Tag: securities

UAW strike: Ford, GM, Stellantis record profits haven’t been shared fairly with workers, Biden says

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President Joe Biden on Friday offered his support to the United Auto Workers, as he addressed their strike aimed at the Big Three auto makers.

Auto companies have seen record profits because of the “extraordinary skill and sacrifices” of UAW workers, Biden said in a brief speech at the White House.

“Those record profits have not been shared fairly, in my view, with those workers,” the president added.

“The companies have made some significant offers, but I believe they should go further to ensure record corporate profits mean record contracts for the UAW,” he also said.

Biden gave his remarks after about 12,700 workers went on strike early Friday as their union and the Big Three automakers failed to reach an agreement before a contract expired.

It’s a targeted strike at a Ford Motor
F,
-0.08%
plant in Michigan, a General Motors
GM,
+0.86%
plant in Missouri and a Stellantis NV
STLA,
+2.18%
plant in Ohio.

The UAW so far has not endorsed Biden’s re-election bid, even as the AFL-CIO and other big unions have lined up behind the Democratic incumbent.

The presidential race in 2024 could be a rematch of 2020’s contest between Biden and former President Donald Trump, who has won over some union households that historically have backed Democrats like Biden rather than Republicans.

See: Here are the Republicans running for president

Biden got more support than Trump from union households in the battleground states of Michigan and Wisconsin in 2020, but Trump got more support from such households in Ohio and Pennsylvania, according to Edison Research exit polls.

Trump has seized on concerns that the car industry’s shift toward electric vehicles
CARZ,
which the Biden administration has promoted, could hurt American workers. “The all Electric Car is a disaster for both the United Auto Workers and the American Consumer,” the former president said Friday in a post on his Truth Social platform.

On Friday, Biden said he hopes the UAW and car companies “can return to the negotiation table to forge a win-win agreement,” and he said he’s sending two administration officials to Detroit — Julie Su, the acting secretary of labor, and Gene Sperling, a senior adviser.

GM posted a 2022 net profit of $11.04 billion, up from $10.38 billion in 2021, while Ford recorded a 2022 net profit of $7.62 billion, up from $6.43 billion in the prior year. For Stellantis, the parent company for brands such as Chrysler, Dodge and Jeep, last year’s net profit was $17.83 billion, up from $15.12 billion.

UAW President Shawn Fain said in a statement after Biden’s speech that union members “agree with Joe Biden when he says ‘record profits mean record contracts.’”

Fain also said: “Working people are not afraid. You know who’s afraid? The corporate media is afraid. The White House is afraid. The companies are afraid.”

Now read: Tesla may be the winner of the Big Three labor woes

And see: Will the UAW strike push up car prices?

Plus: UAW strike to have limited impact on Big Three, Fitch says

Claudia Assis contributed.

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September 15, 2023
Are we bored yet? Retail investors slowing their roll on AI stocks, according to this chart

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There are more signs that investors are cooling a bit on the hot artificial intelligence play, though no one appears ready to let go of their Nvidia stock just yet.

That’s according to Vanda Research analysts, who shared a chart of their latest weekly data showing how retail investor’s net purchases of AI-themed stocks is “steadily waning”:

Marco Iachini, senior vice president, Giacomo Pierantoni, head of data and Lucas Mantle, data scientist at Vanda, said they’ve also noticed fewer news stories covering the sector as well, in their Vandatrack weekly comment that published Thursday.

The fervor for AI-related stocks and technology took off earlier this year, with a pinnacle moment in May when Nvidia
NVDA,
-2.89%
made big predictions on a boom for demand for its AI-related chips. Shares of the company are still up 211% so far this year, but enthusiasm for many tech stocks faded in August as China and interest rate-hike worries cropped up and some companies stressed AI benefits might not happen right away.

That said, Vanda analysts don’t expect Nvidia will feel the hurt of any such waning interest. They point out that short interest in the chip maker has seen a “considerable decline,” in line with its soaring stock price.

“This phenomenon suggests that bearish institutional investors, including long/short hedge funds, may have been compelled to cover their short positions,” said Iachini and his team. “As a result they are unlikely to want to sell the stock in the near term barring strong conviction to do so.”

“It is crucial to recognize that a slowdown in retail demand, by itself, is improbable to trigger substantial price movements, without active bearish participation from institutional investors,” they added.

However, the story is different for smaller AI-related companies such as smaller-cap C3.ai
AI,
-2.78%
as seen in their chart:

For C3.ai, they see a selling trend persisting in coming weeks. The AI software group’s shares are up 154% so far this year, but down 9% this month, taking a hit recently from solid quarterly results that came with forecasts for a bigger-than-expected full year loss. Analysts aren’t quite giving up — among 10 covering the company tracked by FactSet most have hold or a similar rating.

“We believe C3.ai is taking the proper steps to capitalize on Generative AI, but it will take time to prove out,” said a team of analysts at Oppenheimer led by Timothy Horan, after those results were released on Sept. 7. They rate the company perform.

Vanda analysts said another exception to an AI buying slowdown has been IonQ
IONQ,
-6.21%,
“a relatively small quantum computing company that has been outperforming its AI-related counterparts.” They noted “remarkably resilient” demand for the stock, as short interest also increases rapidly.

“This juxtaposition raises a cautionary flag, as a potential weakening of retail interest, coupled with speculative institutional investors accumulating short positions, could create a demand-supply imbalance, potentially triggering a selloff,” they said. Shares of IONQ have soared 422% year-to-date. The company lifted its lifted full-year bookings guidance last month as it reported blowout second-quarter sales.

Young Money blogger Jack Raines highlighted the slowing interest in AI in a post on Thursday , citing data from analytics firm Similarweb that showed ChatGPT traffic down 3.2% in August, after 10% declines in June and July.

“While ChatGPT will probably experience a resurgence this fall as students return to the classroom and expedite their homework via chatbot, it seems like talks of AI disrupting/replacing anything and everything have cooled down,” he said, adding that the “initial euphoria was a bit much.”

Deutsche Bank strategists hopped on the topic in a note to clients entitled “Even hype needs a summer break,” on Thursday, noting how AI interest waned as investors went to the beach and the media turned its attention to extreme weather and “silly season” stories.

“Under the surface, though, there have been important developments indicating a slow maturing of the cycle, of the underlying technologies and of attitudes to a revolution in waiting,” said a team led by analyst Adrian Cox.

Those include Ai being the “elephant in the earnings room,” this summer that also brought a steady stream of AI-related tech announcements. Another theme “Your job is safe..for now,” came via fresh evidence that AI might boost rather than replace white-collar jobs, while yet another saw U.S. politicians also got involved.

