Steven Jobs 1955 – 2011 was an American businessman, inventor, and investor best known for co-founding the technology company Apple Inc.
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“The only way to do great work is to love what you do.” – Steve Jobs
Intel sells stake in UK chip designer Arm
Intel has divested its 1.18 million share stake in the British chip company Arm Holdings, according to a regulatory filing.
Intel is undergoing significant restructuring and cost-cutting to address competitive challenges in the semiconductor industry.
The recent transaction, disclosed on Tuesday 13th August 2024, is believed to have earned Intel approximately $147 million, based on Arm’s average share price between April and June 2024.
This move away from Arm occurs during a challenging financial phase for Intel, as it embarks on what CEO Pat Gelsinger reportedly describes as “the most extensive restructuring of Intel since the memory microprocessor transition four decades ago.”
In early August, Intel announced a cost-reduction plan designed to save $10 billion. This includes the layoff of about 15,000 employees, the elimination of the fiscal fourth-quarter dividend, and a reduction in capital expenditures.
At the same time, Intel disclosed quarterly figures that fell short of expectations and provided conservative guidance for the upcoming quarter.
This announcement precipitated the steepest single-day decline in Intel’s stock value in half a century, plummeting 26%.
Intel one year chart as of 15th August 2024
UK retailers reported a 0.5% rebound in July 2024
UK retail sales up
The rise came after a significant drop in sales volumes, which track the amount purchased, in June due to unfavorable weather affecting demand.
Last month, department stores and retailers of sports equipment saw an uptick in the volume of goods sold thanks to the Euro football tournament.
However, the Office for National Statistics (ONS), which provided the data, noted that it was a challenging month for clothing and furniture retailers, with fuel sales declining even as prices at the pump decreased.
Nikkei rises 3% to lead gains in Asia
Japanese stocks led gains across Asia on Friday 16th August 2024, poised for their best week in four years, with the Nikkei 225 climbing over 3% following a Wall Street rally.
The surge came as new economic data alleviated concerns of a U.S. recession.
In the U.S., retail sales saw a 1% increase in July, significantly exceeding the Dow Jones estimate of a 0.3% rise. Additionally, weekly jobless claims experienced a decline.
The rise in the Nikkei came after the biggest fall in history just days ago where it hit historic lows last seen in 1987 making it a remarkably fast recovery.
Comeback rally gains steam – Nasdaq, S&P 500 and Dow up
U.S. stocks surged on Thursday, buoyed by investor confidence bolstered by positive consumer and labour data, which alleviated fears of a recession.
The Dow Jones Industrial Average soared 554 points to close at 40563 – one year chart
The S&P 500 ended up 1.61% at 5,543.22, marking its sixth consecutive gain. The S&P 500 index has risen approximately 8% from its intraday low on 5th August 2024 – one year chart
The Nasdaq Composite escalated 2.34% to 17594 – one year chart
Positive U.S. economic data
Retail sales saw a 1% increase in July 2024, significantly exceeding the prediction of a 0.3% rise. Additionally, the number of weekly jobless claims dropped. This data provided a boost to investors and the broader market, which is recovering from an August downturn linked to worries over a slowing economy, sparked by a disappointing U.S. jobs report on 2nd August 2024.
With over a 3% increase this week, the S&P 500 is now just about 2% shy of its record high. All three major U.S. indexes are trading above their 2nd August closing levels, which preceded the global stock market plunge on 5th August.
U.S. consumer spending improved in July 2024 as retail sales increased by 1% – better than forecast
In July 2024, U.S. consumer spending exceeded expectations, and inflation pressures continued to ease, as reported by the U.S. Department of Commerce on Thursday 15th August 2024.
Retail sales in the U.S. rose by 1% for the month, with advanced figures adjusted for seasonality but not for inflation. This surpassed the 0.3% increase anticipated. The initially flat reported sales for June 2024 were revised to a 0.2% decrease.
Removing auto-related items, sales saw a 0.4% rise, which was substantially more favourable than the predicted 0.1%.
The number of weekly jobless claims fell to 227,000, a drop of 7,000 from the preceding week, and was below the forecasted 235,000.
Markets have responded positively to all this good news, and together with other favourable developments, it appears increasingly likely that the Federal Reserve will have no reason other than to cut rates in September 2024.
Japan second-quarter GDP expands 0.8% from previous quarter
GDP increased by 0.8% quarter-on-quarter, surpassing estimates of a 0.5% increase. This marked a turnaround from the revised decline of 0.6% in the Q1
After the release of the GDP data, Japanese markets climbed, and the yen saw a slight appreciation against the U.S. dollar.
UK economy grows 0.6% in second quarter 2024
The U.K. economy grew by 0.6% in the second quarter of 2024, the Office for National Statistics said Thursday 15th August 2024, in line with expectations.
The data release follows an expansion of 0.7% in the first quarter of 2024.
Economic growth was flat in June, in line with forecasts.
The UK economy has shown modest yet consistent growth each month this year, marking an exit from a mild ‘technical’ recession. Additionally, GDP remained unchanged in April, influenced by wet weather that impacted retail sales and construction activity.
Growth was led by the services sector, in particular the IT industry, legal services and scientific research.
U.S. inflation slows in July 2024
U.S. consumer prices (CPI) increased at the slowest rate in over three years last month, further supporting the argument for the Fed to begin reducing interest rates.
