,” citing a 21% increase in Aug sales over Jul & an “action plan developed with the dealer body.”  “At Stellantis, we don’t believe that public personal attacks, such as the one in the open letter from the NDC president against our CEO, are the most effective way to solve problems,” the company said.  “We have started a path that will prove successful. We will continue to work with our dealers to avoid any public disputes that will delay our ability to deliver results.”  STLA reported a record profit in 2023, but so far this year, the automaker reported a first-half net profit of €5.6B ($6.1B), down 48% from the same period of 2023.  The stock fell 20¢.

UAW, U.S. dealers increase criticism of Stellantis CEO over cuts, sales declines

Gold prices rose more than 1% to hit a record high, helped by expectations of an interest rate cut by the Federal Reserve next week after US data signaled a slowing of the economy.  Spot gold was up 1.7% at $2554 per ounce & US gold futures settled 1.5% higher at $2580.  The Labor Dept said initial claims for state unemployment benefits rose 2000 to a seasonally adjusted 230K.  US producer prices increased slightly more than expected in Aug amid higher costs for services, but the trend remained consistent with subsiding inflation.  Markets are currently pricing in an 73% chance of a 25-basis-point US rate cut at the Fed's Sep 17-18 meeting & a 27% chance of a 50-bps cut, the CME FedWatch tool showed.  The labor market is continuing to falter & if the labor market deteriorates, the journey that the Fed will embark on in cutting rates is going to go for an extended period of time.

Gold Hits All-Time High as Fed-Cut Hopes Bolster Appeal

West Texas Intermediate (WTI) crude oil for a 2nd day, boosted by the supply cuts caused by Hurricane Francine's path thru the Gulf of Mexico, while the Intl Energy Agency warned demand growth continues to wane as China's economy slows.  WTI crude oil for Oct closed up $1.66 to settle at $68.97 per barrel, while Nov Brent crude, the global benchmark, was last seen up $1.49 to $72.10.  Prices fell to the lowest in more than 3 years earlier in the week, with the market dominated by concerns over the prospects for economic slowdowns in China & the US.  However, now more than a 3rd of gulf oil production is shut in because of the storm, which made landfall in Louisiana today, returning the focus to tight supply.  The Bureau of Safety & Environmental Enforcement, the US offshore regulator reported 169 producing platforms remain evacuated, shutting in 730K barrels per day of oil production, 42% of Gulf output.

WTI Crude Oil Rises Again as Hurricane Francine Cuts Supply While the IEA Cuts Its 2024 Demand Forecast

Stocks were in demand as investors digested fresh inflation & labor data testing high-running expectations for a qtr-point interest-rate cut next week.  The last major pieces of data this week reinforced bets on a smaller, 25 point rate reduction from the Federal Reserve next week instead of a larger, 0.5% cut.  These expectations are bringing buyers to gold who like to see low interest rates.

Markets hold steady with more signs of inflation cooling down

Dow was off 42, advancers over decliners 2-1 & NAZ went up 76.  The MLP index added 3+ to the 285s & the REIT index fell 1+ to the 435s.  Junk bond funds were little changed & Treasuries had a little selling which let yields ease higher.  Oil gained 1+ to the 69s after the hurricane landfall & gold soared 39 to 2581 for a new record!

Dow Jones Industrials

Wholesale prices rose in Aug about in line with expectations, the final inflation data point as the Federal Reserve gets set to lower interest rates.  The producer price index (PPI), a measure of final demand goods & services costs that producers receive, increased 0.2% on the month, the Bureau of Labor Statistics said, matching the estimate.  Excluding food & energy, PPI increased 0.3%, slightly hotter than the 0.2% consensus estimate.  The core increase was the same when excluding trade services.  On a 12-month basis, headline PPI rose 1.7%.  Excluding food, energy & trade, the annual rate was 3.3%.  In other economic news, the Labor Dept said initial filings for unemployment benefits totaled 230K last week, up 2K from the previous period & higher than the 225K estimate.  On the PPI measure, services prices pushed much of the gain, with a 0.4% monthly increase driven by a rise in services less trade, transportation & warehousing.  Another big contributor was a 4.8% jump in guestroom rental.  Goods prices were flat on the month, reversing a 0.6% gain in Jul.  Fed officials of late have turned their attention more to a slowing labor market.  The jobless claims report indicated that layoffs have not spiked, though the weekly number has risen slightly over the past several months.  Continuing claims, which run a week behind edged just higher to 1.85M, an increase of just 5K from the previous period.

Wholesale prices rose 0.2% in August, in line with expectations

Microsoft (MSFT), a Dow stock, said it is cutting 650 roles at its Xbox gaming division, in the latest major round of layoffs to hit the video game industry.  It marks the 3rd series of redundancies in MSFT's video game unit since its blockbuster acquisition of Activision Blizzard, the publisher behind the Call of Duty franchise, for $69B in cash.  The tech giant confirmed that it is cutting hundreds of roles at Xbox, in “mostly corporate and supporting functions.”  In a memo, Phil Spencer, CEO of Microsoft Gaming, told employees that the firm had taken this “difficult” decision to align its post-acquisition team structure & “organize our business for long term success.”  “We are deeply grateful for the contributions of our colleagues who are learning they are impacted,” Spencer added.  “In the US, we’re supporting them with exit packages that include severance, extended healthcare, and outplacement services to help with their transition; outside the US packages will differ according to location.”  MSFT's gaming chief added that there would be “some impacts to other teams as they adapt to shifting priorities and manage the lifecycle and performance of games.”  He stressed that no games, devices or gaming experiences were being canceled, & that no studios are being closed as a result of the redundancies.  The stock rose 3.90.