This week saw Tesla CEO Elon Musk telling Capital Hill politicians that a new federal agency to oversee AI development is a must.

Another big theme that erupted this summer was the chatter by contrarian commentators questioning the hype around generative AI. Cox alluded to the Similarweb report that got everyone excited as it showed Chat GPT traffic falling to 1.4 billion visitors in August from 1.8 billion in May.

“The bigger picture is that open.ai had zero visitors before the launch of ChatGPT less than a year ago and is now No. 28 in the world, according to Similarweb,” said the Deutsche Bank team.

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September 15, 2023
Paid off your mortgage? Be careful — you’re at risk of title theft.

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Homeowners may be thrilled when they finally pay off their mortgage, but the accomplishment comes with risks.

Retirement Tip of the Week: Be vigilant in protecting your identity and assets, and be aware of how you could fall victim to various scams or theft associated with your home.

With title theft, thieves transfer a house deed from the rightful owner to another person’s name by using the owner’s personal information. Title theft could also take the form of using equity in a home, such as by opening a home equity line of credit, known as a HELOC, according to Quicken Loans. When a house is unoccupied, thieves could go so far as to sell or rent out the property.

Title theft isn’t particularly common, but it does happen, and it’s another reason people should protect their identity and other sensitive information. Older Americans could be at higher risk, especially if they have a lot of equity in their home. About 11,500 people reported losing more than $350 million to real-estate scams in 2021, although that figure includes fraud pertaining to real-estate advertisements and rental agreements, according to the FBI.

Homeowners should keep on top of their documents and may even want to occasionally confirm their information with their county deeds office, the FBI said. Any mail from a mortgage lender should be checked to make sure it doesn’t pertain to your specific property.

If you are a victim of title theft, open an identity-theft case with the Federal Trade Commission, alert creditors about the fraud and look over your title insurance, which protects homeowners’ rights and which mortgage companies often require home buyers to have, Quicken Loans said.

There are companies that offer title-protection services, although critics say it’s not the same as title insurance and only alerts a homeowner of a problem after it has occurred.

“Do you need this service to protect your home from property thieves? The answer is no,” the Maryland Attorney General’s office said in a consumer alert about title-protection services. “Title fraud is very rare, and hardly ever successful. If someone ever tries to transfer your deed without your permission or knowledge, like these title lock companies suggest could happen, the transfer is fraudulent and void from the outset.”

Instead, homeowners should monitor their identity and keep an eye on their credit scores, the office said.

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September 15, 2023
Stocks are trapped in a trading range. Something’s got to give.

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The U.S. stock market, as measured by the S&P 500 Index SPX, is trapped in a trading range, and volatility seems to be damping down considerably. The significant edges of the trading range are support at 4330 and resistance at 4540. Both of those levels were touched in the latter half of August. A breakout from this range should give the market some strong directional momentum.

Since Labor Day, prices have hunkered down into an even narrower range. Typically, the latter half of September through the early part of October…

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September 14, 2023
Here’s the ‘triple power play’ that may rule stock-market returns, other assets for next 5 years

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Three powerful dynamics in the global economy are expected to play a significant role in investors’ multi-asset allocations over the next five years, according to a 132-page report from Rotterdam-based asset manager Robeco.

The first is labor’s likely increased bargaining power, with the outcome of any tussle between businesses and their workers probably being determined by wages in a sticky inflation environment, based on the report compiled by strategists Laurens Swinkels and Peter van der Welle on behalf of the multi-asset team at Robeco, which manages $194 billion in assets. The second is the end of monetary-policy leniency and the potential for central banks to lock “horns” with governments over the appropriate level of borrowing costs. The third is the dawn of “multipolarity” as the U.S. and China struggle for power.

Taken together, this “triple power play” is already starting to unfold, shifting investors into a world of higher risk-free rates and lower expected equity risk premiums, according to the asset manager. Risk premium is a gauge of relative value for stocks, helping investors understand what their short-term gain might be when taking on the additional risk of buying equities or investing in stock funds.

Robeco provided its forecasts for five-year annualized, projected returns on a range of assets held by euro- and dollar-based investors — including developed- and emerging-market equities, bonds, and cash.

The firm’s base-case scenario, which Robeco’s team refers to as a “stalemate,” calls for a mild recession in 2024, consumer-price inflation in developed economies to remain around 2.5% on average heading toward 2029, and real GDP in the U.S. to average 2.3% or below what the S&P 500 index
SPX
currently implies.

That benign growth outlook is expected to be accompanied by macroeconomic volatility, plus a “tug of war” between central bankers reluctant to lower interest rates and governments in need of low borrowing costs — which “means there is not enough monetary policy tightening to remove demand-pull inflation.” Under such a scenario, developed-market equities are likely to underperform their emerging market counterparts and domestic bonds should offer a higher return than cash for dollar-based investors, according to Robeco.

Source: Robeco. Returns shown are annualized.

“Looking ahead, a key question is: are we eyeing the start of a new bull market that will broaden and pave the way for another streak of above-historical excess equity return?” the Robeco team wrote in the report released on Tuesday. “In our base case, we expect developed markets’ earnings growth to end up below current 5Y forward consensus projections, which are high single-digit or even still low double-digit for the U.S. and eurozone.

“The reason we foresee a decline in profitability is linked to our overarching macro theme, the triple power play. Equities will likely bear the brunt of the power play in geopolitics,” according to the report. In addition, efforts by global corporations to shift production toward geopolitically-friendly powers or closer regions “will prove more costly and lower efficiency.” Plus, “further pressure from margins will come from a lagged response from past policy rate hikes.”

Under Robeco’s bull-case scenario, early and rapid adoption of artificial intelligence across sectors and industries would likely spawn above-trend growth and push inflation back to central banks’ targets. The result is “an almost Goldilocks scenario in which things are running neither too hot nor too cold,” central banks could take a break from tightening policy, and developed- and emerging-market equities may both be able to come out with double-digit annualized returns from 2024 to 2028.

The firm’s bear-case scenario envisions a world in which mutual trust between the world’s superpowers hits rock bottom, governments are “in the crosshairs” of central banks, and labor loses bargaining power in the services sector. A “stagflationary environment emerges, intensifying the policy dilemma for central bankers” as inflation stays stubbornly high at 3.5% on average and growth comes in at just 0.5% annually for developed economies. In that situation, developed-market equities would eke out an annualized return of 2.25% for dollar-based investors over the four-year period, which would be below the expected return on cash.

On Thursday, all three major U.S. stock indexes
DJIA

SPX

COMP
finished higher as investors digested a batch of better-than-expected U.S. data and continued to expect no action by the Federal Reserve next week. Officials are seen as likely to leave their main policy rate target at a 22-year high of 5.25%-5% on Wednesday.

