Stock futures fall after Wall Street closed out August with losses

U.S. stock futures fell on Thursday morning after the major averages closed out August with losses and investors considered the Federal Reserve's fight against inflation. Dow Jones Industrial Average futures fell by 140 points, or 0.44%. S&P 500 and Nasdaq 100 futures declined 0.71% and 1.19%, respectively. Those moves follow four straight days of losses in the major averages. On the final day of August, the Dow Jones Industrial Average slid nearly 0.9%. The S&P 500 lost about 0.8%, and the Nasdaq Composite fell roughly 0.6%. The Dow closed the month down about 4.1%, while the S&P and Nasdaq recorded losses of 4.2% and 4.6%, respectively. Investors are debating whether stocks will again challenge the June lows in September, a historically poor month for markets, after weighing recent hawkish comments from Fed officials who show no signs of easing up on interest rate hikes. On Wednesday, Cleveland Federal Reserve President Loretta Mester said she expects interest rates to rise above 4% before the central bank can start pulling back. The current fed funds rate is 2.25%-2.50. "If we retest the lows, I think it happens in September," SoFi's Liz Young said Wednesday on CNBC's "Closing Bell: Overtime." However, she added, "I think in order to do so, something would have to get materially worse than it was on June 16," when stocks bottomed, such as earnings revisions that come in worse than investors are expecting.

#Stock #futures #fall #Wall #Street #closed #August #losses https://www.globalcourant.com/stock-futures-fall-after-wall-street-closed-out-august-with-losses/?feed_id=18597&_unique_id=6310418ecb8c5

Cramer says avoid all speculative investments like crypto as the Fed stays hawkish

CNBC's Jim Cramer on Tuesday implored investors to stay away from speculative assets such as cryptocurrencies, warning that they will continue to struggle during the ongoing Federal Reserve tightening cycle. "Look, Fed chief Jay Powell told us that we need to stop doing stupid things with our money. That was the thrust of his speech on Friday," the "Mad Money" host said, referring to the top U.S. central banker's Jackson Hole address, in which Powell warned the Fed's commitment to squashing inflation could bring "some pain" to American businesses and households. Wall Street has finished lower in three straight sessions as investors digest Powell's Friday morning remarks. Powell is "going to bring the pain until it puts an end to the gambling," Cramer said. "Of course, he'll also hurt some good investments in the process ... but we won't see the end of this decline until we get a giant washout of all things that are speculative." That includes, but is not limited to, cryptocurrencies, said Cramer, who also acknowledged he no longer believes in the argument that bitcoin is a store of value. In Cramer's opinion, other speculative parts of the market to avoid are money-losing firms that went public via special purpose acquisition companies and meme stocks. "This is what it looks like when the Fed gets serious," Cramer said. What matters is that we just have to get through it intact. Don't get memed. Don't get SPAC'd. Don't get crypto'd. And you'll get through this thicket and find yourself in a much better time when we are sufficiently oversold for a huge bounce."

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#Cramer #avoid #speculative #investments #crypto #Fed #stays #hawkish https://www.globalcourant.com/cramer-says-avoid-all-speculative-investments-like-crypto-as-the-fed-stays-hawkish/?feed_id=18016&_unique_id=630e9a08015cd

Mississippi governor declares emergency amid Jackson water crisis

An SUV rests in flood waters in this northeast Jackson, Miss., neighborhood, Monday, Aug. 29, 2022. Rogelio V. Solis | AP

Residents of Jackson, Mississippi, the state's capital and largest city, do not have access to reliable drinking water for the near future after the city's main water treatment facility failed on Monday. The state has issued a state of emergency for Jackson and has activated the Mississippi National Guard. It's also distributing drinking and non-drinking water to up to 180,000 people until the system is fixed. Gov. Tate Reeves said during an emergency briefing Monday night that the city would be without "reliable running water at scale" indefinitely and that there isn't enough water to flush toilets or fight fires. "Do not drink the water. In too many cases, it is raw water from the reservoir being pushed through the pipes," Reeves warned residents. "Be smart, protect yourself, protect your family." Officials blamed the problem on longstanding issues at the O.B. Curtis water treatment plant, which has been in crisis for years due to old infrastructure and inadequate resources to update it. The city also said that recent rainfall and flooding of the Pearl River caused complications at the plant. City officials said the flooding had created issues at the plant, which is located near a reservoir that flows into the Pearl River. City residents have been subject to a boil-water notice since last month after tests found cloudiness in water samples. The water problem grew worse this week when businesses and homes endured little to no water pressure and officials warned that the water from the taps was untreated. Officials on Monday said the water shortage is likely to last the next couple of days.

Reservoir police observe the water release from the Ross Barnett Reservoir Spillway onto the Pearl River, Sunday, Aug. 28, 2022, in Rankin County, Miss. Rogelio V. Solis | AP

The governor said the exact cause of failure was unknown, adding that the treatment plant had been inadequately staffed and operated for years. Reeves said the plant's two primary pumps had stopped working, which left the system to depend on unreliable backup pumps. "It's not operating anywhere near capacity," Reeves said of the plant. "We might find out [Tuesday] it's not operating at all. We'll find out." The water crisis is affecting the roughly 150,000 people who live in Jackson and the 30,000 who live in surrounding communities that rely on the same water treatment facility. Jackson is about 82% Black, according to U.S. Census data. In addition to the unreliable water system, the city has been grappling with crime and problematic infrastructure.