Microsoft to cut 650 jobs at its Xbox gaming unit — read the full memo 

Treasury yields were modestly higher as investors reacted to the latest economic data & considered the outlook for interest rates.  The yield on the 10-year Treasury was up by less than 1 basis point at 3.659% & the 2-year Treasury yield was last at 3.648% after adding less than 1 basis point.  Yields & prices move in opposite directions & 1 basis point equals 0.01%.  Today's economic readings come after the consumer price index yesterday showing that prices rose 0.2% on a monthly basis, in line with expectations.  But core inflation, which excludes food & energy prices, came in slightly higher than expected from the previous month at 0.3%, above the forecast 0.2%.  That comes ahead of the next Federal Reserve meeting on Sep 17-18, when the central bank is widely expected to cut interest rates.  Traders are however split on how big the rate cut will be, with some arguing in favor of a bigger 50-basis-point cut, while others say this could be risky for markets & that a 25-basis-point cut would be the better option.  Elsewhere, the European Central Bank cut its benchmark rate by 25 basis points, the 2nd reduction of its key rate this year.

Treasury yields edge higher as investors weigh latest inflation data

Investors are digesting fresh inflation & labor data testing high-running expectations for a qtr-point interest-rate cut next week.  The market is regrouping after a seesaw yesterday that saw revived enthusiasm for techs pull stocks out of a slide.  Those losses came as the latest consumer inflation reading knocked hopes for a 0.5% rate cut by the Federal Reserve.  Meanwhile gold is in heavy demand.

Markets bounce back after a CPI inflation report sell-off

Dow was up 124 thanks to buying in the PM, advancers over decliners 5-4 & NAZ gained 369.  The MLP index added 1 to the 282s & the REIT index was off 1+ to the 436s.  Junk bond funds hardly budged & Treasuries had a tiny amount of buying which took yields a little lower.  Oil rose 1+ to the 67s & gold slid back 2 to 2540 (more on both below).

Dow Jones Industrials 

Small business confidence fell in Aug & reversed the prior month's gains amid growing uncertainty ahead of the Nov 5 presidential election & expectations that sales will be sluggish.  The National Federation of Independent Business (NFIB) said that its Small Business Optimism Index dropped 2.5 points to 91.2 last month.  That comes after it had surged in Jul to the highest reading since Feb 2022, though the Aug decline erased all of Jul's gain. "The mood on Main Street worsened in August, despite last month's gains," said NFIB Chief Economist Bill Dunkelberg.  "Historically high inflation remains the top issue for owners as sales expectations plummet and cost pressures increase. Uncertainty among small business owners continues to rise as expectations for future business conditions worsen."  "The stock market is expressing some unease… and the election is just weeks away," he added.  "Expect more volatility in everything in the coming months."  Inflation continues to be the top source of concern for small business owners, though the share ticked down by 1 point to 24% in Aug & fewer reported raising their average selling prices.  The net percentage of owners expecting higher real sales volumes fell by 9 points to a net negative 18%.  Reports of positive profit trends were a net negative 37%, a decline of 7 points from Jul & the lowest level since 2010.  Labor market issues are persisting for small business owners, with 40% of owners reporting job openings they couldn't fill in Aug, up 2 percentage points from Jul.  The survey found that 36% of small business owners have openings for skilled workers, an increase of 4 points, while 15% have openings for unskilled labor, a 1 point decline .  Of the small business owners surveyed, 56% of owners, including 90% of those hiring or trying to hire, reported finding few or no qualified applicants to fill open positions.  That figure was up 7 points & amounts to the highest level since Sep 2023.  The percentage of small business owners who plan to create new jobs was 13% in Aug, down 2 points from the prior month.  NFIB also found that the share of small business owners planning capital investment increased, with 24% planning capital spending in the next 6 months, up a point from Jul.

Small business confidence dipped in August amid rising election uncertainty

Campbell (CPB) announced the name change, which requires shareholder approval, as it held its investor day & provided updates on its growth strategy.  The company said it aimed to "drive growth through 16 leadership brands" across its snacks & meals & beverages segments as part of its strategy.  Goldfish, Snyder's of Hanover, Pepperidge Farm, Campbell’s, Rao’s, Prego & V8 are among some of the "leadership brands."  They collectively accounted for about 95% of Campbell’s segment operating earnings in fiscal 2024.  The company said its meals & beverages division "has a new growth trajectory for dependable and profitable growth," especially with its acquisition of Sovos Brands.   It completed its $2.7 billion purchase of Sovos, which owned Rao’s & other brands, earlier this year.  Campbell said soup "remains an important part of the Meals & Beverages division but is now a smaller portion of the transformed portfolio."  Long-term, the company is targeting a 2-3% increase in its organic net sales.  That includes the snack division growing 3-4% & the meals & beverages segment growing 1-2%, according to Campbell.  The stock fell 1.96.

