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Nasdaq falls to 6-week low as rising bond yields weigh on ‘Magnificent 7’ stocks
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U.S. stocks traded lower for a third straight day on Thursday as rising bond yields spurred weakness in some of the so-called Magnificent Seven megacap stocks, helping to drive the Nasdaq to a six-week low.

How are stocks trading
- The S&P 500
  SPX
  was down 2 points, or 0.1%, to 4,401.
- The Dow Jones Industrial Average
  DJIA
  shed 42 points, or 0.1%, to 34,725.
- The Nasdaq Composite
  COMP
  fell by 46 points, or 0.3%, to 13,428.
The Dow and S&P 500 were on track to extend a losing streak to a third straight session as major indexes headed for another week in the red. The S&P 500 hasn’t fallen for three weeks in a row since February, FactSet data show.
What’s driving markets

Bonds have resumed command of the stock market of late as higher yields lash shares of megacap technology stocks, undermining their status as the undisputed market leaders.

Long-dated Treasury yields continued to rise Thursday, with the 10-year yield
BX:TMUBMUSD10Y
touching its highest level since the 2008 financial crisis, rising north of 4.31%. Bond yields move inversely to prices.

Rising yields helped heap more pressure on shares of some of this year’s highflying tech stocks, including Tesla Inc.
TSLA,
-0.34%,
Apple Inc.
AAPL,
-0.91%
and Microsoft Corp.
MSFT,
-0.01%

The elite group of megacap tech stocks which also includes Amazon.com Inc., Meta Platforms Corp.
META,
-0.24%
and Alphabet Inc.’s Class A
GOOGL,
+2.42%
and Class C
GOOG,
+2.48%
shares has been credited with driving much of the Nasdaq Composite’s nearly 30% run-up year-to-date. But their market dominance has faded in recent weeks as investors have favored other cyclical sectors like energy and materials stocks. Those two sectors were the best performers on the S&P 500 on Thursday.

“That’s a theme that’s been bubbling up here over the last three to four weeks, but there’s more of an exclamation point on it now,” said David Keller, chief market strategist at Stockcharts.com, during a phone interview with MarketWatch.

“First you had Microsoft and Apple breaking down a few weeks ago, now you’re getting Meta breaking below its 50-day moving average.”

Keller added that rising bond yields tend to have a bigger impact on growth stocks like technology names, while sectors like energy are more resilient.

“Energy can do just fine in a rising rate environment. energy and materials should probably do better in a relative basis,” he said.

Minutes from the Federal Reserve’s July meeting released Wednesday afternoon were being blamed for the latest leg higher in global bond yields. They showed that Fed policy makers could continue raising interest rates amid concerns that inflation could reaccelerate, potentially pushing bond yields even higher.

“It’s really uncertain where terminal interest rates will land given the economy isn’t giving us a decisive picture of being too strong or too weak. It’s keeping the window open for more rate hikes potentially,” said Mohannad Aama, a portfolio manager at Beam Capital Management, during a phone interview with MarketWatch.

Corporate earnings were also in focus as investors received results from Cisco Systems
CSCO,
+4.06%
and retail giant Walmart Inc.
WMT,
-1.74%.
Cisco reported strong quarterly results after Wednesday’s close. Walmart also reported stronger than expected earnings, helping to offset some concerns about the strength of the consumer spurred by Target Corp.’s
TGT,
+1.94%
lackluster earnings and guidance from Wednesday.

Shares of Cisco rose 2.6%, while Walmart shares turned lower, down 1.2%.

Economic updates released Thursday helped support the notion that the U.S. economy is growing at a faster pace than economists had expected, potentially complicating the Fed’s efforts to tamp down inflation.

First-time jobless-benefit claims fell by 11,000 to 239,000 last week, a sign that layoffs in the U.S. labor market remain low. The Philadelphia Fed factory index also shot higher to 12 in August, up from negative 13.5 during the prior month, a sign that manufacturers in the U.S. could be exiting a slump.

Companies in focus

Hawaiian Electric Industries Inc.
HE,
-15.24%
shares fell after The Wall Street Journal reported that the utility has engaged in talks with restructuring advisers to consider its next steps after the deadly Maui wildfires.

Shares of Ball Corp.
BALL,
+3.41%
rose 3% after agreeing to sell its aerospace unit to BAE Systems for $5.5 billion.

Chesapeake Energy Corp.
CHK,
+6.03%
will replace Mercury Systems Inc.
MRCY,
+2.99%
on the S&P MidCap 400, S&P Dow Jones Indices said on Wednesday. Shares of Chesapeake were up 6%.

Shares of Cigna Group
CI,
-7.10%
and CVS Health
CVS,
-8.89%
dropped following a report that a major nonprofit health insurer was preparing to shun the pharmacy-benefit industry.
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August 17, 2023
Russia hikes interest rates by 3.5 percentage points

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Responding to a rapidly deteriorating ruble, the Bank of Russia hiked its key interest rate on Tuesday by 3.5 percentage points to 12%.

The Bank of Russia said steady growth in domestic demand was surpassing the capacity to expand output.

At the same time, elevated demand for imports has impacted the ruble.

“Consequently,…

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August 15, 2023
Donald Trump indicted in Georgia election-interference case

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Former President Donald Trump was criminally indicted by a grand jury in Georgia’s Fulton County on Monday night in connection with a probe into his efforts to overturn the state’s results in the 2020 presidential election.

The 41-count indictment against Trump and 18 of his associates, including Trump attorney Rudy Giuliani, then-White House chief of staff Mark Meadows and Trump adviser John Eastman, was handed to a judge in Atlanta around 9 p.m. Eastern after a daylong session by the Fulton County grand jury, and the details…

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August 14, 2023
Russian ruble slides to 16-month low against U.S. dollar as capital flight, shrinking trade surplus bite

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The Russian ruble plunged to its lowest level against the U.S. dollar in more than 16 months on Monday, as blowback related to President Vladimir Putin’s bloody invasion of Ukraine continued to weigh on the currency.

The U.S. dollar
USDRUB,
+2.17%
surged to 101.74 rubles on Monday, according to FactSet data. That’s the weakest level for the Russian currency since March 28, 2022. Since the start of the year, the dollar has gained more than 38% against the ruble, making the ruble one of the worst performing major emerging-market currencies of the year compared with the greenback.

Weakness in the ruble has intensified over the past week weeks, and just a few days ago the Russian central bank announced it would halt buying of foreign currency on the open market through the end of the year. Instead, it will rely on Russia’s National Wealth Fund’s largess to supply them. The decision was enacted with the intention of “reducing volatility” in financial markets. The central bank has also said it’s launching a digital-ruble pilot program.

Economists, including Konstantin Sonin, a political economist at the University of Chicago, have blamed capital flight and falling budget revenues (due to lower oil and gas income and tax revenue) for the ruble’s troubles.

Data released by Russia’s central bank last week showed Russia’s current-account surplus has shrunk markedly during the first seven months of the year to an estimated $25.2 billion, compared with $165.4 billion during the same period in 2022. The central bank blamed the decline on a shrinking trade surplus caused by the drop in crude oil prices since the first half of 2022.

The Bank of Russia, the country’s central bank, has attempted to shore up the ruble with little benefit. Last month, the central bank hiked interest rates by 100 basis points, the first increase since before Putin ordered the invasion of neighbor Ukraine in February 2022. It hinted that more hikes were possible.