The Mississippi Emergency Management Agency is distributing water to residents and the state is overseeing efforts to begin emergency repairs and maintenance to get the water system up and running, the governor said.

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Dow futures sink 300 points as Friday's rout on Wall Street looks set to continue

Traders work on the floor of the New York Stock Exchange (NYSE) on August 26, 2022 in New York City. Spencer Platt | Getty Images

Stock futures fell on Sunday evening as investors tried to shake off a sharp decline in stocks at the end of last week. Futures for the Dow Jones Industrial Average slid 300 points, or about 0.93%. Those for the S&P 500 and the Nasdaq 100 dropped 1.18% and 1.6%, respectively. The moves in futures come after a brutal sell-off for Wall Street on Friday, when Federal Reserve Chairman Jerome Powell's short and blunt remarks in Jackson Hole, Wyoming, appeared to extinguish hopes of the central bank changing its aggressive course of rate hikes in the months ahead. The Dow fell 1,008 points, or just over 3%, for its worst day since May. The S&P 500 and Nasdaq Composite fell 3.4% and 3.9%, respectively, for their worst days since June. The drop erased the August gains for all three averages. "Investors again cut back on their recent Risk-On positioning, supporting our view that it is way too soon to call their recent risk appetite a more permanent stance, and now one more likely to have cost them badly," Rick Bensignor of Bensignor Investment Strategies said in a note to clients.

The coming week brings more Fed speeches, including Vice Chair Lael Brainard on Tuesday, before August's nonfarm payrolls report on Friday.

#Dow #futures #sink #points #Fridays #rout #Wall #Street #set #continue https://www.globalcourant.com/dow-futures-sink-300-points-as-fridays-rout-on-wall-street-looks-set-to-continue/?feed_id=17190&_unique_id=630c1d127b49a

Playing the sustainable energy transition

Earlier this month, the Biden administration took a major step in combating the climate crisis with the passage of the Inflation Reduction Act, which includes roughly $370 billion in energy and climate incentives – mostly in the form of tax credits, according to Goldman Sachs. But with potential ripple effects on global supply chains as the domestic economy shifts toward a more energy-efficient era, strategic ETF investors can stand to benefit from the advances. "It's very clear that the administration is using the carrot," Tim Johnston, partner at Blue Horizon Capital and co-founder of Li-Cycle, told Leslie Picker in an interview Monday on CNBC's "ETF Edge." "Trying to incentivize people to domesticate or at least work with fair trade countries in order to bolster the supply chain." Johnston said that incentives are decisive in building infrastructure for a sustainable energy generation, and how we use that energy all the way through. "This capital that's flowing in through the administration, it's not just coming from the form of loans and grants," he said. "It's also coming through in the form of tax incentives, so all we're expecting to see is a structural benefit that's geared towards some of these companies that are really helping with this overall transition." And with a recent push toward sustainable ETFs, the move could double as a catalyst to drive further flows in those clean energy companies and industries that stand to benefit. "It's not as though clean energy is new to the ETF space," Tom Lydon, vice chairman at VettaFi, said in the same interview. "There have been some great ETFs have been around for over a decade." Two of the biggest, Lydon said, are the iShares Global Clean Energy ETF (ICLN) and the Invesco Solar ETF (TAN). The two funds collectively have $9 billion in assets and are up year to date. "Most of those ETFs that we have today tend to be cap weighted, so there's more invested in fewer companies," he said, which leaves less allocation to bolster up-and-coming companies in the clean energy space. Beyond the dominating ETFs in the clean energy sphere, Lydon said that strategic investors need to look at other areas like smaller and overseas companies, and producers of lithium cobalt – not just battery or solar companies. "We're going to need those minerals as we continue to move this clean energy process forward," Lydon said. Among the funds driving the transition to new energy is the Blue Horizon New Energy Economy ETF (BNE), which acts as a single index solution to gain global exposure to clean energy themes. Johnston said that Blue Horizon looks at the transition as being broken out across five broad segments: energy generation, distribution and storage, as well as e-mobility and performance materials – commodities like lithium, nickel, cobalt, copper and rare earths. "This transition is really broad based, it's not just here in North America," he said. "And what we're trying to do is identifying what we consider the leaders." That includes staple companies like Tesla that most every ETF investor has, Johnston said, while also incorporating areas like new types of battery technology subgroups and solar power. "We see them as being an important part of this transition as we go forward," he said.