Campbell Soup to make historic name change

Boeing (BA), a Dow stock, delivered 40 commercial jets in Aug, up 5 from the same month in 2023 when it struggled with a manufacturing defect on its 737 MAX, as the planemaker eyes higher output under new CEO Kelly Ortberg.  BA has pledged to boost production of its strongest selling jet, the MAX, to 38 per month by year's end.  But the planemaker faces obstacles such as a possible strike as early as Fri by more than 32K Seattle-area & Portland factory workers who vote on a new deal Sep 12.  The planemaker is operating a slower assembly line since a Jan 5 in-flight blowout of a door plug on a 737 MAX 9 jet that heightened regulatory scrutiny.  BA handed over 32 MAX jets to customers last month, including 9 deliveries to customers in China, the most since 2019.  BA delivered 43 commercial jets in Jul, including 31 MAX jets.  Investors closely watch delivery numbers, as airplane makers receive the majority of payment for an aircraft when it is transferred to a customer.  After adjustments to reflect the backlog, BA reported adjusted net orders for the month of 24.  That brought its gross order total thru Aug 31 to 250.  After removing cancellations & conversions, BA posted a net total of 207 orders since the start of 2024. Following further accounting adjustments, BA reported adjusted net orders of 122 airplanes so far this year.  YTD thru Aug 31, BA delivered 258 airplanes, including 198 MAX jets.  The stock rose 1.17.

Boeing delivers 40 jets in August, up 5 from a year ago

Gold prices fell as the $ & Treasury yields firmed after US inflation data prompted investors to scale back expectations of an oversized rate cut from the Federal Reserve next week.  Spot gold was down 0.1% at $2513 per ounce & US gold futures settled mostly unchanged at $2542.  US consumer prices rose only slightly in Aug, but underlying inflation showed some stickiness, which could dissuade the Fed from delivering a ½-point interest rate cut next week.  Markets are currently pricing in an 87% chance of a 25-basis-point US rate cut, compared to 71% before the data, the CME FedWatch tool showed.  The Fed will lower interest rates by 25 basis points at each of the 3 remaining policy meetings in 2024, according to a majority of economists in a poll that found only 9 out of 101 expected a ½-percentage-point cut next week.

Gold Falls as CPI Data Dampens Talk of Oversized US Rate Cut

Oil prices climbed more than 1%, paring some of the previous day's losses, as concerns about Hurricane Francine disrupting output in the US, the world's biggest producer, outweighed worries about weak global demand.  Brent crude futures were up 84¢ (1.2%) to $70.03 a barrel, while US crude futures were at $66.56 a barrel, up 81¢ (1.2%).  Both benchmarks fell nearly $3 yesterday, with Brent hitting its lowest since Dec 2021 & WTI falling to a May 2023 trough, after OPEC revised down its demand forecast for this year & 2025.  Francine strengthened into a hurricane in the Gulf of Mexico, the National Hurricane Center said, prompting Louisiana residents to flee inland & oil & gas companies to shut production.  About 24% of crude production & 26% of natural gas output in the Gulf of Mexico were offline due to the storm, the Bureau of Safety & Environmental Enforcement (BSEE) said.  Yesterday, the Organization of the Petroleum Exporting Countries (OPEC) cut its forecast for world oil demand to rise by 2.03M barrels per day (bpd) in 2024, from last month's forecast for growth of 2.11M bpd, it said in a monthly report.  OPEC also cut its 2025 global demand growth estimate to 1.74M bpd from 1.78M bpd.  But the Energy Information Administration (EIA) said yesterday global oil demand is set to grow to a bigger record this year while output growth would be smaller than prior forecasts.

Oil Prices Recover on Hurricane Supply Disruption Fears

Uncertainty around the size of the Federal Reserve's first interest-rate cut in years is driving wild swings in stocks.  Today's data showed headline inflation slipping to a more than 3-year low.  But core prices, which strip out the more volatile costs of food & gas, climbed 0.3% over the prior month, above the 0.2% expectations.  And after the hotter-than-expected month-over-month increase for core inflation, traders are now favoring a smaller cut from the Fed at its meeting next week.  The odds of the Fed lowering rates by 50 basis points now sit at just 15%, down from the 44% chance seen a week prior.

Markets selloff as inflation reading signals small Fed rate cut

Dow tumbled 684, decliners over advancers better than 3-1& NAZ sank 220.  The MLP index was off 1+ to 280 & the REIT index declined 7+ to 431.  Junk bond funds & Treasuries had modest buying which reduced yields.  Oil rose to the mid 66s & gold fell 7 to 2535.