As investors continued to monitor the possibility of a strike by United Auto Workers, 2-
BX:TMUBMUSD02Y
and 10-year Treasury yields
BX:TMUBMUSD10Y
ended at one-week highs and the ICE U.S. Dollar Index
DXY
jumped 0.6%. In a separate development earlier this week, Air Force Secretary Frank Kendall warned that China is preparing for a potential war with the U.S.

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September 14, 2023
Why Ray Dalio says cash is ‘temporarily’ good: ‘I don’t want to own debt’

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““I don’t want to own debt, you know bonds and those things.””

— Ray Dalio, founder of Bridgewater Associates

That was the response by the billionaire founder of one of the world’s biggest hedge funds when asked where he would put capital to work right now.

“Temporarily right now, cash, I think is good…and the interest rates are fine. I don’t think they will be sustained that way,” Bridgewater Associates’ Ray Dalio said Thursday at the Milken Institute’s 10th annual Asian Summit in Singapore.

The move into cash has been growing with the yield on the 30-day Treasury bills atop 5%, while investors can also get 4% on certificates of deposit and high-yield savings accounts, but there has also been pushback.

Wells Fargo Investment Institute strategist Veronica Willis told clients last month that even if cash yields stay higher in the near term, history shows investors lose out in the long run as cash tends to underperform and act as a drag on their investments.

Hence the word “temporarily” from Dalio. But his clear disdain for bonds might also run against the crowd, as the 10-year Treasury yield
BX:TMUBMUSD10Y
topped its highest since 2007 last month.

Saira Malik, chief investment officer at Nuveen, recently advised investors to make the shift into longer-dated bonds sooner than later because she says the broader market tends to outperform after a Federal Reserve pause on interest rates and often continues to do well in the following year.

Investors have become less concerned, as of late, that the Fed will keep hiking rates, with inflation data out Wednesday only showing a couple of surprises. Markets are pricing in slim chance of a Fed rate hike in borrowing costs after next week’s meeting, though a hike in November may still be up in the air.

Dalio, who has a net worth of $16.5 billion, according to Bloomberg’s Billionaires Index, said when it comes to investing, he wants to “be in the right places, geographies,” and have diversification. “What I don’t know is going to be much more important than what I do know.”

“Diversification can reduce your risk without reducing the return if you know how to do it well. And then I have to pay attention to the implications of the great disruptions that are going to take place because the world will be radically different tin five years…the next election, the debt situation, all of those things are going to change. And then with the new technologies…it’s going to be like a time warp. It’s a different world.”

And that will “disrupt the disrupters,” so it will be important to know who will be using those technologies in the best way, said Dalio.

Read: Investors need to be wary of ‘priced for perfection’ stock markets, warns Larry Summers

And: Don’t bet against the economy yet, says Bill Ackman

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September 14, 2023
Fed funds futures traders see greater chances of no Fed action for rest of year

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Fed fund futures traders boosted the likelihood of no further rate hikes by the Federal Reserve in September, November or December on Thursday, a day after a mixed consumer price index report for August was released. After factoring in a 97% probability that the Fed will leave rates unchanged at between 5.25%-5.5%, traders now see a 63.7% likelihood of no action in November and 59.9% chance of the same for December, according to the CME FedWatch Tool. That’s up from 57.4% and 53.8% respectively on Wednesday, despite Thursday’s better-than-expected producer price index and retail sales data for August. Treasury yields swung between advances and declines Thursday morning, with the policy-sensitive 2-year rate hovering at just under 5%.

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September 14, 2023
Dow posts back-to-back drop, S&P 500 climbs after inflation gauge ticks higher

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The Dow posted a back-to-back loss on Wednesday after a gauge of consumer inflation for August rose on the back of higher energy costs, while the S&P 500 and Nasdaq Composite ended with modest gains. The Dow Jones Industrial Average
DJIA,
-0.20%
shed about 70 points, or 0.2%, ending near 34,565, according to preliminary FactSet data. That marked its second day in a row of declines. The S&P 500 index
SPX,
+0.12%
added 0.1% and the Nasdaq Composite Index
COMP,
+0.29%
finished at a 0.3% gain. Both the Dow and S&P 500 struggled for direction earlier Wednesday, with both indexes flipping between small gains and loss as investors considered whether the Federal Reserve will be promoted to increase its policy rate any further this year to tamp down inflation further. Its benchmark rate was increased to a 22-year high in July. The consumer price-index for August showed the yearly rate of inflation climbed to 3.7% from 3.2% in July, and up from a 27-month low of 3% in June.

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September 13, 2023
When will inflation cool to the Fed’s 2% target? By late next year, says JP Morgan strategist.

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Inflation is likely to fall below the Federal Reserve’s 2% annual target by late next year, according to David Kelly, chief global strategist at JP Morgan Asset Management.

Consumer prices rose again in August to reach a 3.7% yearly rate, based on Wednesday’s release of the monthly consumer-price index. That marked its biggest jump in 14 months and a higher reading than the recent 3% low set in June (see chart) as the toll of the Fed’s rate hikes kicked in.

U.S. consumer prices rose in August, after touching a recent low of 3% yearly in June, as energy prices shot up.

AllianceBernstein

The catalyst for increased price pressures in August was a roughly 30% surge in energy prices
CL00,
+1.32%
this quarter, according to Eric Winograd, director of developed market economic research at AllianceBernstein.

West Texas Intermediate Crude, the U.S. benchmark, settled at $88.52 a barrel on Wednesday, as traders focused on supply concerns following decisions by Saudi Arabia and Russia to cut crude supplies through year-end. WTI was trading at a low for the year below $65 a barrel in May.

“I don’t think that today’s upside surprise is sufficient to trigger a rate hike next week and I continue to expect the Fed to stay on hold,” Winograd said, in emailed commentary. “But with inflation sticky and growth resilient, the committee is likely to maintain a clear tightening bias—the dot plot may even continue to reflect expectations of an additional hike later this year.”

Federal Reserve officials increased the central bank’s policy rate to a 5.25%-5.5% range in July, the highest in 22 years.

Higher gasoline prices, however, also could act as a counterweight to inflation, according to JP Morgan’s Kelly. “Indeed, to the extent that higher gasoline prices cool other consumer spending, the recent energy price surge could contribute to slower growth and lower inflation entering 2024,” Kelly wrote in a Wednesday client note.

“We still believe that, barring some further shock, year-over-year headline consumption deflator inflation will be below the Fed’s 2% target by the fourth quarter of 2024.”

Kelly isn’t expecting the Fed to raise rates again in this cycle.

U.S. stocks ended mixed Wednesday following the CPI update, with the Dow Jones Industrial Average
DJIA
down 0.2%, the S&P 500 index
SPX
up 0.1% and the Nasdaq Composite Index
COMP
up 0.3%, according to FactSet.