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California bans the sale of new gas-powered cars by 2035

A charging port on a 2022 Lincoln Corsair Grand Touring plug-in hybrid vehicle during AutoMobility LA ahead of the Los Angeles Auto Show in Los Angeles, California, Nov. 18, 2021. Bing Guan | Bloomberg | Getty Images

California, the country's most populous state and the center of U.S. car culture, is banning the sale of new gasoline-powered vehicles starting in 2035, marking a historic step in the state's battle against climate change. The rule, issued by the California Air Resources Board on Thursday, will force automakers to speed up production of cleaner vehicles beginning in 2026 until sales of only zero-emission cars, pickup trucks and SUVs are allowed in the state. The unanimous vote comes after Gov. Gavin Newsom set a target in 2020 to accelerate the shift away from internal combustion engines. The transportation sector represents the largest source of greenhouse gas emissions in California, which has suffered from record-breaking wildfires, droughts and air pollution worsened by climate change. The decision is expected to have sweeping impacts beyond California and will likely pave the way for other states to follow suit. At least 15 states, including New Jersey, New York and Pennsylvania, have adopted California's vehicle standards on previous clean-car rules. Liane Randolph, chair of the California Air Resources Board, said the rule is one of the state's most important efforts yet to clean the air and will lead to a 50% reduction in pollution from cars and light trucks by 2040. The policy will not ban people from continuing to drive gas cars or from buying and selling them on the used market after 2035. The rule will also allow automakers to sell up to 20% plug-in hybrids, which have gas engines, by 2035. But the rule does phase out such vehicles over time, requiring 35% of total new vehicle sales to be powered by batteries or hydrogen by 2026 and 68% by 2030. More than 16% of new cars sold in California in 2022 were zero-emissions vehicles, the state said, up from 12.41% in 2021 and 7.78% in 2020. "California is once again leading the way by establishing commonsense standards that will transition to sales of all zero-polluting cars and light-duty trucks in the state," said Kathy Harris, clean vehicles advocate at the Natural Resources Defense Council.

Motor vehicles drive on the 101 freeway in Los Angeles, California. Robyn Beck | Getty Images

California, home to congested freeways and the smog-filled skies over Los Angeles, has considerable authority over the country's auto industry. A federal waiver under the Clean Air Act allows the state to adopt stronger fuel economy standards than those of the federal government and it has set the precedent for the rest of the country on how to curb vehicle emissions.  California's ability to control vehicle emissions has spurred innovations like catalytic converters that convert toxic gases and pollutants in exhaust gas into less-toxic pollutants, as well as "check engine" lights. The state established the nation's first tailpipe emissions standards in 1966. The Trump administration in 2019 revoked California's authority to regulate its own air quality, but the Biden administration restored that authority earlier this year. State officials said the rule is critical to meeting the state's goal of transitioning to 100% renewable energy by 2045, adding that resulting emissions declines would lead to fewer cardiopulmonary deaths and improved health for those suffering from asthma and other illnesses.

However, meeting the timeline will face challenges, including installing enough charging stations across the state and having adequate access to materials needed to make batteries for electric vehicles. John Bozzella, president and CEO of the Alliance for Automotive Innovation, which represents major automakers, said California's mandate would be "extremely challenging" for automakers to meet. "Whether or not these requirements are realistic or achievable is directly linked to external factors like inflation, charging and fuel infrastructure, supply chains, labor, critical mineral availability and pricing, and the ongoing semiconductor shortage," Bozzella said in a statement. "These are complex, intertwined and global issues." The rule comes after President Joe Biden signed the Inflation Reduction Act earlier this month, which provides funding for electric vehicle tax credits and clean vehicle manufacturing facilities. The Biden administration also issued new nationwide limits on tailpipe emissions last year for new cars and light trucks made through 2026. Environmental groups praised the decision on Thursday, though some argued that the board needed to set even tougher targets to meet the urgency of the climate crisis. Some groups had previous urged the board to impose a rule to achieve 100% zero-emission vehicle sales by 2030, five years earlier than the actual regulation. "This rule needed to match the urgency of the climate crisis and instead leaves Californians making sputtering progress in the slow lane," Scott Hochberg, an attorney at the Center for Biological Diversity's Climate Law Institute, said in a statement. "California needs to act strongly on gas-powered cars instead of ignoring them, and shift to EVs much sooner or watch our climate stability slip away," Hochberg said. Daniel Barad, California senior policy advocate at Sierra Club, said in a statement that the rule is "a major step towards breathable air in California communities, and will be critical for the state to meet its climate goals and emission reduction targets."

"Other states should move swiftly to join California and adopt this life saving rule, which will improve air quality and help slow the climate crisis," Barad said.