Dow Jones Industrials

Inflation fell in Aug to the lowest level in over 3 years, adding to the Federal Reserve's case for an interest rate cut next week even as prices remained uncomfortably high for Ms of Americans.  The Labor Dept said that the consumer price index (CPI), a broad measure of how much everyday goods like gasoline, groceries & rent cost, rose 0.2% in Aug from the prior month, in line with the expectations.  Prices climbed 2.5% in Aug from the same time last year, slightly less than estimates & down from 2.9% in Jul, the lowest level since Feb 2021.  Core prices, which exclude more volatile measurements of gasoline & food to better assess price growth trends, rose 0.3% in Aug from the prior month, slightly above estimates of 0.2%.  The gauge was up 3.2% from a year ago, in line with expectations, & unchanged from last month.  Overall, the report indicates that inflationary pressures in the US economy are continuing to ease, though prices remain above the Federal Reserve's 2% target.  The softer-than-expected inflation reading comes as Federal Reserve policymakers are set to hold a highly anticipated meeting in which they are likely to cut interest rates amid signs that the economy is cooling.  After the central bank kept interest rates at a 23-year-high of 5.25-5.50% in Jul, Fed Chair Jerome Powell signaled in an Aug speech at the Jackson Hole conference that the "time has come" to cut interest rates.

Inflation unexpectedly cools to slowest rate in more than three years

Treasury yields ticked higher as traders assessed a mixed consumer price index report & its implications for the Federal Reserve's rate move next week.  The yield on the 10-year Treasury was more than 2 basis points higher at 3.667%, with the 2-year Treasury yield last up 4 basis points at 3.646%.  Yields & prices move in opposite directions & 1 basis point is equivalent to 0.01%.  The report comes ahead of the Fed's Sep 17-18 meeting, with traders widely expecting a rate cut.  The only remaining question appears to be by how much the central bank will reduce rates.  Some economists have argued the Fed should deliver a ½-point rate cut next week, accusing the central bank of having previously gone “too far, too fast” with monetary policy tightening.  Others have described such a move as one that would be “very dangerous” for markets, pushing instead for the Fed to deliver a qtr-point rate cut instead.  Traders are currently pricing in a 83% chance of a 25-basis-point rate cut, with 17% expecting a 50-basis-point rate reduction, according to the CME Group’s FedWatch Tool.

Treasury yields tick higher following mixed CPI report

Mortgage rates fell for the 6th straight week last week, but mortgage demand still seems to be waiting for something bigger.  The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766K or less) decreased to 6.29% from 6.43%, with points falling to 0.55 from 0.56 (including the origination fee) for loans with a 20% down payment, according to the Mortgage Bankers Association (MBA).  That is the lowest level since Feb 2023 & nearly a full percentage point lower than the same week 1 year ago.  “Treasury yields have been responding to data showing a picture of cooling inflation, a slowing job market, and the anticipated first rate cut from the Federal Reserve later this month,” said Joel Kan, VP & deputy chief economist at the MBA.  Total mortgage demand, however, rose just 1.4% for the week, according to the MBA’s seasonally adjusted index.  The results also included an adjustment for the Labor Day holiday.  Refinance applications only increased 1% week to week, but were 106% higher than a year ago.  That may sound like a massive increase, but the numbers were so low last year, that even with that large gain, refinancing is still historically low.  “There is still somewhat limited refinance potential as many borrowers still have sub-5 percent rates. It is a positive development that there are homeowners who can benefit from a refinance as rates continues to move lower,” added Kan.  Most of those refinancing likely bought their homes in the last 2 years, when rates had moved significantly higher off of record lows.  Applications for a mortgage to purchase a home rose 2% for the week but were 3% lower than the same week 1 year ago.  “Despite the drop in rates, affordability challenges and other factors such as limited inventory might still be hindering purchase decisions,” Kan added.

Mortgage rates hit lowest level since February 2023

Stocks tumbled as investors digested an inflation report that showed consumer price increases ticked lower during Aug & analyzed the first presidential debate between Donald Trump & Kamala Harris.  After a mixed monthly jobs report, the price data was expected to help settle the debate over whether to expect a 0.5% or 0.25% easing next week.  And the hotter-than-expected month-over-month increase for core inflation, is viewed as favoring a smaller cut by the Fed meeting next week.

Markets seesaw after JPMorgan tempers guidance on income

Dow pulled back 92 but well off its midday low on JPM's earnings forecast (see below), decliners modestly ahead of advancers but NAZ rose 141.  The MLP index added 1 to 281 & the REIT index rose 6+ to the 437s as yields declined.  Junk bond funds fluctuated & Treasuries were purchased which lowered yields.  Oil was off a very big 2+ to 66 & gold gained 12 to 2545 (more on both below).