But with oil prices well off their lows for 2023, Winograd said further progress on cooling headline inflation is unlikely this year, even though he expects core inflation to gradually decelerate, a process that will “keep the Fed on high alert.”

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September 13, 2023
‘Complicated’ inflation report produces wavering U.S. stocks, keeps higher-for-longer theme in rates intact

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Investors were evaluating a less-than-straightforward take on U.S. inflation Wednesday, with August’s consumer price index coming in close to or in line with expectations while providing reasons for the Federal Reserve to hike again by year-end.

U.S. stocks
DJIA

SPX

COMP
were higher, though wavering, in New York afternoon trading as traders weighed the chances of another rate hike in November. Three-month through 1-year T-bill rates were up slightly, though 2- through 30-year Treasury yields slipped. And the ICE U.S. Dollar Index
DXY,
which moves according to the market’s expectations for U.S. rates relative to the rest of the world, swung between gains and losses.

Rising gas prices in August had Wall Street anticipating higher headline inflation figures of 0.6% for last month and either 3.6% or 3.7% year-on-year ahead of Wednesday’s session, and on that score August’s CPI report met expectations. The as-expected headline readings appeared to offer some comfort to many investors, even though the monthly gain was the biggest increase in 14 months and the annual rate jumped versus the prior two months.

Still, Ed Moya, a senior market analyst for the Americas at OANDA Corp. in New York, said “this was a complicated inflation report” and price gains are failing to ease by enough for the central bank to abandon its hawkish stance. Core readings which matter most to Fed policy makers came in a bit above expectations at 0.3% for last month, driven partly by a jump in airline fares, as the annual core rate dipped to 4.3% from 4.7% previously. According to Moya, “inflation will likely still be running well above the Fed’s 2% target for the rest of the year.”

“Today’s uptick in CPI could slightly increase the likelihood of a November interest rate hike and potentially delay the timing of any rate cuts until deeper into 2024,” said Joe Tuckey, head of FX analysis at London-based Argentex Group, a provider of currency risk-management and payment services.

As of Wednesday afternoon, however, August’s CPI wasn’t putting much of a dent in expectations for fed funds futures traders. They see a 97% likelihood of no rate hike next Wednesday, which would keep the fed funds rate at between 5.25%-5.5%, and a more-than-50% chance of the same in November and December, according to the CME Fed Tool. They also continued to price in the likelihood of no rate cuts through the early part of 2024.

While August’s CPI report failed to move the needle in stocks, the dollar, or fed funds futures, there was one corner of the financial market where the data did make more a difference: Traders of derivatives-like instruments known as fixings now foresee five more 3%-plus annual headline CPI readings starting in September, after adjusting their expectations to include January.

If those expectations play out, that would bring the total number of 3%-plus readings to six months, including August’s data, and produce a scenario that investors may not be entirely prepared for — the possibility that headline inflation doesn’t meaningfully budge from current levels soon.

Read: Why financial markets may be unprepared for a fourth-quarter ‘inflation surprise’

Central bankers care more about less-volatile core readings, but pay attention to headline CPI figures because of their potential to affect household expectations.

“While these numbers do not change our, and the market’s, expectations that the Fed will hold the target fed funds rate unchanged at the September meeting, the slightly stronger number can influence the tone of the press conference and Summary of Economic Projections,” said Greg Wilensky, head of U.S. fixed income at Denver-based Janus Henderson Investors, which manages $322.1 billion in assets.

“We continue to expect some reduction in the number of participants projecting further hikes, but probably not enough to move the median projection of one more rate hike,” Wilensky said in an email. “That said, we believe that we have likely seen the last rate hike for this cycle, as the economic data that the Fed will see over the coming months will keep them on hold and allow the impact of 5.25% of prior hikes to slow the economy and inflation.”

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September 13, 2023
Nasdaq ends 1% down, leading stocks lower as tech shares slump

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U.S. stocks closed lower on Tuesday, with the Nasdaq Composite leading the way down, as Apple’s unveiling of its new iPhone and watch failed to boost appetite for equities. The Dow Jones Industrial Average
DJIA,
-0.05%
shed about 16 points, or about 0.1%, to end near 34,647, while the S&P 500 index
SPX,
-0.57%
closed 0.6% lower and the Nasdaq Composite Index
COMP,
-1.04%
slumped 1%, according to preliminary FactSet data. That was the biggest daily percentage drop in about a week for the Nasdaq. Shares of Apple Inc.
AAPL,
-1.71%
were a focus Tuesday as it rolled out a lineup of new consumer products, including its iPhone Pro Max, which will now start at $1,199 instead of $1,099, while its Pro model’s price stays the same. Investors also remain focused on the inflation data, including the release on Wednesday of the consumer-price index for August, before the U.S. stock market’s open. Apple shares fell 1.9% on Tuesday. Climbing bond yields can pressure high-growth stocks as borrowing costs rise. The benchmark 10-year Treasury yield
TMUBMUSD10Y,
4.297%
edged down 2.4 basis points to 4.263% Tuesday, but was still near its highest level of the year.

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September 12, 2023

The economy is doing better than anyone thinks, but these troubles are in the pipeline, says Bill Ackman

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Stock investors are showing some hesitancy for Tuesday, with big signals on the economy coming this week via consumer prices and retail sales. Ahead of that, Apple is expected to tempt consumers with yet another new iPhone on Tuesday.

How much should investors be worrying right now? Our call of the day from Pershing Square Capital Management manager Bill Ackman says that in the near term, we can relax a little, but it isn’t all roses.

Read: Hedge funds have bailed on the U.S. consumer in a big way, Goldman Sachs data finds

He told the Julia La Roche Show in an interview where he felt like he had a “crystal ball of what was going to happen,” starting in January 2020 with the COVID-19 outbreak, and that carried on through interest rates and the economy. Indeed, the manager reportedly made nearly $4 billion on a couple of pandemic-related bets.

“I would say the crystal ball has clouded a bit in the last period. I think these are unusual economic times and perhaps we always say that, but I don’t think this is a pattern that has been repeated…or it hasn’t been for more than 100 years,” he said.

But he remains near-term upbeat. “For two years, people have been saying that recession’s around the corner and you know we’ve had a very different view, and continue to have this view that I think people are coming around to, that the economy is actually still quite strong,” he said.

And while those on lower-income rungs have burned through a lot of COVID savings, he thinks the economy has yet to really see impact from the big fiscal stimulus seen in recent years.

Looking down the road though, Ackman has got a stack of concerns over the economy. He sees about a third of federal debt due to get repriced meaning that over a relatively short period of time, “interest expense will become a much bigger part of the deficit that is not going to be a contributor to the economy.”

