Short On Time… Executive Summary
There are two main events happening this week. One is on Wednesday. Nvidia, Crowdstrike and Salesforce all report earnings after the market closes. While all three will likely have something important to say, Nvidia will be the one everyone is listening to. The market isn’t just interested in how Nvidia did last quarter but wants to know their forecast for everything AI going forward. Their sentiment will probably move the market one way or another. The other main event is the new Fed Chair, Kevin Warsh, will be speaking on economic policy from Jackson Hole on Friday morning. His comments are likely to move markets as well. Interest rates keep creeping higher on inflation concerns, but a lot of the increase we have seen this year has been related to oil. When oil has declined, so has inflation. For the month of August it appears relatively flat. So no news is good news here.
The Week On Wall Street
Stocks declined last week as global investors fretted about oil-supply-induced inflation. The Standard & Poor’s 500 Index declined 1.43 percent, while the Nasdaq Composite Index slid 2.05 percent. The Dow Jones Industrial Average slipped 0.85 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, lost 0.40 percent.
Bond Yields Up, Stocks Under Pressure
Bond yields spiked at the start of the week, putting a squeeze on stock prices. The yield on the 30-year Treasury bond hit a 19-year high. Markets continued their slide on Tuesday as investors fretted over inflation. Yields on bonds around the world rose to multi-decade highs. Stocks steadied, and bond yields fell midweek as investors responded to the Treasury Department’s announcement that it would buy back long-term debt to help stabilize interest rates. However, the Wednesday morning rally petered out as the session progressed into the afternoon. Stocks rebounded to finish a tough week on a positive note despite rising oil prices.
A Bee in the Bonnet
Last week, yields on bonds issued by sovereign governments around the world rose to multi-year highs, including in Japan and throughout Europe. Investors in these bonds decided they needed higher yields to compensate for ongoing global issues. As a result, the cost to borrow money went up. And because bond prices and yields move in opposite directions, the value of these bonds fell. The Treasury Department stepped in on Wednesday to say that it would double the size of its current repurchases of longer-term (10- to 30-year) Treasury debt. It’s uncertain how the move could influence markets.
This Week: Key Economic Data
Tuesday: S&P Cotality Case-Shiller Home Price Index. New Home Sales. Consumer Confidence (Conference Board).
Wednesday: Durable Goods. Gross Domestic Product (GDP), 2nd estimate. Personal Consumption Expenditures (PCE) Index.
Thursday: Weekly Jobless Claims. Trade Balance in Goods. Wholesale Inventories. Retail Inventories.
Friday: Consumer Sentiment (U. Michigan). Kevin Warsh speaks at Jackson Hole.
This Week: Companies Reporting Earnings
Stay tuned...