Dow Jones Industrials 

JPMorgan (JPM), a Dow stock, shares fell after the bank's pres told analysts that expectations for net interest income (NII) & expenses in 2025 were too optimistic.  While the bank expects to be in the “ballpark” of the 2024 target for NII of about $91.5B, the current estimate for next year of about $90B “is not very reasonable” because the Federal Reserve will cut interest rates, JPM Pres Daniel Pinto said at a financial conference.  “I think that that number will be lower,” Pinto said.  He declined to give a specific figure.  JPM, the biggest US bank by assets, has been a winner among lenders in recent years, benefiting from better-than-expected growth in NII as the bank gathered more deposits & made more loans than expected.  But skittish investors are now concerned about the outlook for a bellwether banking stock, along with broader concerns about slowing US economic growth.  NII, one of the main ways banks make money, is the difference in the cost of a bank's deposits & what it earns by lending money or investing it in securities.  When interest rates decline, new loans made by the bank & new bonds it purchases will yield less.  Falling rates can help banks in the sense that customers will slow the rotation out of checking accounts & into higher-yielding instruments like CDs or money market funds.  But they also make new assets lower yielding, which complicates the picture.  “Clearly, as rates go lower, you have less pressure on repricing of deposits,” Pinto said.  “But as you know, we are quite asset sensitive.”  When it comes to expenses, the analyst estimate for next year of roughly $94B “is also a bit too optimistic” because of lingering inflation & new investments the firm is making, Pinto said.  “There are a bunch of components that tell us that probably the number on expenses will be a bit higher than what is expected at the moment,” Pinto added.  When it comes to trading, JPM expects 3rd-qtr revenue to be flat to up about 2% from a year ago, while investment banking fees are headed for a 15% jump.  The stock sank 11.22 (5%).

JPMorgan Chase shares drop 7% after bank tempers guidance on interest income and expenses

Europe's top court ruled against Apple (AAPL), a Dow stock, in the tech giant's 10-year court battle over its tax affairs in Ireland.  The case stems back to 2016 when the European Commission ordered Ireland to recover up to €13B ($14.4B) in back taxes from AAPL.  The European Court of Justice’s decision comes hours after the company unveiled new products to revitalize its iPhone, Apple Watch & AirPod lineups.  The Irish gov said that the AAPL case “involved an issue that is now of historical relevance only,” adding that its position has always been that it “does not give preferential tax treatment to any companies or taxpayers.”  AAPL said in a filing that it will incur a 1-time income tax charge of about $10B in its 4th fiscal qtr ending Sep 28, 2024.  The gov noted it will now begin the process of transferring the assets in the escrow fund to Ireland.  “This case has never been about how much tax we pay, but which government we are required to pay it to. We always pay all the taxes we owe wherever we operate and there has never been a special deal,” an AAPL spokesperson said.  “The European Commission is trying to retroactively change the rules and ignore that, as required by international tax law, our income was already subject to taxes in the US.”  The stock fell 16¢.

Apple must pay $14.4 billion in back taxes, EU's top court rules

Pity the poor active trader.  Sep is living up to its reputation as a difficult month.  “Squirrelly” is how 1 trader described the market.  In other words, a tough, choppy market for investors.  The markets opened positive, with a nice lift from Oracle (ORCL), which is keeping the expanding artificial intelligence story going.  The company’s positive comments on AI helped lift the hyperscalers as well.  But that was about it.  None of the other semiconductors got a lift from ORCL.  Everything else in the group is down.  Elsewhere, banks, a former leadership group, have been trending down for the past week, & at midmorning, word on 3rd-qtr guidance from JPM at a Barclays conference, where it said net interest income expectations for 2025 were “too high.”  Stock in the country's largest bank immediately sold off.  That alone is chopping about 100 points off the Dow.   But Goldman Sachs (GS), down about 5%, is also knocking about 160 points off the Dow.  These were 2 major leadership stocks in the S&P 500.  Both were at historic highs going into Sep, not anymore.  Even regional banks are now lower.  The issues facing the market are well known: weak seasonals thru Oct, concerns about a slowing jobs market & valuations that are still on the high side.  Put this all together, & it reinforces the view that there is no reason to stick your neck out.

September is living up to its reputation as a difficult, choppy month

Gold prices held firm above the $2500 level as market participants positioned themselves ahead of US inflation data for further clues on the depth of interest rate cuts by the Federal Reserve next week.  Spot gold rose 0.3% to $2512 per ounce & US gold futures settled 0.4% higher at $2543.  Investors will closely scan thru US Consumer Price Index (CPI) data tomorrow & the Producer Price Index reading on Thurs.  The CPI for Aug is expected to have risen by 0.2% month-over-month, unchanged from the previous month.  Markets are currently pricing in a 67% chance of a 25-basis-point US rate cut at the Fed's Sep 17-18 meeting & a 33% chance of a 50-bps cut, the CME FedWatch tool showed.

Gold holds firm above $2,500 level as US inflation data looms

West Texas Intermediate (WTI) crude oil fell to the lowest in more than 3 years as the market again focused on demand concerns as China's economy weakens, while 2 forecasting agencies cut their 2024 demand forecasts, even as Tropical Storm Francine forces the closure of some Gulf of Mexico platforms, cutting into supply.  WTI crude oil for Oct closed down $2.96 to settle at $65.75 per barrel, the lowest since Aug 2021 & Nov Brent crude, the global benchmark, was last seen down $2.85 to $68.99.  Oil moved higher yesterday following 5 losing sessions that pushed prices down by 11%.  However the release of China's Aug economic data, showing producer-price disinflation as its economy slows, countered any lingering optimism.