A weak ruble was one reason for the hike, as the weak currency has caused inflation to accelerate.

While the ruble remains weak, it’s still holding above its lows around 130 to the dollar seen in March 2022, weeks after the West imposed a first round of sanctions on Moscow following the invasion of Ukraine, which has morphed into a bloody stalemate with no end in sight.

The annual inflation rate rose to 4.5% in July from 3.25%, but economists at Goldman Sachs warned in a note earlier this month that inflation will likely head above the bank’s target again.

“With continuing loose fiscal policy, we expect inflation to continue to rise throughout the year to +7.0% yoy [year-over-year] in December, above the CBR’s July inflation forecast range of +5.0% – +6.5%,” said a team of economists led by Kevin Daly.

Russian officials have blamed the ruble’s latest bout of weakness on the central bank. Oreshkin Maxim, Putin’s economic aide, wrote in an editorial published in state media outlet Tass on Monday, that “loose monetary policy” was to blame for the weak ruble and urged action on that front.

“The Central Bank has all the necessary tools to normalize the situation in the near future and ensure that lending rates are reduced to sustainable levels,” he wrote.

Many economists and currency strategists expect the ruble’s slide to continue. However, a recent rebound in global crude-oil prices is leading to a modestly improved outlook.

In the U.S., West Texas Intermediate crude for September settled at $84.40 a barrel on Wednesday, its highest level of 2023, according to FactSet data. That reflects a wider trend of rising energy prices globally. However, prices remain well below the peak of roughly $130 a barrel from March 2022, when prices spiked in the immediate aftermath of the invasion.

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August 14, 2023
French rapier with Spanish blade

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French rapier with Spanish blade
Made around 1600. Steel handle, cut, drilled and engraved in the shape of a chain, blued and inlaid with gold. The blade itself is imported from Spain, Valencia, as evidenced by the inscription “VALENCIA ME FECIT” (“Made in Valencia”). In those days, Spain produced bladed weapons of the highest quality, the possession of which emphasized the status of the owner

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August 14, 2023
A stumbling stock market faces a crucial summer test. Here’s what will decide the bull’s fate.

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Call it the end-of-summer blues.

History shows that things can get ugly — and volatile — for the U.S. stock market in August and September. So a rocky start to the month shouldn’t be a big surprise. Indeed, even bulls might pine for some near-term consolidation after a torrid run that saw the S&P 500 index
SPX
rally nearly 20% over the first seven months of 2023. Through Friday’s close, the index is still up nearly 25% from its bear-market closing low of 3,577.03 hit on Oct. 12.

But what would send the 2023 rally decisively off the rails?

To answer that question, it helps to think about what has been driving the rally. Mark Hackett, chief of investment research at Nationwide, argues that the rally has largely been about fears that never materialized.

“I would say about 90% of the move that we’ve seen over the last 10 months has really been a walking back from the ledge of fear,” Hackett told MarketWatch, in a phone interview.

The October 2022 lows came as the Federal Reserve was hiking the fed-funds rate in outsize 75 basis point increments, inflation was just coming off its June peak last year above 9% and expectations for an imminent recession, or “hard landing,” were running hot.

Tom Essaye, founder of Sevens Report Research, contends the rally has been built on three pillars: The Fed is now seen by many investors as likely finished, or nearly finished, raising interest rates; the economy appears set to possibly avert a recession altogether, and inflation has remained largely on a downward path.

So trouble for the market would emerge if economic data were to falter and begin pointing to a hard landing, core inflation leveled off or bounced, or Fed Chair Jerome Powell signaled another rate hike is “definitely coming” and caused a further rise in Treasury yields.

“This scenario would essentially undermine the three pillars of the rally, and as such investors should expect a substantial decline in stocks, even considering the recent pullback,” Essaye said in a note last week. “In fact, a decline of much more than 10% would be likely in this scenario, as it would undermine most of the rationale for the gains in stocks since June (and perhaps all of 2023).”

That scenario has yet to materialize.

The year-over-year rate of inflation as measured by the U.S. consumer price index rose to 3.2% in July from 3% in June, data showed last week. But the core rate, which strips out food and energy, slowed to 4.7% from 4.8%. The July producer price index, a measure of costs at the wholesale level, came in a touch stronger than expected, but didn’t change investor expectations for the Federal Reserve to leave rates unchanged when policy makers next meet in September.

Policy makers will see another round of jobs data, including the August employment report, and inflation figures before that meeting.

Meanwhile, a jump in Treasury yields, with the rate on the 10-year note pushing back above 4.15% after hitting a 2023 high near 4.2% earlier this month, is getting much of the blame for continued softness in the stock market. Rising yields can make Treasurys look more attractive than other assets and also raise the cost of financing for companies.

The S&P 500 edged down 0.3% last week, suffering its first back-to-back weekly decline since May. The large-cap benchmark is down 2.7% so far in August, trimming its year-to-date gain to 16.3%. The Dow Jones Industrial Average
DJIA
rose 0.6%, while the Nasdaq Composite
COMP
shed 1.9%.

A lack of obvious near-term catalysts could set the stage for the market to further struggle. A light week lies ahead for U.S. economic data, featuring July retail sales on Monday and the release of the minutes of the Fed’s July meeting on Wednesday.

A slew of major retailers are set to deliver results as the second quarter earnings reporting season enters its final stretch.

Nationwide’s Hackett said the market setup coming into August was nearly a mirror image of October’s gloomfest. Hedge funds and other large investors are no longer betting against the market, while longtime bears and pessimistic economists are throwing in the towel and issuing mea culpas.

Stocks have rallied since late last year as fears priced into the market didn’t materialize, but now that dynamic is gone.

Related: S&P 500 has a new record high 2023 price target. Here’s a look at Wall Street’s official stock-market outlook.

Just as overwhelming pessimism set the stage for the market rally, widespread optimism over a “Goldilocks” scenario of falling inflation, a tame Fed and solid economic growth could eventually spell trouble for the bulls, Hackett said. Expectations don’t yet appear that extreme, but bear watching, he said.

Meanwhile, investors also face seasonal concerns. August is historically a middling month for the S&P 500, producing an average gain of 0.67% based on data going back to 1928, according to Dow Jones Market Data. That makes August the fifth-worst performing month for the S&P 500. September is the worst performing month, producing an average downturn of 1.1%.

For the Dow Jones Industrial Average, August has seen an average return of negative 0.8% since 1986, making it the worst performing month for the blue-chip gauge. In the decades before 1986, August was the blue-chip gauge’s best month.

Mark Hulbert: August used to be the best month for the stock market. Then it became the worst.

And then there’s volatility.

Going back to 1990, the Cboe Volatility Index
VX00,
-4.91%,
known as the VIX, has seen its yearly peak most often in January (six times), followed by August and October at five times each, noted Jessica Rabe, co-founder of DataTrek Research, in a note last week.

By that measure, investors are now in the middle of one of the most volatile months of the year with still another to come in October.

“U.S. equities tend to outperform during calmer environments, so it makes sense that they rallied in July, but are struggling so far in August,” Rabe said. “The upshot: seasonal trends say U.S. equities could prove whippy through October until quieting down during the last two months of the year.”

Hackett doesn’t expect the bull market to come off the rails, but sees scope for some near-term consolidation that will likely prove healthy over the long run.

“It’s something that you don’t want to try to be too cute with because I don’t see the market as being really susceptible to a significant period of pain. I think it’s just a pretty natural, pretty healthy consolidation phase,” he said.