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U.S. stock futures flat after Dow, S&P 500 break three-day slide

Traders on the floor of the NYSE, August 24, 2022. Source: NYSE

U.S. stock futures were flat on Wednesday night after all three major averages ended higher during the daily trading session. Dow Jones Industrial Average futures rose by 8 points, or 0.02%. S&P 500 and Nasdaq 100 futures climbed 0.14% and 0.13%, respectively. Shares of Nvidia slid more than 2% on the heels of a quarterly report that missed Wall Street's expectations. Salesforce fell more than 4% after the company provided a disappointing forecast for fiscal 2023. Snowflake jumped 16% after posting a beat on revenue. The Dow Jones Industrial Average gained 59.64 points, or 0.18%, and the S&P 500 rose 0.29% Wednesday. For both averages, the gains snapped three-day long losing streaks. The tech-heavy Nasdaq Composite also ticked up 0.41%. The market action occurs as investors await the start of the Jackson Hole economic symposium, which begins Thursday with Federal Reserve Chair Jerome Powell scheduled to speak the following morning. Traders will be listening for more information about how the central bank will combat high inflation and if policymakers may cut rates when the current hiking cycle is over. "It's steady as it goes, it's way too early for the Fed to consider a pivot," said Jim Bianco, president of Bianco Research, on CNBC's "Fast Money." Investors are also waiting for key economic reports scheduled to come out later in the week, including jobless claims Thursday and the personal consumption expenditures Friday. The PCE report is one of the Fed's favorite inflation measures, and it could influence its actions going forward.

Peloton reports quarterly earnings Thursday before the bell, along with Gap, Dollar Tree and Dollar General. Ulta Beauty, Workday and Affirm Holdings will release their own results after markets close Thursday.

#U.S #stock #futures #flat #Dow #break #threeday #slide https://www.globalcourant.com/u-s-stock-futures-flat-after-dow-sp-500-break-three-day-slide/?feed_id=15377&_unique_id=6306a4d7c2f83

Stock futures fall as Wall Street looks ahead to Jackson Hole

Traders on the floor of the NYSE, Aug. 9, 2022. Source: NYSE

U.S. stock futures fell on Sunday night following a halt in the summer rally last week, as fears of aggressive interest rate hikes returned to Wall Street. Dow Jones Industrial Average futures slid by 93 points, or 0.28%. S&P 500 and Nasdaq 100 futures dipped 0.35% and 0.53%, respectively. On Friday, the S&P 500 closed down 1.29%. The Dow Jones Industrial Average dropped 292 points, or 0.86%, and the Nasdaq Composite dropped 2.01%. Those moves come ahead of what could be a volatile week of trading on Wall Street. Investors are anticipating Fed Chairman Jerome Powell's latest comments on inflation at the central bank's annual Jackson Hole economic symposium. "We've written a couple of times recently about wait and see trading ahead of key events/releases... and how that can set the stage for greater volatility around the events themselves, and we may see a bit of that play out next week as investors await the symposium," read a Friday note from Susquehanna's Christopher Jacobson.

On the earnings front, traders are expecting Palo Alto Networks and Zoom Video to report results Monday after the bell.

Source https://www.globalcourant.com/stock-futures-fall-as-wall-street-looks-ahead-to-jackson-hole/?feed_id=14003&_unique_id=6302d435499a0

FTX grew revenue 1,000% during the crypto craze: Leaked financials

Sam Bankman-Fried, founder and chief executive officer of FTX Cryptocurrency Derivatives Exchange, speaks during an interview on an episode of Bloomberg Wealth with David Rubenstein in New York, US, on Wednesday, Aug 17, 2022.

Jeenah Moon | Bloomberg | Getty Images

FTX rode the crypto craze to a billion dollars in revenue last year while expanding its global footprint through a flurry of acquisitions, according to internal documents seen by CNBC.

The audited financials give a rare glimpse into the privately held start-up's finances. FTX was profitable, quickly expanding across the globe and saw breakneck growth.

The privately held crypto exchange's revenue soared more than 1,000% from $89 million to $1.02 billion in 2021. Its profitability, like many start-ups, depends on how you measure it. Operating income was $272 million, up from $14 million a year earlier. FTX saw net income of $388 million last year, up from just $17 million a year earlier.

FTX declined to comment on the leaked financial documents.

The company brought in $270 million in revenue in the first quarter of 2022, and was on track to do roughly $1.1 billion in revenue in 2022, according to an investor deck shared with CNBC. But it's unclear how FTX held up in the second quarter as crypto prices plunged during the recent so-called "Crypto Winter."

By way of comparison, publicly traded Coinbase also experienced a cash boom times during crypto's bull market, with $7.4 billion in revenue and $3.6 billion of net income last year. But in Q2 of this year, it reported $808.3 million in revenue, a decline of 64% from the year-ago quarter, and a surprise net loss of $1.1 billion, compared with $1.59 billion in net income in the same quarter last year, as retail trading volumes cratered.

FTX was founded in three years ago by former Wall Street quant trader Sam Bankman-Fried. The 30-year-old CEO has recently stepped in as the industry's lender of last resort, looking to backstop companies as liquidity dried up. On top of multiple loans of hundreds of millions of dollars, Bankman-Fried's companies also looked to acquire distressed assets. In July, FTX signed a deal that gives it the option to buy lender BlockFi and was in discussions to acquire South Korean Bithumb. FTX also offered to buy Voyager in August but was turned down for what the company claimed was a "low ball bid."

According to the documents, FTX had roughly $2.5 billion in cash at the end of last year and 27% profit margins, according to the documents. Margins were closer to 50% if advertising and "related party" expenses are stripped out. It last raised money in January, collecting $400 million from investors like SoftBank's Vision Fund 2 and Tiger Global, at a $32 billion valuation.