And while higher interest rates do help savers, ultimately that will be a big drag on the economy, he said, adding that rising inflation, mortgage rates, car payments and credit card rates, are all set to slow the economy.

“We’re still in the midst of a war and there’s political uncertainty you know with an upcoming election,” he said. That partly explains Pershing Square’s hedge via a short position on the 30-year Treasury bond
BX:TMUBMUSD30Y
that he laid out in a tweet in early August.

For roughly a year, long-term Treasury yields have been trading below short-dated ones, which is known as an inverted yield curve, a phenomenon that’s often seen as a precursor to recession.

“I don’t see inflation getting back to 2% so quickly, if at all, and if in fact we’re in a world of persistent 3% inflation, you know it doesn’t make sense to have a 4.3%, 4.25% Treasury yield,” he said.

Other risks? Ackman remains worried about regional banks following the spring crisis, as many have big fixed-rate portfolios of assets that have gotten less and less valuable as rates rise. “I would say the commercial real estate picture has not gotten better, if anything, you know, you’re going to start seeing real defaults, particularly with office assets,” he said.

“Regional banks have the most exposure to construction loans so they are going to be a lot of construction loans that won’t be able to repaid. There will be a lot of restructurings, so either the investors groups are gonna have to put in a lot more equity or the banks are going to start taking some losses,” he said.

Ackman says investors also face a presidential campaign that could add some stress. The hedge-fund manager said he’s surprised there have not been “more and better alternative candidates” for the 2024 campaign over President Joe Biden and former President Donald Trump.

He’d like to see JPMorgan Chase & Co. CEO Jamie Dimon toss his hat in the ring and believes Biden is “beatable,” by a strong candidate.

Ackman himself said it’s “possible,” he himself could run someday, but he’s more focused on having a better investment track record over Berkshire Hathaway Chairman and CEO Warren Buffett — and needs some 30 years to match the Oracle of Omaha.

Read: Here’s an easy way to make a more concentrated play on the ‘Magnificent Seven’ stocks

The markets

Stock futures
ES00,
-0.36%

NQ00,
-0.45%
are tilting south, led by tech, with Treasury yields
BX:TMUBMUSD02Y

BX:TMUBMUSD10Y
steady to a touch lower and the dollar
DXY
recovering some ground.

Read: Watch this ‘canary in the coal mine’ for signs of trouble in markets, Neuberger Berman CIO says

For more market updates plus actionable trade ideas for stocks, options and crypto, subscribe to MarketDiem by Investor’s Business Daily.

The buzz

Oracle shares
ORCL,
+0.31%
are down 10% in premarket trading after disappointing guidance from the cloud database group.

Apple’s
AAPL,
+0.66%
big event kicks off at 1 p.m. Eastern, with the launch of the pricier iPhone 15 expected to be on the agenda.

Hot ticket. Arm Holdings’ IPO is already 10 times oversubscribed and bankers will stop taking orders by Tuesday afternoon, Bloomberg reports, citing sources.

Tech’s wild week: How Apple, Google, AI, Arm’s mega IPO could set the agenda for years

Upbeat results are boosting shares of convenience-store operator Casey’s General Stores
CASY,
-1.02%.

Packaging giant WestRock
WRK,
-1.48%
and rival Smurfit Kappa
SK3,
-8.87%
have announced a stock and cash tie up. WestRock shares are up 8% in premarket.

Read: U.S. budget deficit will double this year to $2 trillion, excluding student loans

Best of the web

No better than gambling? Amateur investors are piling into 24-hour options.

Demand for oil, coal, gas to peak this decade, IEA chief says

U.S. takes on tech giant Google in landmark case.

The chart

Bank of America’s global fund manager survey for September sees investors still bearish, but no longer on the extreme side. Here’s the chart:

Read: Fund managers just made their biggest shift ever into U.S. stocks — and out of emerging markets

The tickers

These were the most active stock-market tickers on MarketWatch as of 6 a.m. Eastern:

Ticker	Security name
TSLA, +10.09%	Tesla
AMC, +2.23%	AMC Entertainment
CGC, +81.37%	Canopy Growth
NVDA, -0.86%	Nvidia
GME, -3.90%	GameStop
AAPL, +0.66%	Apple
ACB, +72.17%	Aurora Cannabis
NIO, +2.89%	Nio
MULN, +5.77%	Mullen Automotive
AMZN, +3.52%	Amazon

Random reads

“Worst investment ever.” Brady Bunch fan buys original house for cut-price $3.2 million.

And the house from the “Halloween” slasher films just sold for $1.8 million.

China may ban clothes that hurt people’s feelings.

Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. The emailed version will be sent out at about 7:30 a.m. Eastern.

Listen to the Best New Ideas in Money podcast with MarketWatch financial columnist James Rogers and economist Stephanie Kelton.

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September 12, 2023

Watch this ‘canary in the coal mine’ for signs of trouble in markets, Neuberger Berman CIO says

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Neuberger Berman, an asset manager with eight decades under its belt, is on the lookout for cracks in credit markets from the Federal Reserve’s rate-hiking campaign.

Erik Knutzen, chief investment officer of multi asset, worries that several factors could be a tipping point for the economy, from an economic slowdown in China to U.S. consumers finally becoming exhausted by higher rates.

Yet Knutzen expects the high-yield, or junk bond, market to serve as the “canary in the coal mine” for broader market volatility, acting as “perhaps the most visible threat, and therefore one we think could be priced in sooner than later.”

The Bloomberg U.S. High Yield Bond Index has returned 6.4% through the end of August, producing one of the year’s highest gains in fixed income, helped along by a “resilient U.S. economy coupled with still-available financial liquidity,” according to the Wells Fargo Investment Institute.

But Knutzen worries that as the high-yield maturity wall draws closer, “the first policy rate cuts get priced further and further out, raising the threat of expensive refinancings.”

The 10-year Treasury yield’s
BX: TMUBMUSD10Y
climb to a multidecade high in August of almost 4.4% left many major U.S. corporations in early September hesitant to borrow beyond 10 years.

Starting next year, some $700 billion of high-yield bonds are set to mature through the end of 2027, with a big slice of the refinancing need coming from companies with riskier credit ratings below the top BB ratings bracket.

The junk-bond maturity wall.

Bloomberg, Wells Fargo Investment Institute, Moody’s Investors Service

The two big U.S. exchange-traded funds linked to junk bonds are the SPDR Bloomberg High Yield Bond ETF
JNK
and the iShares iBoxx $ High Yield Corporate Bond ETF
HYG,
both up 1.8% and 1.5% on the year through Monday, respectively, while offering dividend yields of more than 5.8%, according to FactSet.