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August 13, 2023
Inflation could rebound later this year. And that might be a good thing.

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U.S. inflation has slowed down significantly over the past few months, but it faces risks of reacceleration in the fourth quarter, or next year, some analysts are warning.

Data released Thursday showed U.S. consumer prices rose a mild 0.2% in July, while the 12-month rate of inflation edged up to 3.2% from 3% in the prior month, the first annual-rate increase in 13 months, the Labor Department said on Thursday. However, the so-called core rate of inflation, which omits food and energy prices, saw its yearly rate of increase slow to 4.7% from 4.8%, the slowest in almost two years.

On Friday the U.S. producer-price index showed a July rise of 0.3%, up from a revised flat reading in June, and the core PPI rose 0.2 in July, up from a 0.1% gain in the prior month.

“We could very easily see a reacceleration of inflation next year,” as base effects may soon work against inflation numbers, said Kathryn Rooney Vera, chief market analyst at StoneX.

If the inflation rate in the comparable period of the previous year was very low, even just a small monthly increase in CPI or PPI in the current year will render a high inflation rate now and vice-versa.

U.S. inflation accelerated aggressively in the first half of 2022, before price rises slowed in the second half. In June 2022, the annual consumer-price inflation rate peaked at 9.1%; it thereafter started to fall.

The most challenging part of combating inflation was not slowing the yearly consumer inflation rate from 9% to 3% but lowering the yearly inflation rate for core personal consumption expenditures, or core PCE, to 2% from 4.1% in June, noted Rooney Vera of StoneX.

PCE is said to be U.S. central bankers’ preferred inflation metric.

Julian Brigden, co-founder and president of Macro Intelligence 2 Partners, echoed the point. The idea that inflation is defeated is “ultimately wrong,” said Brigden. There are risks of upside surprise for inflation in the fourth quarter, noted Brigden.

“Goods inflation has fallen, food inflation has fallen, and energy inflation most materially has fallen. All of those [base] effects start to drop out in the not-too-distant future,” said Bridgden.

Meanwhile, the U.S. economy remains resilient, with unemployment numbers relatively low, supporting an elevated service-sector inflation rate. The Federal Reserve Bank of Atlanta’s real-time GDP tool forecasts the U.S. economy is growing at a 4.1% rate in the third quarter.

“In a service-based economy based on consumption, with a core PCE that’s overwhelmingly driven by service-sector inflation and this economy could potentially grow in the third quarter by 4%, with real wages positive and unemployment at 3.5%, how do we expect service-sector inflation to drop?” said Rooney Vera. “So the Fed has to make a tough choice: Are they targeting 2% inflation or are they not?”

See: Fed has ‘more work to do’ to get inflation back down, Daly says

Also read: Worker pay at center of Fed’s inflation fight

Federal Reserve chief Jerome Powell said in July that it appeared unlikely inflation would get back to the U.S. central bank’s long-term 2% target before 2025.

“I think it’s actually better off if we see some inflation,” according to Melissa Brown, global head of applied research at Qontigo. “Given the economic numbers and the employment numbers, I think to see inflation really come down, it probably is going to suggest a recession.”

Earlier this year an elevated inflation rate made it difficult for companies to raise prices enough to offset their own rising costs, especially while the Fed was raising borrowing rates. But “even if we see some inflation going into the fourth quarter, that actually could be good. We would switch from this being bad inflation to being good inflation, which just means that the economy is strong enough to sustain higher inflation,” said Brown.

U.S. stock indexes traded mixed on Friday. The Dow Jones Industrial Average
DJIA
gained 0.4%, and the S&P 500
SPX
was unchanged. The Nasdaq Composite
COMP
fell 0.5%.

Read on:

Want companies to lower their prices? Stop buying stuff from them.

‘Greedflation’ is replacing inflation as companies raise prices for bigger profits, report finds

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August 13, 2023
Inflation could rebound later this year. And that might be a good thing.

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U.S. inflation has slowed down significantly over the past few months, but it faces risks of reacceleration in the fourth quarter, or next year, some analysts are warning.

Data released Thursday showed U.S. consumer prices rose a mild 0.2% in July, while the 12-month rate of inflation edged up to 3.2% from 3% in the prior month, the first annual-rate increase in 13 months, the Labor Department said on Thursday. However, the so-called core rate of inflation, which omits food and energy prices, saw its yearly rate of increase slow to 4.7% from 4.8%, the slowest in almost two years.

On Friday the U.S. producer-price index showed a July rise of 0.3%, up from a revised flat reading in June, and the core PPI rose 0.2 in July, up from a 0.1% gain in the prior month.

“We could very easily see a reacceleration of inflation next year,” as base effects may soon work against inflation numbers, said Kathryn Rooney Vera, chief market analyst at StoneX.

If the inflation rate in the comparable period of the previous year was very low, even just a small monthly increase in CPI or PPI in the current year will render a high inflation rate now and vice-versa.

U.S. inflation accelerated aggressively in the first half of 2022, before price rises slowed in the second half. In June 2022, the annual consumer-price inflation rate peaked at 9.1%; it thereafter started to fall.

The most challenging part of combating inflation was not slowing the yearly consumer inflation rate from 9% to 3% but lowering the yearly inflation rate for core personal consumption expenditures, or core PCE, to 2% from 4.1% in June, noted Rooney Vera of StoneX.

PCE is said to be U.S. central bankers’ preferred inflation metric.

Julian Brigden, co-founder and president of Macro Intelligence 2 Partners, echoed the point. The idea that inflation is defeated is “ultimately wrong,” said Brigden. There are risks of upside surprise for inflation in the fourth quarter, noted Brigden.

“Goods inflation has fallen, food inflation has fallen, and energy inflation most materially has fallen. All of those [base] effects start to drop out in the not-too-distant future,” said Bridgden.

Meanwhile, the U.S. economy remains resilient, with unemployment numbers relatively low, supporting an elevated service-sector inflation rate. The Federal Reserve Bank of Atlanta’s real-time GDP tool forecasts the U.S. economy is growing at a 4.1% rate in the third quarter.

“In a service-based economy based on consumption, with a core PCE that’s overwhelmingly driven by service-sector inflation and this economy could potentially grow in the third quarter by 4%, with real wages positive and unemployment at 3.5%, how do we expect service-sector inflation to drop?” said Rooney Vera. “So the Fed has to make a tough choice: Are they targeting 2% inflation or are they not?”

See: Fed has ‘more work to do’ to get inflation back down, Daly says

Also read: Worker pay at center of Fed’s inflation fight

Federal Reserve chief Jerome Powell said in July that it appeared unlikely inflation would get back to the U.S. central bank’s long-term 2% target before 2025.

“I think it’s actually better off if we see some inflation,” according to Melissa Brown, global head of applied research at Qontigo. “Given the economic numbers and the employment numbers, I think to see inflation really come down, it probably is going to suggest a recession.”

Earlier this year an elevated inflation rate made it difficult for companies to raise prices enough to offset their own rising costs, especially while the Fed was raising borrowing rates. But “even if we see some inflation going into the fourth quarter, that actually could be good. We would switch from this being bad inflation to being good inflation, which just means that the economy is strong enough to sustain higher inflation,” said Brown.

U.S. stock indexes traded mixed on Friday. The Dow Jones Industrial Average
DJIA
gained 0.4%, and the S&P 500
SPX
was unchanged. The Nasdaq Composite
COMP
fell 0.5%.

