- Asian Stocks Track US Rally in Countdown to CPI: Markets Wrap
(Bloomberg) — Stocks in Asia followed a rally on Wall Street after the latest US inflation data reinforced bets that the Federal Reserve will be able to start its monetary easing in September. Equity benchmarks in Japan and South Korea advanced more than 1% at the open, extending their recovery from a historic Aug. 5 selloff. - Nasdaq closes up 2%, Dow adds 400 points as tame inflation data fuels market comeback
Stocks rallied Tuesday, moving closer to last month’s record levels following the first of two key U.S. inflation reports this week. The Dow Jones Industrial Average ended the day up 408 points, or 1.04%, at 39,765.64. The Nasdaq Composite jumped 2.43% to close at 17,187.61, while the S&P 500 added 1.68% to 5,434.43. The broad market index is now roughly less than 5% from its record high from July. The producer price index, a measure of wholesale prices, increased 0.1% last month. Economists expected the reading to show a monthly gain of 0.2% in July, in line with the previous month’s reading, according to Dow Jones consensus estimates. The PPI encouraged investors ahead of the more widely followed consumer price index out Wednesday morning, which is expected to show an increase of 0.2% month over month, up from a 0.1% decline in the prior month. The data could give an uncertain market some direction after last week’s wild moves. - Oil strengthens as fall estimated in U.S. crude inventories
Oil prices climbed on Wednesday on estimates about shrinking U.S. crude and gasoline inventories as the market watched for a possible widening of the Middle Eastern war, which could curtail global oil supplies. Brent crude futures rose 30 cents to $80.99 a barrel by 0009 GMT. U.S. West Texas Intermediate crude increased by 38 cents to $78.73 per barrel. U.S. crude oil and gasoline inventories were expected to have fallen last week, while distillate stocks rose, according to market sources, citing American Petroleum Institute data on Tuesday. The API figures showed crude stocks shrunk by 5.21 million barrels in the week ended Aug. 9, the sources said, speaking on condition of anonymity. Gasoline inventories eased by 3.69
million barrels, and distillates rose by 612,000 barrels. - Gold firms as dollar, yields slip after US PPI data
Gold prices steadied on Tuesday to hover close to an all-time high hit in July, as the dollar and Treasury yields crept lower after U.S. producer price data cemented hopes for a interest rate cut from the Federal Reserve in September. Spot gold prices were down about 0.2% at $2,467.12 per ounce due to some profit-taking. Non-yielding gold touched a record high of $2,483.60 on July 17 and is up 20% so far this year. U.S. gold futures for December delivery rose 0.1% to $2,507.5. The dollar was down 0.2% against its rivals, making gold more attractive for other currency holders, while the Benchmark 10-year note yields slipped to a one-week low. - Hedge Fund SPX Gains 2.4% in July, Pares Bullish US Dollar Bet
(Bloomberg) — Brazil’s SPX Capital said its flagship Nimitz fund has scaled back its wager on a stronger US dollar, according to a note sent to investors last week seen by Bloomberg. Fund now has a low exposure to the US dollar, holding currency positions that are in line with a scenario of a global slowdown, SPX said in a separate letter to investors SPX, which has about $11 billion under management, said its flagship mixedallocation. - Wall Street’s Crowded Options Trade Survives Short-Vol Turmoil
(Bloomberg) — A popular hedge-fund trade betting on calm is reloading after the equity selloff, even as some critics warn it helped fuel the recent turmoil. Once a niche strategy for specialized hedge funds, the so-called dispersion trade has boomed in the bull market era, netting big gains by riding placid equity indexes while wagering that volatility will hit. - Elliott Nominates 10 Candidates for Southwest Airlines Board
(Bloomberg) — Elliott Investment Management nominated 10 candidates, including three former airline chief executives, for Southwest Airlines Co.’s board, escalating the activist investor’s push for sweeping changes at the struggling carrier. The candidates include former Virgin America CEO David Cush; Gregg Saretsky, the former head of WestJet; and Robert Milton. - Ukraine Plotted Incursion to Throw Kremlin Off Balance
(Bloomberg) — Ukraine had been weighing several possibilities for an attack that would shock the leadership in Moscow and put President Vladimir Putin on the backfoot before storming across the border last week, according to a Western official familiar with the planning. - Fed’s Bostic Says More Data Needed, Rate Cut Likely by Year-End
(Bloomberg) — Federal Reserve Bank of Atlanta President Raphael Bostic said he’s looking for a little more data before supporting a reduction in interest rates, emphasizing he wants to be sure the US central bank will not have to change course once it begins cutting. We want to be absolutely sure, Bostic said Tuesday in remarks to the Conference of African American. - China Economy Is Plodding Along in Absence of Consumption Spark
(Bloomberg) — China’s economy probably failed to turn the corner on its worst stretch in five quarters, with an uneven recovery in July held back by consumer spending still lagging industrial activity and investment. Data due Thursday will show retail sales remained sluggish, according to the median forecasts compiled by Bloomberg, despite a slight improvement. - DOJ Mulls Google Breakup Push After Landmark Antitrust Win