Global footprint

FTX was founded at a time when Coinbase and Binance had solidified themselves as the world's largest trading venues. Coinbase still operates largely within the U.S. Binance, the largest exchange by trading volume got its start in China, later moved its headquarters to the Cayman Islands and is now making a push for the U.S. market with an American subsidiary.

FTX has been quietly building its own fleet of global subsidiaries to compete.

FTX Trading Ltd is headquartered in Antigua, with FTX Derivatives Markets based in the Bahamas, where Bankman-Fried lives. FTX Trading recently bought Digital Assets DA AG, out of Switzerland, as well as IFS Group and Hive out of Australia – bringing the total to 15 smaller companies across the world. Its portfolio companies span Cyprus, Germany, Gibraltar, Singapore, Turkey and the United Arab Emirates, among other countries, according to the documents. Crypto companies often acquire start-ups to quickly get the proper regulatory licenses to set up shop in a new country.

Bankman-Fried also founded trading firm Alameda Research, which accounts for about 6% of FTX's exchange volumes, according to the documents.

FTX's U.S. business is technically owned by a parent company, West Realm Shires Inc. As of 2021, FTX U.S. made up less than 5% of FTX's total revenue. Still, the company is making a push to expand here with a series of high-profile ads and sponsorships.

FTX spent roughly 15% of revenue on advertising and marketing in 2021, according to the documents. That may account for its 2022 Super Bowl ad with actor Larry David and high-profile celebrity endorsements by Tom Brady and Giselle Bündchen, who are also equity investors in the company. FTX also bought the naming rights to Miami's NBA arena, formerly the American Airlines Arena. FTX planned to spend an estimated $900 million in advertising in the coming years, according to the documents.

The crypto exchange is also expanding into stock trading. It launched equities trading weeks after Bankman-Fried took a 7.6% passive stake in Robinhood, fueling speculation that FTX is looking to buy the trading app in a landgrab for U.S. retail accounts. Robinhood and Bankman-Fried have denied that a deal is in the works.

FTX has certainly ramped up its retail expansion efforts. But the documents show that it's still mainly a venue for more sophisticated traders using derivatives – either futures, or options. Sixty seven percent of revenue came from futures trading fees, while roughly 16% came from so-called spot trading. Futures and derivatives trades tend to be more lucrative for exchanges.

Source https://www.globalcourant.com/ftx-grew-revenue-1000-during-the-crypto-craze-leaked-financials/?feed_id=13527&_unique_id=63012b82ab01a

China's consumer and factory data miss expectations in July

Employees working on an air-conditioner production line at a Midea factory in Guangzhou, China.

Jade Gao | AFP | Getty Images

BEIJING — China reported data for July that came in well below expectations.

Retail sales grew by 2.7% in July from a year ago, the National Bureau of Statistics said Monday. That's well below the 5% growth forecast by a Reuters poll, and down from growth of 3.1% in  June. Within retail sales, catering, furniture and construction-related categories saw declines.

Sales of autos, one of the largest categories by value, rose by 9.7%. The gold, silver and jewelry category saw sales rise the most, up by 22.1%.

Industrial production rose by 3.8%, also missing expectations for 4.6% growth and a drop from the prior month's 3.9% increase.

Fixed asset investment for the first seven months of the year rose by 5.7% from a year ago, missing expectations for 6.2% growth.

Investment into real estate fell at a faster pace in July than June, while investment into manufacturing slowed its pace of growth. Investment into infrastructure rose at a slightly faster pace in July than in June. Fixed asset investment data is only released on a year-to-date basis.

The unemployment rate among China's youth, ages 16 to 24, was a high 19.9%. The unemployment rate across all ages in cities was 5.4%.

"The national economy maintained the momentum of recovery," the statistics bureau said in a statement. But it warned of rising "stagflation risks" globally and said "the foundation for the recovery of the domestic economy is yet to be consolidated."

Read more about China from CNBC Pro

Analyst forecasts for July were projected to show a pickup in economic activity from June, as China put the worst of this year's Covid-related lockdowns behind it, especially in the metropolis of Shanghai.

Exports remained robust last month, surging by 18% year-on-year in U.S. dollar terms despite growing concerns of falling global demand. Imports lagged, climbing by just 2.3% in July from a year earlier.

However, China's massive real estate sector has come under renewed pressure this summer. Many homebuyers halted their mortgage payments to protest developer delays in constructing homes, which are typically sold ahead of completion in China.

The deterioration in confidence puts developers' future sales — and an important source of cash flow — at risk.

The potential for a Covid outbreak has remained another drag on sentiment. A surge of infections in tourist destinations, especially the island province of Hainan, stranded tens of thousands of tourists this month.

The local situation reflects the large gap between goals set at the beginning of the year and the ensuing reality. Hainan had set a GDP target of 9%, but was only able to grow by 1.6% in the first six months.

Similarly, at a national level, China's GDP grew by just 2.5% in the first half of the year, running well below the full-year target of around 5.5% set in March.