WTI Crude Oil Falls to a Three-Year Low With the Focus on Demand as China's Economy Slows

Stocks traded mixed in a rollercoaster session as investors geared up for a looming consumer inflation report seen as crucial to determining the size of an interest-rate next week.  In the meantime, safe haven gold remains in demand & oil is at a more than 3 year low.  Sep has a well deserved reputation for being a tough time in the stock market.

Markets stumble ahead of inflation reports

Dow fell 155, decliners over advancers 5-4 & NAZ went up 68.  The MLP index was little changed at 280 & the REIT index rose 4+ to the 435s.  Junk bond funds crawled higher & Treasuries saw buying which lowered yields (more below).  Oil dropped 2+ to the 66s & gold added 6 to 2538.

Dow Jones Industrials

A report released by the Federal Reserve Bank of New York found that US consumers see inflation easing, but that worries about the labor market & managing household debt loads rose.  The New York Fed's latest Survey of Consumer Expectations found that respondents continue to see inflation at 3% a year from now & 2.8% in 5 years, findings that are unchanged from the prior month.  It found that consumers' price expectations over the next year involved larger increases for gas, rent & medical care, as well as smaller increases for food & college expenses.  The survey also found that for the 3rd straight month, respondents' expectations of missing a debt payment in the next 3 months increased with a 0.3 percentage point rise in Aug to 13.6%, the highest level since the early stages of the COVID pandemic in Apr 2020.  Consumers' views of the labor market were mixed in the report, with fewer worries about losing a job but also less optimism about voluntarily leaving a current job or finding a new job after losing their present role.  The perceived probability of an individual losing their job in the next 12 months fell by 1 percentage point to 13.3%, below the 12-month trailing average of 13.7%, while the probability of leaving a job voluntarily also fell to 19.1% from 20.7%.  The report also found that the perceived probability of finding a job if an individual lost their job decreased, with a decline of 0.2 percentage points to 52.3%, below the 12-month average of 53.9%.  Expectations for growth in household incomes increased by 0.1 percentage points to 3.1%, while spending growth expectations increased by the same amount to 5.0%.

Consumers see inflation easing, anxious about job market, personal debt: NY Fed survey

Europe's top courtupheld a €2.4B ($2.65B) fine imposed on Google (GOOGL) for abusing its dominant position by favoring its own shopping comparison service.  The fine stems from an antitrust investigation by the European Commission, the exec arm of the EU, which concluded in 2017.  The commission said at the time that GOOGL had favored its own shopping comparison service over those of its rivals.  GOOGL appealed the decision with the General Court, the EU's 2nd-highest court, which also upheld the fine.  GOOGL then brought the case before the European Court of Justice (ECJ), the EU's top court.  The ECJ on dismissed the appeal & upheld the commission's fine.  “We are disappointed with the decision of the Court,” a GOOGL spokesperson said.  “This judgment relates to a very specific set of facts. We made changes back in 2017 to comply with the European Commission’s decision. Our approach has worked successfully for more than seven years, generating billions of clicks for more than 800 comparison shopping services.”  To address European concerns, GOOGL in 2017 made changes that meant it will have to bid in the same way as competitors for advertising slots within shopping search results.  The decision caps off another major case for the EU after the ECJ also confirmed a European Commission decision from 2016 that Apple (AAPL), a Dow stock, should pay €13B in back taxes in Ireland.  Regulators are mounting pressure on Alphabet owned GOOGL globally.  In Mar, the EU launched an investigation into Alphabet under its sweeping Digital Markets Act, which scrutinizes the practices of tech companies in Europe.  In the US GOOGL is in the midst of an antitrust case brought by the Dept of Justice with regard to its advertising business after losing another antitrust case earlier this year.  GOOGL stock rose 1.93 & AAPL stock fell 13¢.

Google's 2.4 billion euro fine upheld by Europe's top court

Treasury yields dipped ahead of the final major inflation report before the Federal Reserve's Sep meeting.  The yield on the 10-year Treasury was nearly 3 basis points lower at 3.674%, with the 2-year Treasury yield also down by more than 2 basis points at 3.642%.  Yields & prices move in opposite directions & 1 basis point is equivalent to 0.01%.  Treasury yields have stabilized after tumbling last week when a series of labor market releases missed estimates.  The data also sent US stocks to their worst week of the year.  Investors are now keenly awaiting Aug's consumer price index, set to be published tomorrow to see if headline inflation will ease further from Jul's 2.9% reading as expected.  That will be followed by the producer price index on Thurs.  Debate has erupted over whether the Fed could opt for a 50 basis point rather than a 25 basis point interest rate cut during the Sep 17-18 meeting.  Some analysts argue such a move would show the Fed's commitment to supporting jobs growth, as others contend it would be an unnecessary step that could sow market panic. CME Group's FedWatch Tool currently places market pricing for a 50 basis point move at 27%, against 73% for the smaller move.