Of note, fixed-income strategists at the Wells Fargo Investment Institute also said they see risks emerging in junk bonds for companies rated B and below, particularly with spread in the sector trading less than 400 basis points above the risk-free Treasury rate since July. Spreads are the premium that investors are paid on bonds to help compensate for default risks.

Top corporate executives appear hopeful that the Federal Reserve will cut rates sooner than later. Fed Chairman Jerome Powell said in Jackson Hole, Wyo., in August that the central bank is prepared to keep its policy rate restrictive for a while to get inflation down to its 2% target.

To that end, Neuberger Berman, which has roughly $443 billion in managed assets, sees several sources of volatility lurking through year’s end, and has a “defensive inclination” in equity and credit, favoring high-quality companies with plenty of free cash flow, high cash balances and less expensive long-term debt.

U.S. stocks booked gains on Monday after a week of losses, with the S&P 500 index
SPX
and Nasdaq Composite Index
COMP
scoring their best daily percentage gains in about two weeks. The Dow Jones Industrial Average
DJIA
advanced 0.3%.

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September 11, 2023
Wall Street’s most bullish strategist warns of choppiness in stocks, still sees the S&P 500 touching a record high this year

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Recent weakness in the U.S. stock market is likely to persist over the near-term, according to Wall Street’s most bullish strategist, who still thinks the S&P 500 is on a path to a record high this year.

John Stoltzfus, chief investment strategist at Oppenheimer Asset Management Inc., in late July projected the S&P 500 would rise above 4,900 by the end of 2023. That is the highest price target for the large-cap index among 20 Wall Street firms surveyed by MarketWatch in August.

It implies the S&P 500 would rise above its earlier closing record high of 4,796 reached on Jan. 3, 2022 by the end of the year. The path up, however, could get bumpy.

“Bullishness [in the stock market] is relatively high while the Fed remains shy of its inflation target,” said a team of Oppenheimer strategists led by Stoltzfus in a Sunday note. They also said, “we persist in suggesting that investors curb their enthusiasm [in the stock market] for a long rate pause or even a rate cut and instead right-size expectations.”

Expectations that the Federal Reserve is nearing an end to its current interest-rate hiking cycle, as well as optimism around artificial intelligence boosted the U.S. stock market in the first seven months of 2023. However, the rally came to a brief halt in August as investors worried the Fed could be forced to keep rates elevated as a batch of stronger-than-expected economic data and rising oil prices fueled concerns that still-sticky inflation would mean that borrowing costs will stay higher for longer.

Investors should not brush off those pressures, even through the Fed appears to be nearing the end to its current rate-hike cycle, Stoltzfus and his team said. “The stickiness evidenced in food, services, energy and other prices warrants the Fed remaining vigilant along with a potential for one more hike this year and perhaps another next year,” they said.

See: When will consumers stop buying more stuff? It’s a key question for the stock market.

However, Stoltzfus doesn’t see current headwinds for stocks as something that would prevent the S&P 500 from achieving his team’s new peak target.

Stock-market investors expect this week’s August inflation report to offer more clarity on whether the central bank will continue to ratchet up its fight against inflation. The headline component of the consumer-price index is forecast to accelerate to 0.6% in August from July’s 0.2% gain, while the core measure that strips out volatile food and fuel costs is expected to rise a mild 0.2% from a month earlier, according to a survey of economists by The Wall Street Journal.

Meanwhile, a key Wall Street volatility index also pointed to “some choppiness” in the stock market in the near term to keep investors on their toes, said Stoltzfus. The CBOE Volatility Index
VIX,
at a level of 13.82 on Monday, hovered around its 12-month low and traded about 30% below its one-year average level of 19.9, and 37% below its two-year average of 21.88 (see chart below).

Stoltzfus and his team suggest that investors use market weakness to seek out “babies that get thrown out with the bath water” in periods of volatility. They said the S&P 500 Energy Sector
XX:SP500.10
looks increasingly attractive as policy makers in the U.S. and abroad strive to contain inflation and manage economic growth.

“We believe that prospects are looking better that the Fed’s success thus far in bringing down the rate of inflation could lead to a [rate] pause next year, thus lessening pressures on economic growth,” the strategists said. An improved economic growth, along with fiscal stimulus from investment in stateside infrastructure projects and stateside chip manufacturing efforts, could contribute to profitability in the energy sector into 2024, the team added.

The Energy Select Sector SPDR Fund
XLE,
which is seen as a proxy of the energy sector of the S&P 500, has advanced 3.9% year to date versus a 8.5% increase in the price of the U.S. benchmark West Texas Intermediate crude oil
CL00,
+0.03%

CL.1,
+0.03%,
according to FactSet data.

Oil futures
CLV23,
+0.03%
BRNX23,
-0.03%
traded at their highest levels of the year on Monday morning, a week after Russia and Saudi Arabia caught markets off guard with their output cut extension announcements, but they settled modestly lower on Monday afternoon.

See: Energy ETFs are outshining the S&P 500, but it’s not just because of the oil rally

Stoltzfus in late July projected the S&P 500
SPX
would rise above its record high by the end of 2023, lifting his year-end price target for the large-cap index to 4,900 from an earlier 4,400 projection from December. It implies a 9.2% advance from where the S&P 500 settled on Monday, at around 4,487.

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

U.S. stocks finished higher on Monday, boosted by technology shares as Nasdaq Composite
COMP
advanced 1.1%. The S&P 500 was up 0.7% and the Dow Jones Industrial Average
DJIA
ended 0.3% higher, according to FactSet data.

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September 11, 2023
The iPhone 15 is coming: Everything to expect from Apple’s big event

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For Apple fans, it’s almost that time of year again.

The company is expected to launch the iPhone 15 at an event Tuesday, but don’t get too excited about the new phone. This year, the biggest change from Apple
AAPL,
+0.35%
could be the iPhone’s price.

Apple tends to introduce new iPhones every year in the fall, and lately, the company has been keeping prices the same even as it upgrades the technology. That may not be the case this year, though, with some thinking that Apple could boost the price of its Pro-level models by $100 or $200 compared with what an iPhone 14 Pro currently sells for.

That’s notable because iPhones are already pretty expensive, with the cheapest iPhone 14 Pro option selling for $999 and the priciest iPhone 14 Pro Max configuration going for $1,599.

“Given the popularity of the iPhone 14 Pro models compared to the iPhone 14 models, Apple may believe consumers will be willing to pay more without much fuss,” Monness, Crespi, Hardt & Co. analyst Brian White wrote in a recent report. “Moreover, Apple may feel a price hike is warranted given the inflationary forces that have disrupted the economy over the past couple of years.”