Read on:

Want companies to lower their prices? Stop buying stuff from them.

‘Greedflation’ is replacing inflation as companies raise prices for bigger profits, report finds

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August 13, 2023
David Weiss named special counsel in Hunter Biden probe

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U.S. Attorney General Merrick Garland on Friday named David Weiss as a special counsel in the investigation into President Joe Biden’s son Hunter.

Weiss is the U.S. attorney in Delaware. Speaking at the Justice Department, Garland said that Weiss informed him that the probe had “reached a stage at which he should continue his work as a special counsel,” and asked to be appointed.

The move deepens the investigation into Hunter Biden ahead of the 2024 presidential election, and comes as the Justice Department is also investigating President Biden’s main 2024 rival, Donald Trump.

Hunter Biden’s conduct, including foreign business dealings and taxes, has been under scrutiny. In late July, the younger Biden’s plea deal on two tax charges fell apart after the federal judge hearing his case expressed concern over a related agreement on a more serious gun-possession charge.

See: Hunter Biden plea deal appears to fall through as federal judge expresses new concern about future investigation

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August 11, 2023
‘We are heartsick’: Death toll from Maui wildfires rises to at least 53

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LAHAINA, Hawaii — A search of the wildfire devastation on the Hawaiian island of Maui on Thursday revealed a wasteland of obliterated neighborhoods and landmarks charred beyond recognition, as the death toll rose to at least 53 and survivors told harrowing tales of narrow escapes with only the clothes on their backs.

A flyover of historic Lahaina showed entire neighborhoods that had been a vibrant vision of color and island life reduced to gray ash. Block after block was nothing but rubble and blackened foundations, including along famous Front Street, where tourists shopped and dined just days ago. Boats in the harbor were scorched, and smoke hovered over the town, which dates to the 1700s and is the biggest community on the island’s west side.

“Lahaina, with a few rare exceptions, has been burned down,” Hawaii Gov. Josh Green told The Associated Press. More than 1,000 structures were destroyed by fires that were still burning, he said.

The death toll will likely rise as search and rescue operations continue, Green added, and officials expect it will become the state’s deadliest natural disaster since a 1961 tsunami killed 61 people on the Big Island.

“We are heartsick,” Green said.

Tiffany Kidder Winn’s gift store Whaler’s Locker, which is one of the town’s oldest shops, was among the many businesses destroyed. As she assessed the damage Thursday, she came upon a line of burned-out vehicles, some with charred bodies inside them.

“It looked like they were trying to get out, but were stuck in traffic and couldn’t get off Front Street,” she said. She later spotted a body leaning against a seawall.

Winn said the destruction was so widespread, “I couldn’t even tell where I was because all the landmarks were gone.”

Fueled by a dry summer and strong winds from a passing hurricane, the fire started Tuesday and took Maui by surprise, racing through parched growth covering the island and then feasting on homes and anything else that lay in its path.

The official death toll of 53 as of Thursday makes this the deadliest U.S. wildfire since the 2018 Camp Fire in California, which killed at least 85 people and laid waste to the town of Paradise. The Hawaii toll could rise, though, as rescuers reach parts of the island that had been inaccessible due to the three ongoing fires, including the one in Lahaina that was 80% contained on Thursday, according to a Maui County news release. More than 270 structures have been damaged or destroyed, and dozens of people have been injured, including some critically.

“We are still in life preservation mode. Search and rescue is still a primary concern,” said Adam Weintraub, a spokesperson for Hawaii Emergency Management Agency.

Search and rescue teams still won’t be able to access certain areas until the fire lines are secure and they’re sure they’ll be able to get to those areas safely, Weintraub added.

The flames left some people with mere minutes to act and led some to flee into the ocean. A Lahaina man, Bosco Bae, posted video on Facebook from Tuesday night that showed fire burning nearly every building on a street as sirens blared and windblown sparks raced by. Bae, who said he was one of the last people to leave the town, was evacuated to the island’s main airport and was waiting to be allowed to return home.

Marlon Vasquez, a 31-year-old cook from Guatemala who came to the U.S. in January 2022, said that when he heard the fire alarms, it was already too late to flee in his car.

“I opened the door and the fire was almost on top of us,” he told The Associated Press on Thursday from an evacuation center at a gymnasium. “We ran and ran. We ran almost the whole night and into the next day, because the fire didn’t stop.”

Vasquez and his brother Eduardo escaped via roads that were clogged with vehicles full of people. The smoke was so toxic that he vomited. He said he’s not sure his roommates and neighbors made it to safety.

Lahaina residents Kamuela Kawaakoa and Iiulia Yasso described their harrowing escape under smoke-filled skies. The couple and their 6-year-old son got back to their apartment after a quick dash to the supermarket for water, and only had time to grab a change of clothes and run as the bushes around them caught fire.

“We barely made it out,” Kawaakoa, 34, said at an evacuation shelter, still unsure if anything was left of their apartment.

As the family fled, they called 911 when they saw the Hale Mahaolu senior living facility across the road erupt in flames.

Chelsey Vierra’s grandmother, Louise Abihai, was living at Hale Mahaolu, and the family doesn’t know if she got out. “She doesn’t have a phone. She’s 97 years old,” Vierra said Thursday. “She can walk. She is strong.”

Relatives are monitoring shelter lists and calling the hospital. “We got to find our loved one, but there’s no communication here,” said Vierra, who fled the flames. “We don’t know who to ask about where she went.”

Communications have been spotty on the island, with 911, landline and cellular service failing at times. Power was also out in parts of Maui.

Tourists were advised to stay away, and about 11,000 flew out of Maui on Wednesday with at least 1,500 more expected to leave Thursday, according to Ed Sniffen, state transportation director. Officials prepared the Hawaii Convention Center in Honolulu to take in the thousands who have been displaced.

In coastal Kihei, southeast of Lahaina, wide swaths of ground glowed red with embers Wednesday night as flames continued to chew through trees and buildings. Gusty winds blew sparks over a black and orange patchwork of charred earth and still-crackling hot spots.

The fires were fanned by strong winds from Hurricane Dora passing far to the south. It’s the latest in a series of disasters caused by extreme weather around the globe this summer. Experts say climate change is increasing the likelihood of such events.

Wildfires aren’t unusual in Hawaii, but the weather of the past few weeks created the fuel for a devastating blaze and, once ignited, the high winds created the disaster, said Thomas Smith an associate professor in Environmental Geography at the London School of Economics and Political Science.

Hawaii’s Big Island is also currently seeing blazes, Mayor Mitch Roth said, although there were no reports of injuries or destroyed homes there.

With communications hampered, it was difficult for many to check in with friends and family members. Some people were posting messages on social media. Maui officials opened a Family Assistance Center at the Kahului Community Center for people looking for the missing.

Maj. Gen. Kenneth Hara, of the Hawaii State Department of Defense, told reporters Wednesday night that officials were working to get communications restored, distribute water and possibly add law enforcement personnel. He said National Guard helicopters had dropped 150,000 gallons of water on the fires.

The Coast Guard said it rescued 14 people who jumped into the water to escape the flames and smoke.

Maui County Mayor Richard Bissen Jr. said Wednesday that officials hadn’t yet begun investigating the immediate cause of the fires.