Treasury yields edge higher ahead of final inflation prints before Fed meeting

Stocks wavered as investors geared up for a looming consumer inflation report seen as crucial to determining the size of the first US interest-rate cut in years.  The moves follows yesterday's sharp rebound, which saw the major gauges surge over 1% as investors went post-rout bargain hunting.  Volatility is expected in the markets as investors waver between hopes for a hefty 0.5% rate cut from the Federal Reserve & worries about recession risks.

Markets climb as bargain hunters purchase stocks

Dow jumped 484, advancers over decliners better than 2-1 & NAZ was up 193.  The MLP index held steady, a little above 280, & the REIT index gained 4+ to the 431s.  Junk bond funds fluctuated & Treasuries saw very limited buying which allowed rates to inch higher.  Oil was up 1.09 to the 68s & gold added 7 to 2532 (more on both below).

Dow Jones Industrials 

Apple (AAPL), a Dow stock, unveiled the latest version of its flagship iPhone during its "Glowtime" event.  CEO Tim Cook described the iPhone 16 lineup as the "first iPhones designed from the ground up for Apple Intelligence and its breakthrough capabilities."  To run Apple Intelligence & other capabilities, the phones have been built with A18 chips, according to the tech giant.  AAPL said the iPhone 16 base model will sport a 6.1-inch display.  For the iPhone 16 Plus, it will be 6.7 inches.  The stock was up 9¢.

Apple unveils AI-infused iPhone 16 during tech giant's 'Glowtime' event

Europe's leading battery maker is to slash jobs & scale back its commitments as the “challenging” market for electric vehicles bites manufacturers.  Northvolt, the Swedish company which raised £10B to challenge China's dominance of batteries, today pledged to refocus efforts on improving its struggling factory in Skellefteå & cutting costs.  This will involve “a re-scope of operations and appropriate resizing of our workforce”, an announcement said.  The company, which counts German car giants BMW & Volkswagen among its backers, also said it would sell or seek investment from outside partners in its energy storage business.  It is the latest business to scale back its investment plans as a slowdown in EV sales spooks the automotive industry.  Last week, Volkswagen warned that it could be forced to close a factory in Germany for the first time & make large cost savings as it manages the transition away from petrol cars.  Battery maker Northvolt said it would suspend cathode active material production at its gigafactory in Sweden & cut costs under a plan that could lead to job losses as the company scales back its rapid expansion.  Billed as a frontrunner in Europe's effort to build a battery industry of its own, Northvolt is focusing on its large-scale cell manufacturing after a strategic review following a series of setbacks.  It has suffered production delays & the cancellation by BMW.  Northvolt's decision to pause cathode active materials (CAM) production at its Skelleftea gigafactory means the company will need to import it instead, said Daniel Brandell, a research leader at Uppsala University's battery research group Angstrom Advanced Battery Centre.  "This (CAM) is the most complex part of the lithium ion battery, and they don't think that their in-house material is of a good enough quality, and therefore they need to buy it instead and will need to import this from other suppliers," Brandell added.

Swedish battery maker Northvolt mulls job cuts as it seeks to save costs

China's consumer inflation accelerated in Aug to the fastest pace in ½ a year but the uptick was due more to higher food costs from weather disruptions than a recovery in domestic demand as producer price deflation worsened.  A sputtering start in the 2nd half is mounting pressure on the world's 2nd-largest economy to roll out more policies amid a prolonged housing downturn, persistent joblessness, debt woes & rising trade tensions.  The consumer price index (CPI) rose 0.6% from a year earlier last month, versus a 0.5% rise in Jul, data from the National Bureau of Statistics (NBS) showed, but less than a 0.7% increase forecast.  Extreme weather this summer from deadly floods to scorching heat has pushed up farm produce prices, contributing to faster inflation.  China's affected crops due to various natural disasters.  "The higher CPI in August was due to high temperatures and the rainy weather," NBS statistician Dong Lijuan said.  Food prices jumped 2.8% on year in Aug from an unchanged outcome in Jul, while non-food inflation was 0.2%, easing from 0.7% in Jul.  "But the rebound was softer than expected and did little to ease deflation concerns. Much of the improvement has been food reflation, which is susceptible to fluctuating weather conditions and capacity changes," said Junyu Tan, North Asia Economist at Coface.  Core inflation, excluding volatile food & fuel prices, was 0.3% in Aug - the lowest in nearly 3½ years, down from 0.4% in Jul.  The consumer inflation gauge was up 0.4% month-on-month, compared with a 0.5% increase in Jul & missing expectations of a 0.5% gain.  China's yuan dipped against the $ as long-dated yields hit record lows after monthly inflation data added to economic worries & calls for fresh easing.

China's consumer prices rise in August, PPI stuck in deflation

Gold prices held their ground, as investors awaited the US inflation report for further clues on the potential size of the Federal Reserve's interest-rate cut.  Spot gold was little changed at $2499 per ounce & US gold futures settled 0.3% higher at $2532.70.  Bullion hit a record high of $2531 on Aug 20.  Traders now see a 73% chance of a 25-basis-point cut at the Fed's meeting next week & a 27% chance of a 50 bp reduction, according to the CME FedWatch tool.  The US public's outlook for inflationary pressures was little changed last month, according to a report released by the New York Federal Reserve.