Morgan Stanley’s Erik Woodring is less certain that Apple will hike prices broadly. The company could boost the price of its Pro Max phone by $150 to account for an expected new rear-facing periscope lens, but it’s “very un-Apple-like to raise prices across the board in the midst of a smartphone market down 11%,” he wrote. He said he expects the company to keep prices the same on the regular Pro model and its two base-level options.

One key issue for iPhone enthusiasts — and Apple investors — is when the new phones will be ready for sale. Most of the iPhone models Apple introduced last year hit stores in mid-September, but there are some concerns about potential production delays this year.

Read: Waiting for the iPhone 15? You might have to hold out longer than you think.

“The broad availability of the iPhone 15 Pro Max could be October given some manufacturing challenges,” BofA Securities analyst Wamsi Mohan wrote recently.

iPhone feature updates have become more incremental in recent years, and Apple watchers aren’t expecting anything groundbreaking this time around either. New iPhones always tend to be a little faster than their predecessors, and this year’s models might charge more quickly too. There’s a catch, though, as Apple is expected to switch out its proprietary Lightning cable for the more universal USB-C cord.

While the Pro models get a lot of attention, White said that those looking to buy base-level models could see some enhancements. Reports “have highlighted the potential for the iPhone 15 and iPhone 15 Plus to be graced with certain features found on last year’s more expensive Pro models, including the A16 chip, Dynamic Island, and a 48-megapixel camera,” he wrote.

Why go Pro? Apple could move to a titanium frame from its prior stainless-steel casing and make camera enhancements. Mohan highlighted the potential for a periscope-type telephoto lens on Max versions.

Apple fans “should also see more casing quality color differentiation between the Pro and regular series to help drive vanity switchers to the higher-priced models,” Jefferies analyst Andrew Uerkwitz wrote recently.

There could be a dark blue color option for the iPhone Pro line this year, for example, according to 9to5Mac. That said, those content with the base-level model might be enticed by a pink version of that phone, with 9to5Mac noting that that’s one of several rumored pastel color options.

Read: Here’s why Wall Street may be overreacting about Apple’s China’s challenges

Apple is also expected to refresh its Apple Watch lineup at Tuesday’s event. Bloomberg News has reported that the Apple Watch Series 9 could feature a faster processor, though it will have the same general design as past models. Apple is also expected to keep the look the same on an upgraded version of its Ultra Watch, and that might come in a black color option.

The event kicks off at 1 p.m. Eastern time Tuesday and will be available for live viewing on Apple’s site.

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September 10, 2023
Trouble in paradise: Shock guilty plea roils case of yoga gurus charged with stealing millions from bipolar Malibu doctor

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Their shared hippie spirit brought them together over a vegan potluck dinner, but the prospect of years in federal prison for allegedly stealing millions from a mentally-ill Malibu doctor, has driven a wedge between them.

A federal fraud prosecution against a pair of yoga gurus accused of siphoning cash from Dr. Mark Sawusch’s $60 million fortune took a significant turn at the end of August when one pleaded guilty and agreed to testify against the other, her ex-boyfriend, according to court documents and people familiar with the matter.

Anna Moore’s guilty plea before a federal judge in Los Angeles on Aug. 28 represents a serious legal challenge to her longtime partner, Anthony Flores, who faces decades behind bars if convicted in the case. Flores pleaded not guilty after his arrest in January.

Details of Moore’s agreement with federal prosecutors remain under seal, but people familiar with the matter say her ultimate sentence in the case will largely be determined after her level of cooperation is evaluated. A sentencing hearing for Moore was set for Nov. 6.

“We are aware of Ms. Moore’s decision to plead guilty. Obviously this changes Mr. Flores’ legal situation in the case, and we are currently reviewing our options,” Flores’ attorney Ambrosio Rodriguez said.

Messages left with Moore’s attorney weren’t immediately returned. A spokesman for the U.S attorney’s office for the central district of California declined to comment.

The tragic end to Sawusch’s life began on June 23, 2017, when the brilliant, but troubled, ophthalmologist met Flores and Moore in a chance encounter at a vegan ice cream parlor in Venice Beach, Calif.

Flores, who went by Anton David, was a guru-esque figure with long, flowing hair and a beard. He worked as a hair stylist on film shoots. Moore, a pixie-like blond, was an actress and singer. The couple had met years earlier at a vegan potluck dinner and had fallen in love over what they described as a shared hippie spirit. Together, they ran a yoga center in Fresno, Calif., while going back-and-forth to L.A.

Their spiritual vibe cast a spell on Sawusch, who had just days earlier been released from a mental health facility, where he had been committed after suffering a breakdown, court filings said. Within a week, Flores and Moore had moved into Sawusch’s multi-million dollar beachfront home in Malibu, Calif., federal prosecutors said.

Over the next year, the pair gained increasingly firm control over the doctor’s life and finances, with Flores establishing power of attorney over Sawusch’s vast fortune while plying him with a steady diet of marijuana and LSD as he also underwent experimental ketamine treatments for his bipolar disorder that left him addled, investigators said.

Sawusch later died in May 2018 of a lethal mixture of ketamine and alcohol, according to a coroner’s report. The Los Angeles County medical examiner’s office ruled the death an accident.

In her guilty plea, Moore said she was not immediately aware of the scope of Flores’ alleged efforts to steal the doctor’s money, but admitted that following Sawusch’s death she participated in a later effort in probate court to keep the stolen money. Prosecutors have alleged that this was a separate fraud.

When Sawusch’s family sought to take control of his estate, they discovered that almost $3 million had been transferred from his accounts to ones controlled by Flores in the days before and after the doctor’s death, federal prosecutors said.

Sawusch’s family launched a civil lawsuit against the yogi couple and convinced a California state judge to issue a restraining order freezing Flores’ and Moores’ accounts, and order they return the money. Instead, federal prosecutors say, the two engaged in a second fraud by making false claims in probate court that Sawusch had verbally told them he would give them a third of his fortune plus his Malibu beach house.

The couple claimed that the doctor had given them the money in return for them taking care of him and as part of an effort to protect his fortune from his family, from whom he was estranged. The family said those claims were untrue and that the pair had kept Sawusch isolated from his friends and family.

Eventually, the couple returned around $2 million of the doctor’s money, but around $1 million remained unaccounted for, according to federal prosecutors.

Flores and Moore broke up during the pandemic after nearly a decade together. Moore moved to Mexico while Flores remained in Fresno, where he was arrested in late January. Moore was arrested at George Bush Intercontinental Airport in Houston upon her return to the U.S. around the same time. Both have been held without bail since.