President Joe Biden declared a major disaster on Maui. Traveling in Utah on Thursday, he pledged that the federal response will ensure that “anyone who’s lost a loved one, or whose home has been damaged or destroyed, is going to get help immediately.” Biden promised to streamline requests for assistance and said the Federal Emergency Management Agency was “surging emergency personnel” on the island.

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August 10, 2023
‘It was apocalyptic’: At least 6 killed in devastating wildfires on Hawaiian island of Maui

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KAHULUI, Hawaii — A wildfire tore through the heart of the Hawaiian island of Maui in darkness Wednesday, reducing much of a historic town to ash and forcing people to jump into the ocean to flee the flames. At least six people died, dozens were wounded and 271 structures were damaged or destroyed.

Flyovers Wednesday of the town of Lahaina by US Civil Air Patrol and the Maui Fire Department showed the extend of the devestation, said Mahina Martin, a spokesperson for Maui County.

The fires continued to burn Wednesday afternoon, fueled by strong winds from Hurricane Dora as it passed well south of the Hawaiian islands. Officials feared the death toll could rise.

As winds diminished somewhat, some aircraft resumed flights, enabling pilots to view the full scope of the devastation. Aerial video from coastal Lahaina showed dozens of homes and businesses flattened, including on Front Street, where tourists gathered to shop and dine. Smoking heaps of rubble lay piled high next to the waterfront, boats in the harbor were scorched, and gray smoke hovered over the leafless skeletons of charred trees.

“It’s horrifying. I’ve flown here 52 years and I’ve never seen anything come close to that,” said Richard Olsten, a helicopter pilot for a tour company. “We had tears in our eyes, the other pilots on board and the mechanics, and me.

Acting Gov. Sylvia Luke said the flames “wiped out communities,” and urged travelers to stay away.

“This is not a safe place to be,” she said.

The exact cause of the blaze couldn’t be determined, but a number of factors, including high winds, low humidity and dry vegetation, likely contributed, said Maj. Gen. Kenneth Hara, adjutant general for Hawaii State Department of Defense. Experts also said climate change is increasing the likelihood of more extreme weather.

“Climate change in many parts of the world is increasing vegetation dryness, in large part because temperatures are hotter,” said Erica Fleishman, director of the Oregon Climate Change Research Institute at Oregon State University. “Even if you have the same amount of precipitation, if you have higher temperatures, things dry out faster.”

The wind-driven conflagration swept into the area with alarming speed and ferocity, blazing through intersections and leaping across wooden buildings in the Lahaina town center that dates to the 1700s and is on the National Register of Historic Places.

“It was apocalyptic from what they explained,” Tiare Lawrence said of 14 cousins and uncles who fled the town and took refuge at her home in Pukalani, east of Lahaina.

Lahaina resident Keʻeaumoku Kapu was tying down loose objects in the wind at the cultural center he runs in Lahaina when his wife showed up Tuesday afternoon and told him they needed to evacuate. “Right at that time, things got crazy, the wind started picking up,” said Kapu, who added that they got out “in the nick of time.”

Two blocks away they saw fire and billowing smoke. Kapu, his wife and a friend jumped into his pickup truck. “By the time we turned around, our building was on fire,” he said. “It was that quick.”

Crews were battling three fires in Maui: in Lahaina, south Maui’s Kihei area and the mountainous, inland communities known as Upcountry, said Mahina Martin, spokesperson for Maui County.

In the upcountry Kula area, at least two homes were destroyed Tuesday in a fire that engulfed about 1.7 square miles, County of Maui Mayor Richard Bissen Jr. said.

There have been no reports of injuries or homes lost to three wildfires burning on Hawaii’s Big Island, Mayor Mitch Roth said Wednesday. Firefighters did extinguish a few roof fires.

The National Weather Service said Hurricane Dora, which was passing to the south of the island chain at a safe distance of 500 miles, was partly to blame for gusts above 60 mph that knocked out power, rattled homes and grounded firefighting helicopters on Maui.

The Coast Guard on Tuesday rescued 14 people, including two children, who had fled into the ocean to escape the fire and smoky conditions, the county said in a statement.

Fires killed six people on Maui, but search and rescue operations continued and the number could rise, Bissen said.

Six patients were flown from Maui to the island of Oahu on Tuesday night, said Speedy Bailey, regional director for Hawaii Life Flight, an air-ambulance company. Three of them had critical burns and were taken to Straub Medical Center’s burn unit, he said. The others were taken to other Honolulu hospitals. At least 20 patients were taken to Maui Memorial Medical Center, he said.

Authorities said earlier Wednesday that a firefighter in Maui was hospitalized in stable condition after inhaling smoke.

Luke issued an emergency proclamation on behalf of Gov. Josh Green, who is traveling, and activated the Hawaii National Guard to assist.

“Certain parts of Maui, we have shelters that are overrun,” Luke said. “We have resources that are being taxed.”

President Joe Biden said in a statement Wednesday evening that he has ordered “all available Federal assets” to help Hawaii. The president said the Coast Guard and Navy are supporting response and rescue efforts, while the Marines are providing Black Hawk helicopters to fight the fires.

There was no count available for the number of people who have evacuated, but officials said there were four shelters open housing 2,100 people.

Kahului Airport, the main airport in Maui, was sheltering 2,000 travelers whose flights were canceled or who recently arrived on the island, the county said. Officials were preparing the Hawaii Convention Center in Honolulu to take in up to 4,000 displaced tourists and locals.

“Local people have lost everything,” said James Tokioka, director of the Department of Business, Economic Development and Tourism. “They’ve lost their house, they’ve lost their animals.”

Kapu, the owner of the Na Aikane o Maui cultural center in Lahaina, said he and his wife didn’t have time to pack up anything before being forced to flee. “We had years and years of research material, artifacts,” he said.

Alan Dickar said he’s not sure what remains of his Vintage European Posters gallery, which was a fixture on Front Street in Lahaina for 23 years. Before evacuating with three friends and two cats, Dickar recorded video of flames engulfing the main strip of shops and restaurants frequented by tourists.

“Every significant thing I owned burned down today,” he said.

Lahaina is often thought of as just a Maui tourist town, Lawrence said, but “we have a very strong Hawaiian community.”

“I’m just heartbroken. Everywhere, our memories,” she said. “Everyone’s homes. Everyone’s lives have tragically changed in the last 12 hours.”

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August 9, 2023
German exports to Russia’s neighbors have surged

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European Union countries are meant to have placed an array of sanctions on Russia, preventing exports of a host of goods and services, ranging from high-end machinery to luxury cars, to the country in the wake of its unprovoked 2022 invasion of neighboring Ukraine.

And official data do show that EU exports to Russia have slumped, by 31% during the first five months of the year.

But, curiously, exports from EU countries to Russia’s neighbors have surged.

Take Germany, for instance, whose exports to Kazakhstan are up 105% on a year-over-year basis. German exports to Central Asia and Belarus are up 75%.

IIF

“Not all of this stuff is going to Russia. But a lot of it probably is,” tweeted Robin Brooks, chief economist at the Institute of International Finance, who produced the chart.

And it’s not just Germany. Sweden also has seen a surge of exports to Kazakhstan.

Meanwhile, Germany, Poland, the Czech Republic and Hungary have boosted exports to Kyrgyzstan.

