The shortened Labor Day Holiday week was met with some market headwinds, as the S&P 500 dropped -1.29%, the Dow Jones was down -0.7%, and the NASDAQ fell -1.93%. Bonds sold off, as well, with the Agg down -0.27%. Alternatives were mixed, with Bitcoin up 0.32%, gold down -1.25%, silver down -5.57%, and oil up 2.06% on Saudi supply cut concerns.
In the shortened economic data week, we saw Durable Orders (Final) start the week on Tuesday coming in with a slight downward revision, while factory orders seasonally adjusted beat expectations. Wednesday saw the MBA 30-Year mortgage report with a slight dip down to 7.2% from the previous month’s 7.3%. Jobless claims were down week over week and lower than expected. We saw Unit Labor Costs SAAR (Seasonally Adjusted Annual Rate) strongly surprise at 2.2% for the second quarter—a strong bump over the 1.6% expected. Friday closed the week with consumer credit growing by 9.2% for revolving and 0.2% for nonrevolving debt.
In the full trading week ahead, we have CPI prints for August on Wednesday with expectations for Headline CPI to tick up to 0.6% while Core CPI, which excludes food and energy, is expected to hold steady. Inflation data continues on Thursday, with PPI reporting for August with expectations of Headline PPI to also tick upward, while Core PPI is expected to stay relatively flat. Friday will end the week with Import and Export pricing data and capping off a trio of inflationary measures for the week.
“Know your customer.” This phrase, when ignored, has created a significant backlash. This summer, conservative customers responded with boycotts of Target and AB InBev (through its Bud Light brand) and the companies’ share prices fell as a result. Joining the group of companies not knowing their base last week was Liberty Safe, the largest US maker of gun safes, as they turned over the access code for a customer’s safe to the FBI. The company faced significant social media backlash and calls for boycotts due to the immediate compliance with the government’s request, while companies, like Apple, have traditionally fought back to preserve customer privacy. We see continued headwinds for companies not understanding the customer base’s values, and the recent successes in boycotting has strengthened customer’s resolve to advocate for businesses with value alignment.
In geopolitical events, North Korea allegedly launched a tactical nuclear attack submarine, the “Hero Kim Kun Ok”, this past Wednesday in a ceremony attended by North Korean leader Kim Jong Un. Western officials believe the submarine is conventionally powered with the capability of carrying nuclear-equipped missiles, but there are significant doubts regarding the sub’s capabilities. As the Russo-Ukrainian War continues, Cuba has arrested 17 men for a human trafficking ring luring Cuban men to fight for the Russian military in Ukraine. As the war continues, we expect to see further global impact like posturing in North Korea and human trafficking for soldiers as needed.
Ending a further down week in US Equities, Fedspeak pushed sentiment down to mirror markets Dallas Fed President Logana and NY Fed President Williams both spoke with sentiments emphasizing caution and calibration for the September FOMC meeting. Markets broadly viewed this commentary, considering the recent economic reports, as indicating a rate increase pause.
Monday marked the twenty-second anniversary of the September 11 terror attacks. It is hard to fathom how many in our society were not even alive when the planes struck the Towers that fateful day. As the markets march a little more slowly heading into the September Fed meeting, it is a great time to reflect on our lives and those heroes who have impacted us. As some choose to step up as others do evil, we too should focus on understanding His will and living wisely. “Be very careful, then, how you live—not as unwise but as wise, making the most of every opportunity, because the days are evil. Therefore, do not be foolish, but understand what the Lord’s will is.” – Ephesians 5:15-17.
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