Read the series:

Part 1: Death and deceit in Malibu: How yogi couple befriended and stole millions from vulnerable rich doctor

Part 2: Rich Malibu doctor’s final days defined by fight between family and suspect yogis over declining mental health

Part 3: A star-crossed trade: Yogis offered friendship to a rich Malibu doctor in exchange for a third of his $60 million fortune

Part 4: Money, mania and LSD: A Malibu doctor’s tragic final weeks under yoga gurus’ sway

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September 10, 2023
Nasdaq snaps four-day losing streak, but U.S. stocks book worst week in three

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U.S. stocks finished modestly higher on Friday, but Wall Street still suffered a losing week amid renewed concerns that the Federal Reserve may keep interest rates higher for longer. The S&P 500
SPX,
+0.14%
booked a 1.3% weekly loss, while the Dow Jones Industrial Average
DJIA,
+0.22%
fell 0.8% and the Nasdaq Composite
COMP,
+0.09%
dropped 1.9% for the week. All three major indexes logged their worst weekly decline since August 18, according to Dow Jones Market Data. Meanwhile, investors looked ahead to inflation data, with readings on the consumer-price index and producer-price index next week expected to offer further clues on the central bank’s rate decision at its next policy meeting.

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September 8, 2023
Stock market’s 2023 run may hit roadblock after August’s energy-led boost to U.S. CPI

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August was a hot month and it wasn’t just about the weather. Financial markets are now bracing for what’s likely to be a rebound in headline U.S. inflation next week, fueled by higher energy prices.

Barclays
BARC,
+0.18%,
BofA Securities
BAC,
+0.62%,
and TD Securities expect August’s consumer price index to reflect a 0.6% monthly rise, up from the 0.2% monthly readings seen in July and in June. In addition, they put the annual CPI inflation rate at 3.6% or 3.7% for last month, which compares with the 3.2% and 3% figures reported respectively for the prior two months.

While Federal Reserve policy makers and analysts are loath to read too much into one report, August’s CPI has the potential to disrupt expectations that getting back to the central bank’s 2% target will be easy. Inflation has instead been nudging back up since June, with the likely rebound in August being regarded as primarily driven by the energy sector. What now remains to be seen is how much longer energy prices will remain elevated and whether they’ll begin to feed into narrower measures of inflation that matter most to the Fed.

Read: Stock-market investors just got reminded that the inflation fight isn’t over

“We’re going to see a spike in gas prices and other commodity prices driven by supply cuts, which means headline CPI goes back up,” said Alex Pelle, a U.S. economist for Mizuho Securities in New York. Via phone on Friday, Pelle said that prospects for a hotter August CPI report have already been factored in by financial markets, with all three major U.S. stock indexes heading for weekly losses.

How investors react to next Wednesday’s data will likely come down to whether the rebound in headline figures is seen as “a one-off” or something that gets repeated, and “what that means for the bottoming off of inflation,” Pelle said. “The equity market is going to have some trouble in the fourth quarter after a pretty impressive first half. Earnings expectations are still pretty high, but the macro-driven backdrop is challenging.”

Rising energy prices in August have already spilled into the month of September, with gasoline reaching the highest seasonal level in more than a decade this week. Voluntary production cuts by Saudi Arabia and Russia are a major contributing factor curtailing the supply of crude oil into year-end, and Goldman Sachs has warned that oil could climb above $100 a barrel.

In financial markets, there’s one group of traders which is telegraphing that the final mile of the road toward 2% inflation won’t be smooth.

Traders of derivatives-like instruments known as fixings anticipate that the next five CPI reports, including August’s, will produce annual headline inflation rates above 3%. Though policy makers care more about core readings that strip out volatile food and energy prices, they’re aware of how much headline figures can impact the public’s expectations.

Source: Bloomberg. The maturity column reflects the month and year of upcoming CPI reports. The forwards column reflects the year-ago period from which the year-over-year rate is based.

At BofA Securities, U.S. economist Stephen Juneau said August’s CPI won’t necessarily change his firm’s view that inflation is likely to move lower next year and fall back to the Fed’s target without the need for a recession. BofA Securities expects just one more Fed rate hike in November and will maintain that view if August’s CPI report comes in as he expects, Juneau said via phone.

After stripping out volatile food and energy items, BofA Securities, along with Barclays and TD Securities, expects August’s core CPI readings to come in at 0.2% month-over-month — matching June and July’s levels — and to fall to 4.3% on an annual basis.

Based on core measures, August’s report wouldn’t “change the narrative all that much: Everything points to a moderation in price growth,” Pelle said. “There’s a reason why food and energy are typically excluded,” and “we don’t want to put too much stock into one month.”

As of Friday afternoon, all three major U.S. stock indexes were headed higher, with the S&P 500 attempting to snap a three-day losing streak. Dow industrials
DJIA,
the S&P 500
SPX
and Nasdaq Composite
COMP
were respectively on track for weekly losses of 0.7%, 1.2%, and 1.7%. They’re still up for the year by more than 4%, 16% and 31%.

Meanwhile, Treasury yields turned were little changed on Friday as fed funds futures traders priced in a 93% chance of no action by the Fed at its next policy meeting in less than two weeks, and a more-than-50% likelihood of the same for November and December — which would leave the Fed’s main policy rate target between 5.25%-5.5%.

“There is a risk that investors are too complacent about the inflation report,” said Brian Jacobsen, chief economist at Annex Wealth Management in Elm Grove, Wis. “We might not get to 2% inflation as quickly as many hope.”

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September 8, 2023
Fed’s Williams says monetary policy is in a ‘good place,’ recession talk ‘has vanished’

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New York Fed President John Williams on Thursday sounded content with the current level of interest rates, but said he will be watching data closely to make sure the level of rates is high enough to keep inflation moving down.

“We’ve done a lot,” Williams said during a discussion at a conference sponsored by Bloomberg News.

“Right now, we’ve…

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September 7, 2023
Nasdaq falls for 4th straight session as Apple weighs on technology stocks

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U.S. stocks finished mostly lower on Thursday with the Nasdaq Composite leading the way down as investor sentiment cratered in the face of concerns that the Federal Reserve may keep interest rates higher for longer. The technology-heavy Nasdaq
COMP,
-0.89%
fell 123 points, or 0.9%, to end at 13,748, while suffering its four consecutive sessions of losses. The Dow Jones Industrial Average
DJIA,
+0.17%
was up 0.2%, and the S&P 500
SPX,
-0.32%
dropped 0.3%. Apple shares
AAPL,
-2.92%
were down for a second day, after the Wall Street Journal reported that China had banned government officials from using iPhones for work purposes. In U.S. economic data, initial jobless benefit claims fell by 13,000 to 216,000 in the week ended Sept. 2, the U.S. Labor Department said Thursday. This is the lowest level since mid-February.

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September 7, 2023