PPI rose +0.3% m/m in July, a hotter number than expected (+0.2%). Prices (ex food, energy) increased y/y by +2.7%. Producer prices are those that “makers” get, versus prices that consumers pay. Services costs were up +0.5% m/m—the largest increase since a year ago. So, with CPI lower than expected this week, and now PPI higher than expected—the bet is that higher producer costs will be passed onto consumers.
Per UBS, vol has expanded. The ave daily range for the S&P in the past week increased to 1.12% of its underlying level to fall just shy of 1.25%, which marks the typical demarcation line of a bullish and bearish environment. The prior violation of this threshold occurred during the regional banking hit in March. The “miles driven” have jumped concurrently. In short, things are getting more skittish. The S&P made a lower intraday trough on consecutive days for 7 of 8 sessions. Yesterday’s decline was particularly stunning because in the morning, the markets were popping.
The DOE is investing $1.2bn in giant vacuums that are going to suck carbon out of the air to try to stop global warming. The initial funding will go to 2 carbon removal hubs in LA and TX, run by Climeworks and Occidental. Supposedly, there will be another $2.5bn invested in 2 additional hubs, to be announced next year. Once they suck in the carbon, they can store it underground or use it for other purposes (e.g., ag products, building materials, manmade diamonds). Get ready for NIMBY advocates.
Per BBG, the gov will impose limits on US investments in China, specifically targeting chip, quantum computing and artificial intelligence. The order will take effect next year, and it targets investors in restricted Chinese companies via mergers, private equity and private capital, as well as by joint ventures and financing arrangements. Most likely it will target startups and larger firms that get over 50% of their revenue from the restricted sectors. VCs here in Silicon Valley are relieved because it excludes past investments. Bloomberg notes that export-oriented economies will probably remain a drag on world growth, and these sorts of limits will just complicate the story.
China is trying to figure out travel demand by lifting a ban on group tours to the US and the UK.
A poll by Glassdoor found that 81% of workers say they’d be more productive if they could drop 1 workday, to total just 4/wk. Workers in fields with the highest burnout were the most likely to sign up for that change. Interestingly, workers in legal, accounting, and finance roles say that the shortened workweek would NOT boost their productivity. Maybe because they know they would just get killed more on their workdays, or basically get paid less for the same amount of work.
Hawaii emergency management records don’t show any sign that warning sirens sounded before people had to flee on Maui. Because officials sent alerts to mobile phones, TVs and radio stations—but power/cell was out—folks may not have gotten the news in time. Hopefully services in Hawaii and across the US rethink their warning plans after this.
The AT1 holders of $17bn of CS bonds are fuming after UBS says it won’t need the $10bn state support for its rescue deal of CS. The money was going to cover losses it would incur from the takeover. But if the backstop wasn’t necessary, then maybe those noteholders shouldn’t have been wiped out, or so they say. It comes down to whether this was a liquidity issue or an asset/capital depletion issue. Given that the rescue money was not directly tied to the note holders, it will be a long road in court.
I loved the BBG article about bringing back formal lunch to woo back office workers. I learned that since 1962, French employees have received meal vouchers as part of their compensation. They can buy a meal at a restaurant up to 19 euros, and employers/employees split the cost about 50/50. Imagine the trading desk at your favorite bank….popping out for a sit-down, white napkin lunch and a glass of vino. I remember in Italy how kids and their parents would come home for lunch and a nap before heading back out to school and work. Never going to happen in the US, but it’s a funny thought. Now back to your salad in a bowl at your desk…
