The JOBS report showed some softening in the jobs market here in the US, so the odds for a Sep pause just went up. There were fewer job openings, more people joining the labor force, and an increase in hours worked. Hiring increased in Aug, and wage growth slowed. So, in some ways it was a mixed report, with some data showing strength and other data showing slowing.
Saudi crude exports declined meaningfully in Aug because they cut production to prop up prices. Observed flows declined to their lowest levels since Mar 2021. With gas sitting above $6 here in the Bay Area, it’s hard to say that inflation is improving, and this won’t help. Before everyone starts calling for rate cuts, there may be a few more data points needed…
Remember when Biden said that about China’s economy? Well, BBG is out with a report that the US and a few other countries may be trying to dance on the grave a bit too early, flipping the past decade’s view that China was the unstoppable growth beast to now an unstoppable anchor that will weigh everyone down. Certainly they have large challenges, such as demographics and debt indulgence, but they also have some self-inflicted ones that could be reversed (e.g., when the quest for power and control took its toll on the tech industry with various heavy handed regulatory moves). These latter self-inflicted challenges, if halted, could make China more investible globally. So, we wouldn’t be trying to put China in the rear view mirror quite yet.
The Energy Depart made Christmas come early for battery startup Eos Energy, which increased more than 55% premarket, after issuing them a conditional commitment of almost $400mm so they could build up to 4 production lines for zinc-bromine battery energy storage systems in Pennsylvania. The gov is trying to secure a pipeline for materials as well as manufacturing in the space.
News has ratcheted up a notch for the JPM vs US Virgin Islands case. In brief, JPM “found” $1bn in suspicious transactions tied to Epstein after 16 years and finally reported it to the gov. The question is whether JPM was bankrolling and benefitting from Epstein’s sex trafficking, and whether it should have halted its role sooner. It sounds like Epstein brought a lot of clients over to JPM, so one would have to imagine that some people questioned this particular “sales cycle.”
Tesla slashed its models S and X prices in China after introducing a new Model 3, per Bloomberg. We’ve seen that there’s a lot of inventory out there in the US too, and dealers are trying to get rid of it before their 2024 vehicles arrive.
Bloomberg noted that the US airlines fell in August because of rising oil prices, lower consumer demand, and resulting earnings cuts.
In addition to keeping tabs on China, investors have to keep an eye out for Japan. To note, Japanese firms cut capital spending for 1st time in more than a year, per the Nikkei. Also, per Reuters, Japan PMIs reflected a slowdown in factory activity as their costs are increasing. Japan’s companies feed into the world economy, so these are not so good notes.
I highly recommend reading “It’s Time to Re-Examine Your US Recession Playbook” on BBG today. Simon White walks through inflationary recessions, what does well/poorly, and makes an obvious warning to investors today.