Read on:

Why the exodus of Western companies out of Russia market after Ukraine invasion hasn’t fully materialized

Yale’s Sonnenfeld locked in heated clash over integrity of Swiss research into companies’ Russia retreat

How enforcement loopholes are creating an unfair playing field for U.S. companies that exited Russia over Ukraine war

Far from Putin’s claims of resilience, Russian economy is being hammered by sanctions and exodus of international companies, Yale report finds

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August 8, 2023
normal decisive superficial

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When the euro banknotes were 1st designed in 2002, they featured fictional bridges, so as not to cause a row amongst EU member countries. Ten years later an architect for the Dutch town of Spijkenisse claimed them all for the Netherlands by building them ALL on a single waterway

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August 7, 2023
U.S. stocks would be much lower if it wasn’t for ‘excessive’ government spending, Morgan Stanley’s Mike Wilson says

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U.S. stocks would be in much worse shape in 2023 if it wasn’t for “excessive” fiscal policy from the government and explosive money-supply growth in recent years.

That’s the latest take from Morgan Stanley’s Mike Wilson, the bank’s chief investment strategist who, as MarketWatch’s Steve Goldstein pointed out earlier, seems to never miss an opportunity to recall how wrong his market calls have been this year.

In his latest note, Wilson told clients and the financial press that excessive government spending has helped prop up the U.S. economy and markets to a degree that Wilson and his team failed to anticipate.

“Part of the reason we’ve found ourselves offside this year is that the fiscal impulse returned with a vengeance and remained quite strong in 2023 — something we didn’t factor into our forecasts,” Wilson said in the note.

In an accompanying chart, Wilson noted that fiscal spending looks particularly excessive when compared with the U.S. unemployment rate, which fell to 3.5% in July, according to data from the Department of Labor released on Friday.

MORGAN STANLEY

To be sure, Wilson was one of a select few on Wall Street to correctly anticipating last year’s inflation-driven selloff.

But heading into the New Year, he expected stocks would tumble to new lows during the first half of 2023.

And after hanging on to his bearish view for months in spite of a powerful rally in equities driven by the artificial intelligence craze and a surprisingly resilient U.S. economy, he’s recently taken the opportunity to reflect on why he got it wrong, while acknowledging the possibility that the rally could continue.

See: Morgan Stanley’s Mike Wilson admits ‘we were wrong’ about 2023 stock-market rally, but refuses to throw in the towel

See: Morgan Stanley’s Mike Wilson is warming to the U.S. stock-market rally. Here’s what would make him turn bullish.

It’s possible, even likely, that the government’s excessive spending could continue, at least until it comes time to raise the debt ceiling again in 2025.

Fitch Ratings last week cited projections for ballooning budget deficits for helping to inspire its decision to strip the U.S. of its AAA credit rating.

“The main takeaway for the equity market this year is that fiscal policy has allowed
the economy to grow faster than forecast, giving rise to the consensus view that the
risk of a recession has faded considerably. Furthermore, with the recent lifting of the debt ceiling until 2025, this aggressive fiscal spending could continue,” Wilson said.

The biggest problem with spending so much during good economic times, however, is that it limits Congress’s ability to act when another recession inevitably arrives.

That could create problems for corporate earnings and, by extension, stocks, down the road, Wilson said.

“If fiscal policy is showing such little constraint in good times, what happens to the deficit when the next recession arrives?”

U.S. stocks were trading higher early Monday after the S&P 500
SPX
logged its fourth straight day in the red on Friday, capping off the worst week for stocks since March. The index was up 0.5% in recent trade near 4,500, while the Nasdaq Composite
COMP
was 0.2% lower at 13,881.

The Dow Jones Industrial Average
DJIA,
which has surged higher over the past month as traders have favored some of this year’s market laggards, was up 300 points, or 0.9%, at 35,362.

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August 7, 2023
180 Life Sciences Announces an Agreement for a Clinical Pharmacology Study Testing a New Formulation of CBD for Enhanced Oral Uptake – World News Repo… – Medical Marijuana Program Connection

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/EIN News/ — PALO ALTO, Calif., Aug. 07, 2023 (GLOBE NEWSWIRE) — 180 Life Sciences Corp. (NASDAQ: ATNF) (“180 Life Sciences” or the “Company”), today announced that an agreement has been reached with Prof. Avi Domb of the Hebrew University, School of Pharmacy, and with Prof. Elyad Davidson, of Hadassah Hospital, to perform a clinical pharmacology (“Pharmacokinetic” or “PK”) study of the uptake of cannabidiol (CBD) in a formulation which can be delivered as a pill orally. The PK study will seek to determine how much CBD is taken up into the blood of volunteers.

While CBD preparations have previously been approved by the U.S. Food and Drug Administration (FDA) for rare forms of childhood epilepsy, a major problem in working with CBD is its low and unpredictable and variable uptake following the most convenient delivery form, by mouth, as CBD in oil. This has hampered progress and clinical trials seeking potential uses for CBD, such as for the treatment of pain, post-traumatic stress disorder (PTSD), head trauma, and more, where reports have suggested the possibility of benefits. To help try to solve this problem, Prof. Domb and colleagues have developed “ProNanoLipospheres” (PNL), a mixture of components available over-the-counter, which form little droplets and have been shown to be absorbed from the gastrointestinal tract into blood. The dosage form has been shown in preliminary testing in rats to…

Original Author Link click here to read complete story..

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August 7, 2023

The S&P 500 hasn’t seen a 2% daily drop in nearly 6 months. Does this mean a selloff is overdue?

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The U.S. stock market has been conspicuously calm for most of 2023, prompting some analysts to question whether investors might be overdue for a powerful jolt of volatility.

It’s been 113 trading sessions since the S&P 500 has seen a daily drop of 2% or more, the longest such stretch since Feb. 21, 2020, according to Dow Jones Market Data.

The last time the large-cap index fell by 2% or more through the close was Feb. 21, 2023, when the index dropped by 2% exactly. That was nearly six months ago.

Such subdued volatility is perhaps the most pertinent indication of just how much has changed for markets since 2022.

When measured by the total number of 2% swings in either direction, last year was the most volatile for U.S. stocks since 2009. The S&P 500 recorded 46 daily swings of 2% or more in either direction last year, compared with 55 in 2009, Dow Jones data show. Of those, roughly half were down days.

This quiet streak has been good for stocks: Since Feb. 21, the S&P 500 has gained nearly 13%, according to FactSet data. And as of Thursday, it was up more than 18% for the year.

But as August has gotten off to a rocky start, with the S&P 500 and Nasdaq Composite on track to finish lower for the first week of the month following a three-day streak of losses, some are wondering if the market might be overdue for a larger and perhaps more aggressive drop.

To the extent that the market’s past performance can tell investors anything useful about the future, historical data compiled by Dow Jones Market Data show that streaks of relative calm have endured for much longer in the not-too-distant past.

However, investors have often paid the price eventually.

The longest streak in recent memory without a 2% drop for the S&P 500 ended on Feb. 1, 2018 after 351 trading days — nearly 18 months. It encompassed all of 2017, a memorably tranquil year for markets that saw the Cboe Volatility Index fall to an all-time low in single-digit territory.

A few days later, stocks would see one of their biggest daily routs in years during the now-infamous “Volmageddon” episode on Feb. 5, 2018 when the Dow Jones Industrial Average fell by 1,175 points while the Cboe Volatility Index, otherwise known as the VIX, doubled, jumped by a record 20 points from 18.44 to a high of 38.40, FactSet data show.

At the time, it was the biggest daily point decline on record for the Dow. Data also show that the index has traded lower one year after the end of such streaks two out of five times.