China's top leaders indicated at a meeting in late July the country might miss its GDP goal for the year. The meeting did not signal any forthcoming large-scale stimulus, while noting the importance of stabilizing prices.

The country's consumer price index hit a two-year high in July as pork prices rebounded.

This is breaking news. Please check back for updates.

Source https://www.globalcourant.com/chinas-consumer-and-factory-data-miss-expectations-in-july/?feed_id=10993&_unique_id=62f9b4a8b8cd5

How Sri Lanka's economic collapse raises alarm bells for other emerging markets

During the 2010s, Sri Lanka had one of the fastest-growing economies in Asia. 

Things took a 180-degree turn at the end of the decade as the country's economy stumbled. In May 2022, the government defaulted on its debt for the first time in history. 

As inflation continued to spiral out of control, with a massive shortage of food, fuel and medicine for the country's 22 million people, Sri Lankans took to the street, forcing the president, Gotabaya Rajapaksa, to resign and flee the country. 

Even though Sri Lanka has a new president, Ranil Wickremesinghe, protests continue. Inflation has risen past 50% — and could hit 70% — making it harder for people to survive. 

Many experts believe that Sri Lanka's story is a warning sign for emerging markets. 

"Sri Lanka is facing its worst economic collapse in its modern history," said Sumudu W. Watugala, assistant professor of finance at the Kelley School of Business at Indiana University. "This is due to long-standing structural weaknesses exacerbated by a series of idiosyncratic shocks. Sri Lanka's crisis can be a warning sign to other developing nations because it's a classic emerging market crisis in many ways."

So what does Sri Lanka's economic crisis signal about similar economies and emerging markets? Watch the video to learn about more risks involved in emerging markets, how Sri Lanka's economy collapsed and the country's path forward. 

Source https://www.globalcourant.com/how-sri-lankas-economic-collapse-raises-alarm-bells-for-other-emerging-markets/?feed_id=10622&_unique_id=62f88ac1003ed

Dow futures are flat after Wednesday's market rally

Dow futures were flat in overnight trading on Wednesday after all the major averages posted sharp gains on the back of a better-than-expected July inflation report.

Futures tied to the Dow Jones added 0.02% or 6 points, while S&P 500 futures and Nasdaq 100 futures inched 0.07% and 0.13% lower, respectively.

Disney added 6.7% in late trading after posting stronger-than-anticipated subscriber numbers and topping earning estimates on the top and bottom lines. Shares of Sonos slumped more than 19% after missing analysts' expectations.

Wednesday's regular trading session saw all the major indexes rally, with the Dow Jones Industrial Average jumping 535.10 points, or 1.63%, to close at 33,309.51. The S&P 500 added 2.13% to 4,210.24 and hit its highest level since early May, while the Nasdaq Composite gained 2.89% to 12,854.80, its highest close since late April.

The moves came after the headline consumer price index for July came in at 8.5%, slightly cooler than the 8.7% expected by analysts surveyed by Dow Jones, and raised questions as to whether inflation has hit its peak and the Federal Reserve will need to hike rates as aggressively as anticipated when it meets next month.

Beaten-up tech shares that have borne the brunt of this year's selloff drove Wednesday's market rally as shares of Meta Platforms and Netflix jumped 5.8% and 6.2%, respectively. Battered chip names such as Nvidia and Advanced Micro Devices jumped nearly 6% and 4%, respectively.

"For today, we're rallying, and I think it's really because inflation has been such an overhang for investors and for the market," Lindsey Bell, Ally Invest's chief markets and money strategist told CNBC's "Closing Bell" on Wednesday. "And I think what investors are thinking today is maybe the peak really has been put in the past."

Earnings season continues Thursday with reports from Rivian, Warby Parker, Poshmark and more. July producer price index data is also slated for Thursday.

Source https://www.globalcourant.com/dow-futures-are-flat-after-wednesdays-market-rally/?feed_id=9236&_unique_id=62f43b8cb1350

Market outlook 'too volatile' to chase stock, bond rallies, asset manager says

Investors should eschew chasing recent rallies in stocks and bonds given the current economic uncertainty, according to the chief investment officer of Swiss asset manager Prime Partners.

Francois Savary said it was hugely difficult to have clear economic visibility due to the particulars of the current investment cycle, such as the Covid-19 recovery and the Ukraine war.

"One of the key factors that supported the rally, which was a strong bond market during the month of July, has disappeared to a certain extent," he told CNBC's "Street Signs Europe" on Monday.

Additionally, while the second-quarter earnings season has been robust so far, a key issue looming is how much analysts will revise their third-quarter earnings forecasts. "So we consider that the two elements that can support a further rally in the equity market are not clearly there," Savary said.

As such, he said investors should "absolutely not" be chasing the rally in equities that has been underway since mid-July. The S&P 500 is up almost 13% from its July lows, closing at 4,140 on Monday, but remains down since the start of the year.

On bonds, Savary said, "we all know it's very difficult to make money on the bonds side. I would not chase the bond rally that we experienced over the last two months."