(Bloomberg) — A rare bid to break up Alphabet Inc.’s Google is one of the options being considered by the Justice Department after a landmark court ruling found that the company monopolized the online search market, according to people with knowledge of the deliberations. - Campaign Hacks Blamed on Iran Draw FBI Probe of Election Risks
(Bloomberg) — Suspected attempts by Iranian hackers to infiltrate US presidential campaigns have touched off a widening federal investigation into the first major effort by a foreign actor to disrupt the November election. Investigators believe that attackers tied to Iran succeeded in hacking Republican nominee Donald Trump’s campaign. - Japan Company Bond Sales to Slow as Spreads Widen on BOJ Hike
(Bloomberg) — Yen bond markets have become more volatile after the Bank of Japan’s July 31 interest rate hike, and underwriters say that will likely slow corporate debt sales by making it pricier for companies to borrow. One key gauge of funding costs credit spreads, or the extra yield over benchmark government bonds that issuers have to offer investors, have risen. - Bond Traders Are Set for Rally to Extend as CPI Test Looms
(Bloomberg) — Bond traders who’ve endured some dramatic swings lately are betting on big gains heading into Wednesday’s key inflation report. US Treasuries rallied sharply at the start of last week, sparked by broader market upheaval and mounting concerns that a softening economy may force aggressive Federal Reserve interest-rate cuts. - Bain Is Said to Be Frontrunner For Indian Hospital Chain HCG
(Bloomberg) — Bain Capital has emerged as the frontrunner to acquire a controlling stake in Indian cancer hospital chain HealthCare Global Enterprises Ltd., according to people familiar with the matter. The US private equity firm is considering buying CVC Capital Partners’ 60.4% stake in the Mumbai-listed company, said the people, who asked not to be identified. - US Hedge Fund Whitebox Backs New Restructuring Option for Varta
(Bloomberg) — US-based hedge fund Whitebox Advisors is backing a restructuring proposal for Varta AG that would allow ordinary shareholders to provide new funds, according to people familiar with the matter, as the struggling German battery-maker negotiates with lenders to cut its debt load. Whitebox has a position in Varta’s €250 million ($275 million) of promissory notes. - CKI Is Said to Near Deal to Buy UK Wind Farm Assets From Aviva
(Bloomberg) — CK Infrastructure Holdings Ltd. is nearing a deal to buy a portfolio of wind farms in the UK from Aviva Plc’s asset-management arm, according to people familiar with the matter. CKI, as the conglomerate backed by Hong Kong tycoon Victor Li is known, and Aviva Investors are finalizing details of a deal that would be valued at about £350 million, $450 million. - Carlyle to Buy Baxter’s Kidney-Care Unit for $3.8 Billion
(Bloomberg) — Baxter International Inc. said it will sell its kidney-care unit to the Carlyle Group private equity firm for $3.8 billion, part of the health care company’s efforts to streamline and pay down debt. Baxter will receive about $3.5 billion in cash with net after-tax proceeds estimated at about $3 billion, which the company plans to use to cut debt. - Vista Agrees Deal to Buy Cinven’s Software Firm Jaggaer
(Bloomberg) — Vista Equity Partners has agreed to acquire privately held software company Jaggaer. Austin, Texas-based Vista is buying the business from fellow private equity firm Cinven, according to a statement on Tuesday that confirmed a Bloomberg News report. Financial terms were not disclosed. - Market Chatter: Boeing Likely to Miss 2024 737 MAX Production Target
Boeing (BA) will likely fall short of its 2024 production target for the 737 MAX jet, Reuters reported on Tuesday, citing analysts from Moody’s and S&P Global Ratings. The report said the company’s goal is to produce 38 MAX jets per month by the end of 2024, up from 25 in July. - Trump and Musk host friendly conversation on X after delay from technical difficulties
Former President Donald Trump and Tesla CEO and X owner Elon Musk hosted a friendly conversation Monday on X after their interview was delayed by more than 40 minutes due to technical difficulties. The delay of the high-profile interview was the Trump campaign’s latest stumble as it looks to regain momentum following the Democratic Party coalescing around Vice President Kamala Harris. It also marked the second time Musk suffered a setback while trying to launch a highly attended X Space with a presidential candidate. The discussion between the former president and the richest man in the world, who has endorsed
Trump, marked Trump’s return to X after his account had remained dormant for nearly a year. The last time Trump had posted on the social media website was when he posted his mugshot from being processed at an Atlanta jail in the Georgia election subversion case in August of last year. - Home Depot shares fluctuated between gains and losses after the home-improvement retailer lowered its comparable sales and profit forecasts for the full year, and reported weaker-than-expected secondquarter sales
