Bloomberg is noting how investors are excited about the US bond market at current yields because they view the Fed as close to getting to peak rates. This compares to talks out of the Eurozone/UK, whose various leaders (Lagarde, Kazaks, Broadbent) are talking about higher rates for longer.
A 20% chance of a rate increase at the September 20th FOMC meeting. So, most are assuming a pause. The odds of a 25 basis point hike at the November 1st meeting = 47%, so we’ll give that to a hike because there are 9% odds on a 50bps hike. Looking at contracts for June 2024, futures see lower odds of Fed rate cuts in 1H24. A month and a week ago, investors were betting 81/83% odds of Fed Funds being lower than today (5.25 – 5.50%). Now, it’s 50/50.
Three auto companies (Ford, GM and Stellantis) are in a face-off with their unions after Unifor members voted for a strike mandate. They are joining the bandwagon of the 150k UAW union which has warned they will strike at all three companies if their demands are not met by mid-Sep. They want a 46% wage increase, a return to traditional pensions, and a 32-hr work week. Hard to see the auto companies agreeing to that.
This week, the US will announce 10 drugs that Medicare can negotiate pricing for, expecting to save taxpayers billions of dollars and reducing profits for the related pharma. Analysts are guessing that J&J’s Xarelto blood thinner and Eli Lilly’s Jardiance for diabetes will be on the list.
CNBC is out with a story on hand guns. The one that caught my eye was from Biofire; it uses facial recognition and fingerprint verification to operate, thus hoping to reduce accidental firings and suicides. Also, It will be the first time in 5 years that Apple’s iPad Pro will be meaningfully advanced; in 2024, the co will use the M3 chip and use brighter, crisper iPhone-style OLED displays.
The near 5% rally in China fizzled when overseas funds dumped mainland shares. This month’s outflows are set to hit a record. The gov promised to reduce the stamp duty on stock trades, slow the pace of IPOs, lower deposit ratios for margins, restrict share sales by some top shareholders, but that didn’t do much to counteract weak industrial profit data. Bloomberg is out with the story.
This week we’ve got Friday’s Jobs Report and ISM Manufacturing survey, which will affect the Fed’s next meeting on Sep 20. So will Tuesday’s consumer confidence data, Wednesday’s GDP/home sales data, Thursday’s personal spending and income/initial jobless claims. Given last week’s major moves with the S&P and the 10yr (and the USD), most likely the data will drive equities up if it is soft and down if it shows economic strength.
BBG is out with a story about Peachtree City, where teens and adults use EV golf carts to get around, versus traditional cars. There are 9,300 golf carts per 13,000 households and 100 miles of car-free paths across the town’s 25 square miles. Sounds pretty fun.