Date Streak Ended	Length of Streak	6-Month Performance	1-Year Performance
10/08/2014	125	5.74%	2.26%
6/26/2015	179	-1.93%	-3.05%
02/01/2018	351	-0.31	-4.09%
10/09/2018	129	-0.07%	1.36%
02/21/2020	124	1.78%	17.05%

SOURCE: DOW JONES MARKET DATA

Ryan Detrick, chief market strategist at Carson Group, said stocks might be ripe for a larger pullback in August, although he acknowledged that streaks of low volatility have often persisted for much longer.

“While these periods of low volatility can increase the odds of some type of near-term pull back, these trends can last a while,” Detrick said during a phone interview with MarketWatch.

“We might be overdue for a modest 4% to 6% pullback here, but it makes sense that this low-volatility world we’ve been living in could have legs.”

Detrick noted that 2022 saw the biggest pullback for the S&P 500 since 2008 as the index fell 19.4%, according to FactSet data.

To be sure, the selloff in the bond market was even more intense, with many analysts describing it as the worst year for bonds in decades, if not in the history of modern financial markets.

“The whole apple cart got rocked last year,” he said.

Detrick also noted that August and September tend to be more volatile months for stocks.

“The odds are higher that we could see some seasonal volatility here,” he said. “August isn’t a great month for stocks, but it’s even worse when you’ve had a good year going into it,” he said.

U.S. stocks rebounded on Friday following the release of the Labor Department’s July jobs report. The S&P 500
SPX
was up 0.8% in recent trade, while the Nasdaq Composite
COMP
rose by 1%. The Dow
DJIA
was trading 256 points, or 0.7%, higher at 35,474.

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August 6, 2023

USA knocked out of Women’s World Cup after loss on penalties to Sweden

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MELBOURNE, Australia (AP) — Lina Hurtig’s converted her penalty and Sweden knocked the United States out of the World Cup 5-4 on penalties after a scoreless draw at the Women’s World Cup.

U.S. goalkeeper Alyssa Naeher fruitlessly argued she had saved Hurtig’s attempt, but it was ruled over the line. The stadium played Abba’s “Dancing Queen in the stadium as the Swedes celebrated.

The United States, which has a record four World Cup titles overall and was trying to win an unprecedented third consecutive tile, was eliminated in the Round of 16 for the first time in team history.

The Americans’ worst finish had been third place, three times.

It was the first match at this World Cup to go to extra time.

It was the was the fourth time a U.S. match at the World Cup went to extra time. All of the three previous matches went to penalties, including the 2011 final won by Japan. The U.S. won on penalties in a 2011 quarterfinal match against Brazil, and in the 1999 final at the final at the Rose Bowl against China.

Sweden knocked the United States out of the 2016 Olympics in the quarterfinals on penalties.

Sweden goes on to the quarterfinals to play Japan, the 2011 World Cup winner, which defeated Norway 3-1 on Saturday night.

Sweden has never won a major international tournament, either the World Cup or the Olympics. The closest the team has come is World Cup runner-up in 2003. They finished in third in the 1999, 2011 and 2019 editions, and won silver medals in the last two Olympics.

The Americans struggled through group play with just four goals in three matches. They were nearly eliminated last Tuesday by first-timers Portugal, but eked out a 0-0 draw to fall to second in their group for just the second time at a World Cup.

The Americans looked far better against Sweden, dominating possession and outshooting the Swedes 5-1 in the first half alone. Lindsey Horan’s first-half header hit the crossbar and a second-half blast was saved by goalkeeper Zecira Musovic, who had six saves in regulation.

Sweden won all three of their group games, including a 5-0 rout of Italy in its final group match. Coach Peter Gerhardsson made nine lineup changes for the match, resting his starters in anticipation of the United States.

It was tense from the opening whistle.

Naeher punched the ball away from a crowded goal on an early Sweden corner kick. Three of the Swedes’ goals against Italy came on set pieces.

Trinity Rodman’s shot from distance in the 18th minute was easily caught by Musovic, who stopped another chance by Rodman in the 27th.

Horan’s header off Andi Sullivan’s corner in the 34th hit the crossbar and skipped over the goal. Horan was on target in the 53rd minute but Musovic dove to push it wide. Horan crouched to the field in frustration while Musovic was swarmed by her teammates.

The United States was without Rose Lavelle, who picked up her second yellow card of the tournament in the group stage finale against Portugal and has to sit out against Sweden.

In Lavelle’s absence, U.S. coach Vlatko Andonovski started Emily Sonnett, who was making her first start for the team since 2022. The addition of Sonnett allowed Horan to move up higher in the midfield.

Sweden pressed in the final 10 minutes of regulation. Sofia Jakobsson, who came in as a substitute in the 81st minute, nearly scored in the 85th but Naeher managed to catch it for her first save of the tournament.

Neither Caroline Seger of Megan Rapinoe started the match, but Rapinoe came in as a sub for Alex Morgan in the first overtime period.

Seger, whose 235 appearances for Sweden are the most for any woman in Europe, was on the bench to start the match. The 38-year-old has been struggling with a calf problem all year and trained alone in the two days of practice leading into the showdown with the U.S.

Rapinoe, also 38, previously announced that this would be her last World Cup. She has taken on a smaller role for the Americans in her final tournament. She was a substitute in the United States’ first and third games of group play and didn’t get off the bench in the middle match. She made her 200th appearance for the national team at the World Cup.

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August 6, 2023
U.S. adds 187,000 jobs in July and points to hiring slowdown. Wages still high

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The numbers: The U.S. added a more modest 187,000 new jobs in July, perhaps a sign the economy is cooling enough to drive inflation lower and even stave off further increases in interest rates.

Employment growth has fallen below 200,000 two months in a row for the first time since the onset of the pandemic in 2020.

The unemployment rate, meanwhile, dipped to 3.5% from 3.6%, the government said Friday.

After the report, stocks rose and bond yields fell.

Senior officials at the Federal Reserve will decide whether to raise interest rates again in September after reviewing a handful of reports on jobs, wages and inflation.

A sign advertises job openings in Illinois. The economy created 187,000 jobs in July.

Scott Olson/Getty Images

Higher rates work to slow inflation by depressing the economy, but they also raise the risk of recession. The Fed is aiming to extinguish high inflation without triggering a downturn — what economists call a “soft landing.”

The good news? Inflation has slowed a bit faster than expected recently. Yet while the labor market appears to be cooling, a shortage of workers is keeping upward pressure on wages.

Wages rose 0.4% in July. The increase over the past 12 months was unchanged at 4.4%.

Fed officials want to see annual wage growth return to pre-pandemic levels of 3% or less.

The pace of hiring is also faster than the Fed would like. The economy probably only needs to add 100,000 jobs a month to absorb all the people entering the labor force in search of work, Fed officials said.

Key details: The increase in hiring in July was concentrated in just a handful of areas, mostly health care and social assistance.

Some 87,000 jobs — or 47% of July’s total — were created by medical providers and social programs.

Hiring also rose slightly in leisure and hospitality, finance, wholesale and government.

While the economy is still creating lots of new jobs, fewer industries are hiring. The percentage of firms adding jobs vs. the share reducing them fell close to a record low last month. That’s a sign the labor market is cooling off.

Hiring in June and May was also weaker than previously reported.

Job gains in June were reduced to 185,000 from 209,000, marking the smallest increase since the end of 2020.