SECOND QUARTER RESULTS: Comparable sales -3.3% vs. -2% y/y, estimate -2.39%. Net sales $43.18 billion, +0.6% y/y, estimate $43.79 billion. Adjusted EPS $4.67, estimate $4.52. Customer transactions -1.8%. Average ticket sales $88.90, -1.3% y/y. 2025 YEAR FORECAST: Sees comparable sales -3% to -4%, saw about – 1%, estimate -1.65%. Sees sales +2.5% to +3.5%, saw about +1%. Sees operating margin 13.5% to 13.6%, saw about 14.1%. Sees EPS growth -2% to -4%, saw about +1%. Sees adjusted EPS growth -1% to -3%. JPMorgan, Christopher Horvers: Says Home Depot came in worse than expected. - Starbucks Corp. investors have never rewarded the stock more than they have today on the news that the coffee chain giant hired Chipotle Mexican Grill Inc.’s Chief Executive Officer Brian Niccol as its new leader
Shares of Starbucks surged 24.5% and added $21.4 billion in market capitalization. On the other hand, Chipotle shares slid 7.5%, for a loss in value of $5.7 billion. Niccol is being hailed as the top public restaurant CEO in the U.S. by several analysts, including Bloomberg Intelligence’s Michael Halen, who said the hire is a no brainer. Oppenheimer & Co.’s Brian Bittner said Niccol is a dream hire for Starbucks. In just a few hours following the announcement, the stock received at least four upgrades, with Niccol earning praise for his successful track record as chief at Chipotle, as well as at Taco Bell, which is owned by Yum Brands. The optimism is well deserved. Chipotle shares climbed 773% since Niccol took over as CEO in March 5, 2018 through Monday’s close. Starbucks shares are up just 35% for the same period, while the S&P 500 has gained 99%. - Nike shares gained 5.2% and Estee Lauder gained 6.6%
Vital Knowledge’s Adam Crisafulli highlights that Nike as well as Estee Lauder are trading higher on Tuesday. Both companies happen to be SBUX-like in that each possesses an inimitable brand with a mgmt. team that’s arguably tired and in need of a shakeup, he wrote. Telsey Advisory Group analyst Cristina Fernandez said investors can also draw some parallels between Nike and Starbucks, which earlier ousted its chief executive officer following lackluster sales performance. A management change would also be welcome news for Nike, and the Starbucks shakeup signals that if an activist were to get involved with Nike, that could accelerate a leadership change, according to Fernandez. Rates NKE outperform with PT $100. Nike is also rising alongside sporting-goods peers after sneaker maker On Holding reported solid 2Q results. - Alphabet fell 0.9% afterhours after a report surfaced that a bid to break up Alphabet Inc.’s Google is one of the options being considered by the Justice Department after a landmark court ruling found that the company monopolized the online search market, according to people with knowledge of the deliberations
The move would be Washington’s first push to dismantle a company for illegal monopolization since unsuccessful efforts to break up Microsoft Corp. two decades ago. Less severe options include forcing Google to share more data with competitors and measures to prevent it from gaining an unfair advantage in AI products. Regardless, the government will likely seek a ban on the type of exclusive contracts that were at the center of its case against Google. If the Justice Department pushes ahead with a breakup plan, the most likely units for divestment are the Android operating system and Google’s web browser Chrome. Officials are also looking at trying to force a possible sale of AdWords, the platform the company uses to sell text advertising. Another option would require Google to divest or license its data to rivals, such as Microsoft’s Bing or DuckDuckGo. - Japan Prime Minister Fumio Kishida will not run for party reelection
Japan’s Prime Minister Fumio Kishida announced Wednesday he will not be running in the Liberal Democratic Party presidential election due next month. Kishida said in a press conference that it is important for the LDP to have a new face in leadership and that a first step would be for him to step down, according to a Reuters translation. He added that he felt the need to step down in order for the LDP to regain the public’s trust. The prime minister also pledged to fully support the new leader. Kishida’s decision to not run for reelection effectively means he would step down as prime minister when the party elects a new leader, ending a threeyear term. He said the decision was made in consideration of what’s best for the country’s public, and that to make a full exit from the country’s deflation-prone economy, wage and investment growth should be promoted. Japan has been battling stubborn deflationary pressures that have gripped country’s economy since the 1990s. - Wednesday’s big CPI inflation report could mark a change in thinking for the Fed
Economists surveyed by Dow Jones expect the consumer price index, to be released Wednesday at 8:30 a.m. ET, to show 0.2% increases on both the all-items reading and the core measurement. A positive CPI reading could mean the Federal Reserve is able to turn its gaze to other economic challenges, such as the slowing labor market. Inflation is almost a nonissue at this point. There’s this broad expectation that the worst is easily behind us, said Jim Baird, chief investment officer at Plante Moran Financial Advisors.
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