Corporate, government and high-yield bond funds saw sizeable inflows last month. The U.S. 10 Year Treasury yield — which moves inversely prices — has slipped to trade around 2.76% on Tuesday after topping 3.48% in mid-June.

Investors in global markets are navigating a whirlwind of inflationary pressures, recession risks and central bank tightening cycles, with even juggernauts such as Berkshire Hathaway and SoftBank posting investment losses in the June quarter.

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"It's a very difficult market environment," Savary told CNBC. "You need to have some hedge funds [and] some kind of decorrelating strategy that are in your portfolio."

Keeping some investment in stocks will provide partial protection from inflation, he said, however investors will need to be tactical and observe the latest economic figures.

Meanwhile cash, Savary said, is useful for providing flexibility.

"It's interesting to have some cash to check because everything is possible in this kind of environment. We could have a recession, but you could also get a slow but satisfactory rate of growth in the coming 12 months," he said.

For now, Savary said the market has priced in a recession. "But the numbers are not telling you that there is a recession, so we need to be nimble and to check what is happening week-by-week and month-by-month, and we should have more visibility by the early fall, in the U.S. in particular."

U.S. gross domestic product fell for the first two quarters of the year, meeting a common definition of a recession, although the NBER defines it differently and the White House insists the U.S. is not currently in recession.

Investors will be looking to U.S. inflation data out Wednesday for further clues on the state of the world's largest economy. It comes after the jobs report for last month showed unexpected strength and increased expectations of a 75 basis points rate hike in September.

Source https://www.globalcourant.com/market-outlook-too-volatile-to-chase-stock-bond-rallies-asset-manager-says/?feed_id=8522&_unique_id=62f213a04a7dc

Uber and Lyft stocks had their best week ever

Air travelers wait in the ride share lot near a sign for Uber at Los Angeles International Airport (LAX) on August 20, 2020 in Los Angeles, California.

Mario Tama | Getty Images

Shares of gig economy companies Uber, Lyft, DoorDash and Airbnb popped this week after the companies posted quarterly reports that showed strong demand.

Lyft finished the week up 46%, and Uber jumped 37%, the best week ever for both stocks. DoorDash closed up 15%, and Airbnb rose for a third straight week, climbing 5.5%.

Investors are encouraged to see that gig companies in the consumer market are, so far, withstanding inflationary pressures that have rocked other sectors, such as retail. It also may be an indication that grocery delivery platform Instacart can form a stronger pitch for an IPO. Instacart confidentially filed for an IPO in May, though it's had to bring its private market valuation down.

Uber CEO Dara Khosrowshahi said he's noticed a change in consumer spending from retail to services. And inflation may even have helped. Khosrowshahi said Uber saw a boost in the number of drivers on the platform as consumers look to other ways to increase their income.

Airbnb, meanwhile, posted an all-time high in bookings. DoorDash said it had a record number of orders. Lyft, which still had a net loss, posted its highest ever adjusted earnings figure.

Here are some of the highlights:

• Uber reported revenue of $8.07 billion, well above analyst estimates of $7.39 billion. Khosrowshahi said that driver engagement reached another post-pandemic high during the quarter.

• Lyft reported a 16% increase in active riders, to 19.9 million, the highest since the start of the pandemic.

• DoorDash posted better-than-expected revenue. Though it reported a wider loss per share than estimated, the company recorded 23% growth in the total number of delivered orders.

• Shares of Airbnb were up for the third week in a row. The company posted higher-than-expected earnings Tuesday and revenues in line with expectations for the second quarter. Airbnb said gross nights booked for cross-border travel exceeded pre-pandemic levels and doubled compared with the same period last year.

Source https://www.globalcourant.com/uber-and-lyft-stocks-had-their-best-week-ever/?feed_id=7164&_unique_id=62ed99a6684ed

nonfarm payrolls, unemployment, Fed, recession

Investors are closely monitoring the health of the U.S. economy after recent numbers showed a second consecutive negative gross domestic product reading.

As a result, upcoming data releases related to the labor market will be highly anticipated by many money managers.

Nonfarm payrolls data will be released at 8:30 a.m. ET, alongside unemployment and average hourly wage numbers.

Richmond Fed President Tom Barkin is scheduled to deliver remarks at 8 a.m. ET on Friday.

Cleveland Fed President Loretta Mester on Thursday said the Federal Reserve plans to keep raising interest rates into 2023, in another sign that the central bank does not yet see an economic recession.

Source https://www.globalcourant.com/nonfarm-payrolls-unemployment-fed-recession/?feed_id=6882&_unique_id=62ecd0e131404

Morgan Stanley on market bottom and tech stocks, Nasdaq

Source https://www.globalcourant.com/morgan-stanley-on-market-bottom-and-tech-stocks-nasdaq/?feed_id=6763&_unique_id=62ec6ff0a8078

Bolivia farmers clash with police over 'illegal' coca markets

Fast News

Coca cultivators protest in capital La Paz to demand closure of what they say are new unlawful markets.

Coca leaf trade generates profits for politicians and is at the root of the conflict. (AFP)

Clashes between police and the Departmental Association of Coca Producers (ADEPCOCA) have continued in the capital La Paz, where coca growers demand the closure of what they say are new illegal coca markets.