Gold prices steady with spotlight on US inflation data

Oil futures rose by about 1% as a potential hurricane approaching the Gulf Coast helped oil prices to recover some of the previous week's heavy losses.  Brent crude rose 67¢ (0.9%) to $71.73 a barrel while West Texas Intermediate crude futures were up 68¢ (1%) at $68.35.  Prices of Brent crude had fallen in each of the past 6 trading sessions, retreating by more than 11%, nearly $9 a barrel, to register the lowest closing price since Dec 2021 on Fri.  Analysts said today's rebound was partly in response to a potential hurricane near the US Gulf Coast.  A weather system in the southwestern Gulf of Mexico is forecast to become a hurricane before it reaches the northwestern US Gulf Coast, the National Hurricane Center said yesterday & the Gulf Coast accounts for about 60% of US refining capacity.

Oil Rebounds from Week of Heavy Losses as Storm Approaches US Gulf Coast

Stocks rebounded on the heels of the worst week since early 2023.  The major averages regained some of the ground they had lost although the Aug jobs report did not settle settle how aggressively will the Federal Reserve will lower interest rates?  2 inflation reports due later this week will give clues.  Meanwhile China with its large economy also has inflation problems.

Markets rebound after last week's substantial sell-off

Dow advanced 487, advancers over decliners a modest 2-1 & NAZ gained 119.  The MLP index hardly budged above 280 & the REIT index was up 2+ to the 429s.  Junk bond funds were flattish & Treasuries had very limited buying, taking yields a little lower (more below).  Oil was up pennies in the 67s (more below) & gold slid back 1 to 2523.

Dow Jones Industrials

Boeing (BA) a Dow stock, announced it reached a tentative agreement with the union representing 33K workers in the Pacific Northwest, just days ahead of a possible strike scheduled later this week.  If the deal is approved, the proposed 4-year contract would provide employees with a general wage increase of 25%, along with a commitment to build the next commercial airplane in the Seattle region.  The agreement is the first full labor deal reached between the 2 entities in 16 years.  While providing an increase in wages, the deal would provide better retirement benefits & give the union greater input in the safety & quality of BAs production system.  "We've heard what’s important to you for the new contract. And we have reached a tentative agreement with the union on a historic offer that takes care of you and your family," BA Commercial Airplanes Pres & CEO Stephanie Pope said.  "The contract offer provides the largest-ever general wage increase, lower medical cost share to make healthcare more affordable, greater company contributions toward your retirement, and improvements for a better work-life balance."  Pope also said the contract will deepen the company's commitment to the Pacific Northwest, where BA planted its roots.  "This would go along with our other flagship models, meaning job security for generations to come," she said.  "It’s a commitment to you and to our community."  The Intl Association of Machinists and Aerospace Workers (IAM) called the agreement the best contract it had ever negotiated & described union workers as committed to building quality airplanes.  The stock rose 5.56.

Boeing strikes tentative labor deal with union representing over 32K workers

Treasury yields were slightly higher as investors look ahead to fresh inflation prints following a series of weaker-than-expected US economic data releases.  The yield on the 10-year Treasury was less than 1 basis point higher at 3.712% & the 2-year Treasury yield rose about 2 basis points to 3.671%.  Yields & prices move in opposite directions.  1 basis point is equivalent to 0.01%.  Aug's consumer price index will be out Wed, followed by the producer price index on Thurs.  Treasury yields tumbled across the first week of Sep trade as reports on nonfarm payrolls & private payrolls both missed forecast estimates, reviving concerns about the extent of the slowdown in the US economy.  The unemployment rate dipped as expected to 4.2%.  The Federal Reserve holds its next monetary policy meeting next Wed, on Sep 18.  Markets were last pricing a 71% probability of a 25-basis-point cut in interest rates, against a 29% probability of a 50-basis-point cut, according to CME Group's FedWatch Tool.

Yields rise as investors gear up for inflation prints after weak jobs data

US crude oil futures rebounded nearly 1% after posting the worst week since Oct 2023.  The US benchmark, West Texas Intermediate, has fallen 15.8% so far in the 3rd qtr while the Brent global benchmark has fallen more than 16.6%.  The West Texas Intermediate Oct contract was $68.13 per barrel, up 46¢ (0.7%) & YTD US crude oil has fallen 4.8%.  Bent Nov was $71.56 per barrel, up 50¢ (0.7%) & YTD, the global benchmark has pulled back 7%.  Weak demand in China has weighed on the crude market, with consumption expected to soften in Europe & the US as the summer driving season winds down & refineries go into maintenance mode.  OPEC+ has delayed a production boost originally scheduled to begin in Oct as prices have deteriorated.  Some analysts expect the group to start increasing production in Dec & forecast that Brent will trade around $70-85 per barrel.

U.S. crude oil rebounds after worst week since 2023

Buyers returned as inflation came back into focus for investors gauging pressures that could influence the size of interest rate cuts.  Comments by Fed officials appeared to tilt the market in favor of a 0.25% cut by suggesting that incoming data would have to support the need for larger & further easing.