The increase in employment in May was cut to 281,000 from 306,000.

Another sign of a softening labor market: The number of hours people work fell a tick to 34.3 and matched a post-pandemic low. Businesses tend to cut hours before resorting to layoffs when the economy slows.

The share of people working or looking for work, meanwhile, was unchanged at a post-pandemic high of 62.6%.

High labor-force participation can also help to reduce inflation. When more people are looking for work, companies don’t have to raise wages as much to obtain labor.

Big picture: Can the Fed really pull off a soft landing — something it’s only done once or twice since World War Two? Senior officials are increasingly convinced it’s doable.

The Fed economic staff recently dropped its forecast of a recession and a majority of Wall Street economists now say a downturn is unlikely in the next year.

The economy still isn’t out of danger, though. The Fed has raised interest rates to the highest level in a few decades and some key parts of the economy are suffering.

If progress on reducing inflation wanes and rates go even higher, the economy would be more vulnerable to a recession.

Looking ahead: “Today’s July jobs report is consistent with a soft landing in the U.S. economy,” said chief economist Gus Faucher of PNC Financial Services. “Job growth is gradually slowing to a more sustainable pace.”

“The July employment report should not change the Fed’s hawkish lean,” said Nationwide Chief Economist Kathy Bostjancic. “But officials will want to see the August employment report and the next two inflation monthly readings before deciding whether they can remain on hold or if further rate hikes are required to cool labor demand and inflationary pressures.”

Market reaction: The Dow Jones Industrial Average
DJIA
and S&P 500
SPX
were set to open higher in Friday trades. The yield on the 10-year Treasury BX:TMUBMUSD10Y fell to 4.1%.

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August 4, 2023
Service side of the economy slows slightly, ISM finds, but ‘sales have been steady’
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The numbers: A measure of business conditions for service sector companies like hotels, restaurants and hair salons slowed in July, but still signaled an expanding economy.

The service-sector index fell to 52.7% from 53.9% in the prior month.

That was a larger drop than economists predicted. Economists forecast the Institute for Supply Management’s survey to slow to 53.3%.
The index has been in expansionary territory for seven months in a row, however. Numbers above 50% indicate growth.

“I think we’re on solid footing right now. It’s just hard to see what might happen down the road,” said Anthony Nieves, chairman of the survey.

Key details:

The index of new orders dipped to 55.0% from 55.5%. “Sales have been steady,” a senior construction executive told ISM.

The production gauge fell 2.1 points to 57.1%

The employment barometer dropped 2.4 points to 50.7%

The prices-paid index, a measure of inflation, grew to 56.8% from 54.1% the prior month. “Supplier costs (are) not coming down as much as expected,” a wholesale trade executive told ISM.

Big picture: Demand for services has been strong in the aftermath of the pandemic. People’s desire to travel and go to restaurants has been a balancing force while the industrial side of the economy remains stuck.

Looking ahead: “Even though the risks of a recession may be easing, that doesn’t mean the economy is set to enjoy a strong performance over the second half of the year,” said Andrew Hunter, deputy chief U.S. economist at Capital Economics.

Market reaction: The Dow Jones Industrial Average
DJIA
and S&P 500
SPX
fell slightly in Thursday trades.
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August 3, 2023
What Fitch’s U.S. credit downgrade means for investors

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As you’ve probably heard by now, Fitch Ratings late Tuesday cut the U.S. federal government’s credit rating to AA+ from AAA.

Here’s a look at what it means for investors and markets:

What’s a credit rating?

A credit rating is an independent assessment of the ability of an organization, including corporations and governments, ranging from school boards to cities, counties, states and countries, that have issued debt to meet their obligations. Fitch — alongside S&P Global and Moody’s Investors Service — is one of the world’s big three ratings firms.

Need to Know: The U.S. is downgraded. How much does it matter to markets? And the surprise asset that may benefit.

The ratings firms use scales that employ letters, and in Moody’s case also include numbers, to provide a guide to creditworthiness. At the top of the list is the AAA rating from S&P and Fitch, or Aaa, in the case of Moody’s. AA+ is the second-highest rating.

Ratings that employ Cs are at the bottom of the scales, with Fitch and S&P using D ratings in cases of default or bankruptcy.

Any rating below BBB- from Fitch and S&P, or Baa from Moody’s, is considered below “investment grade.” Such debt is often termed “junk.”

Why did the U.S. rating get cut

Fitch had warned in May that a cut was possible, with the ratings firm expressing dismay over what it termed another round of “brinkmanship” around the U.S. government’s debt ceiling. The warning came amid a battle between congressional Republicans and the Biden administration over lifting or suspending the federal government’s debt ceiling.

The limit has been a frequent source of political squabbling. While the showdown was resolved with a two-year suspension of the limit, the battle underlined the high stakes. Failure to reach a deal could have led to a default. In Tuesday’s decision, Fitch said that the past two decades have seen “a steady deterioration in standards of governance” in the U.S., the debt-ceiling agreement notwithstanding.

How does the U.S. rating stack up to other countries

Fitch isn’t the first of the big three ratings firms to strip the U.S. of its AAA rating. S&P did so in 2011, amid an earlier debt-limit battle. That leaves Moody’s as the only firm to still assign the U.S. its top rating.

The pool of triple-A sovereign ratings, meanwhile, continues to dwindle. Only a handful of countries carry triple-A ratings across the board from all three ratings firms.

See: Here are the countries that still have Triple-A credit ratings across the board

What does rating cut mean to investors?

The cut isn’t seen having much lasting effect on investor demand for U.S. Treasurys. The market for Treasurys is the largest and most liquid debt market in the world. Despite the lack of triple-A ratings, Treasurys are viewed and treated by investors as being virtually “risk-free,” or equivalent to cash. Other types of debt are often quoted in terms of the yield premium, or spread, demanded by investors to hold them over Treasurys.

That isn’t going to change overnight. Analysts have emphasized that investors don’t buy Treasurys based on the credit rating. And any outflows from funds that are required to hold only triple-A rated bonds are expected to be limited.

See: $25 trillion Treasury market is in the spotlight as U.S. loses its AAA rating for a second time

“Many major Treasury holders, such as funds and index trackers, have already prepared for the move by changing mandates to specifically refer to Treasurys rather than AAA credit, and are unlikely to be forced into selling given the importance of the asset class,” said Solita Marcelli, chief investment officer for the Americas at UBS Global Wealth Management, in a Wednesday note.

How are markets reacting?

The downgrade was blamed for a weak tone across global equity markets, with U.S. stocks following suit. The Dow Jones Industrial Average
DJIA
dropped around 315 points, or 0.9%, while the S&P 500
SPX
shed 1.3%. The moves come after a strong run of gains, however.

Treasury yields, which move opposite to price, were higher. The selling, however, took hold only after data from ADP that showed a stronger-than-expected rise in private-sector payrolls. Treasurys took the downgrade in stride in earlier trading, with yields moving lower.

The yield on the 10-year Treasury note
BX:TMUBMUSD10Y
was up around 2 basis points near 4.02%.

Marcelli recalled that in 2011 the yield on the 10-year U.S. Treasury fell around 50 basis points, or half a percentage point, in the three days after the S&P downgrade to 2.6% on Aug. 5. Even 15 trading days later, yields were still down 40 basis points from the day of the downgrade, and around 80 basis points lower compared with where they were 15 trading days before the move.

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August 2, 2023