"We want to close this illegal market. We will not accept any more (coca) markets, we will be in constant protest, so this must be shut down, whatever it takes," said one of the coca growers during the protest.

ADEPCOCA manages the main coca market in the capital and claims to be the only market authorised to trade coca leaves.

Coca growers along with other government oppositions protested near the coca market in La Paz against new “illegal” markets. (AP)

Coca-leaf trade

In recent years, the organisation has been opposed to the former president and leader of the ruling MAS party Evo Morales, who heads another coca growers' union in the Chapare locality in the central region of Cochabamba.

The coca leaf trade is legal in Bolivia and takes place in markets specifically designated by law and managed by the coca growers' unions.

This sale generates profits for the leaders and is at the root of the conflict.

In Bolivia, the constitution classifies coca as a "sacred leaf" because of the Andean cultural heritage and traditional uses such as chewing and natural medicine, which are widely practised in the country.

However, much of coca leaf production is diverted to cocaine, of which Bolivia is the world's third-largest producer after Colombia and Peru.

Source: AP

Source https://www.globalcourant.com/bolivia-farmers-clash-with-police-over-illegal-coca-markets/?feed_id=5867&_unique_id=62e9e55005cce

S&P 500 sheds nearly 1% Friday on Snap-led tech sell-off, but finishes higher on week

The S&P 500 fell nearly 1% on Friday, but finished the week higher, as investors digested disappointing results from Snap that sent social media shares reeling.

The Dow Jones Industrial Average lost 137.61 points, or 0.43%, to 31,899.29. The S&P 500 declined 0.93% to 3,961.63, while the Nasdaq Composite traded 1.87% lower to 11,834.11.

Those losses cut into weekly gains for all three major averages, with the Dow closing out the week nearly 2% higher. The S&P 500 advanced about 2.6%, and the Nasdaq capped the week up 3.3%.

An earnings miss from Snap, which sent shares tumbling about 39.1%, halted this week's Nasdaq rally. Traders, eyeing some better-than-expected results from tech companies, had deliberated whether markets had finally found a bottom.

"Snap has managed to snap the uptrend in the Nasdaq by reporting disappointing earnings, which has created a cascading effect on the S&P," said Sam Stovall, chief investment strategist at CFRA Research.

"This is just an example of the volatility that investors should expect as earnings are reported, and, therefore, could cause fluctuations in prices in response to better than or worse than results," Stovall added.

The results from the Snapchat parent were followed by a slew of analyst downgrades on the stock. Snap's quarterly report also weighed on other social media and tech stocks, which investors feared could face slowing online advertising sales.

Shares of Meta Platforms and Pinterest fell about 7.6% and 13.5%, respectively, while Alphabet lost 5.6%.

Twitter rose 0.8% despite reporting disappointing second-quarter results that missed on earnings, revenue and user growth. The social media company blamed challenges in the ad industry, as well as "uncertainty" around Elon Musk's acquisition of the company, for the miss.

Verizon was the worst-performing member of the Dow after reporting earnings. The wireless network operator dropped 6.7% after cutting its full-year forecast, as higher prices dented phone subscriber growth.

About 21% of S&P 500 companies have reported earnings so far. Of those, nearly 70% have beaten analyst expectations, according to FactSet.

Economic data weighs on sentiment

Meanwhile, concerns over the state of the U.S. economy also weighed on sentiment after the release of more downbeat economic data. A preliminary reading on the U.S. PMI Composite output index — which tracks activity across the services and manufacturing sectors — fell to 47.5, indicating contracting economic output. That's also the index's lowest level in more than two years.

The report comes a day after the U.S. government reported an unexpected uptick in weekly jobless claims, raising questions about the health of the labor market.

Still, Wall Street has enjoyed a strong week for markets, as traders absorbed second-quarter results that have come in better than feared. On Friday, the S&P 500 touched the 4,000 level, which it hasn't hit since June 9, before coming back down.

The Dow got a boost earlier in the session following a robust earnings report from American Express. The credit card company jumped about 1.9% after beating analyst expectations, because of record consumer spending in areas such as travel and entertainment.

"This is showing you that market expectations are really low, that a little bit of good news can go a long way when you have low expectations," said Truist's Keith Lerner, noting that investors rotated back into growth stocks even amid weak economic data.

To be sure, some market participants do not believe the bear market is over despite this week's gains. Since World War II, nearly two-thirds of one-day rallies of 2.76% or more in the S&P 500 occurred during bear markets, with 71% occurring before the bottom was in, according to a note this week from CFRA's Stovall.

Stovall believes the broader market index could rally as high as the 4,200 level before coming back down to challenge June lows.

— CNBC's Fred Imbert contributed to this report.

Lea la cobertura del mercado de hoy en español aquí.

Source https://www.globalcourant.com/sp-500-sheds-nearly-1-friday-on-snap-led-tech-sell-off-but-finishes-higher-on-week/?feed_id=454&_unique_id=62db294674865