According to the U.S. Labor Department, prices climbed 2.9% in the 12 months leading up to July 2024, marking the smallest yearly rise since March 2021 and a decrease from 3% in June 2024.
The monthly inflation report was under intense scrutiny following indications of weaker-than-anticipated job growth in July, which earlier this month led to upheaval in the stock market and concerns about a recession.
Analysts have suggested that these figures should persuade the Federal Reserve that the elevated borrowing costs are effectively bringing inflation back to its target levels, despite the recent increases in housing and food prices.
UK inflation rate climbs to 2.2%
The UK’s inflation rate has risen for the first time this year, official ONS figures show.
This indicates that overall prices increased by 2.2% in the year leading up to July, a rise from 2% in June, surpassing the Bank of England’s target.
The anticipated increase is primarily attributed to the less significant drop in gas and electricity prices compared to the previous year.
The Bank of England reportedly anticipates a further increase in inflation this year before it declines again.
The core inflation rate, which is the Consumer Price Index (CPI) excluding food, energy, alcohol, and tobacco prices, was reported at 3.3% in July, a slight decrease from 3.5% in June, according to the statistics office.
Additionally, service inflation, which the Bank of England (BoE) monitors closely, decreased to 5.2% in July from 5.7% the previous month, yet still remains elevated.
These inflation statistics follow the release of data on Tuesday 13th July 2024, which revealed that the average wage growth excluding bonuses was 5.4% from April to June year-on-year, the lowest in two years.
Concurrently, the unemployment rate dropped to 4.2% during this period, down from 4.4% between March and May 2024.
Do falling commodity prices indicate there is trouble brewing with the U.S. economy?
Falling commodity prices can be a signal of economic trouble ahead
When commodity prices drop, it often reflects a decrease in demand for raw materials, which can be a sign of slowing economic activity. For instance, the recent decline in copper prices is seen as a potential indicator of economic slowdown.
Sugar, cotton, soybean, oil and iron ore are some examples where demand has fallen during this year.
However, it’s important to consider other factors as well. The global economic slowdown has reduced demand for energy, minerals, and agricultural products. While this trend is evident in many countries, the U.S. economy has shown some resilience.
So, while falling commodity prices can be a warning sign, they are just one piece of the puzzle. It’s essential to look at a broader range of economic indicators to get a complete picture.
Commodity price charts as of: 13th August 2024
Copper one year chart
Iron ore one year chart
Cotton price one year chart
Sugar one year price chart
Soybeans one year price chart
U.S. oil one year price chart
U.S. wholesale inflation rose 0.1% in July 2024 by less than expected
In July 2024, a principal indicator of U.S. wholesale inflation climbed less than anticipated, potentially paving the way for the Federal Reserve to begin reducing interest rates.
The Producer Price Index (PPI), which is a gauge of wholesale inflation, saw a modest increase of 0.1% for the month of July, falling short of the 0.2% prediction. Excluding food and energy, the PPI remained unchanged.
Year-on-year, the headline U.S. PPI ascended by 2.2%, marking a significant decline from June’s 2.7% figure.
Should the Federal Reserve not proceed now with a rate cut VERY soon, it is probable that a ‘frenzy’ of ‘catch-up’ rate cuts will ensue to counteract a struggling economy.
UK unemployment falls slightly and pay growth slows
Official figures indicate a slight decrease in the UK’s unemployment rate, which was 4.2% in the three months to the end of June 2024, a drop from the previous quarter’s 4.4%.
In contrast, UK wage growth has decelerated, with an annual increase of 5.4%, marking the lowest rate in approximately two years.
Not all positive
The Office for National Statistics (ONS) has acknowledged some positive developments, yet it also noted indications of a ‘cooling’ job market, evidenced by an increase in job vacancies, a rise in redundancies, and a persistently high number of individuals not actively seeking employment.
This trend emerges as businesses are grappling with escalating operational costs and potentially reducing their recruitment efforts.
Over half of new cars sold in China are electric or hybrid
China has seen new energy vehicles surpass traditional fuel-powered cars in monthly sales for the first time.
(Data as per the China Passenger Car Association’s July 2024).
New energy vehicles, comprising solely battery-operated and hybrid-powered cars, represented 51% of China’s new passenger car sales as registered in July 2024 as reported by China Passenger Car Association.
This marks an increase from a 36% market share the same time in 2023, and a rebound from just under one-third in January 2024.
Report accuracy
The accuracy of the association’s data has previously faced scrutiny. July’s report revealed that battery-only vehicles had higher sales than hybrids, achieving a 28% market share.
But sales and delivery reports from companies like BYD suggest a growing consumer preference for hybrid vehicles in China which sits in line with the China Passenger Car Association data.
As the largest global automobile market, China has experienced a slowdown in overall economic growth, leading to strong competition and a price war within the new energy vehicle sector.
Policy
For over ten years, the Chinese government has ‘supported’ the local new energy vehicle industry with subsidies and beneficial policies. The most recent trade-in initiative aimed at stimulating consumption has particularly encouraged the purchase of new energy vehicles.
Slower and smaller-than-expected rate cuts. A slowing U.S. economy and a potential AI bubble – does this all add up to a coming bear market?
The stock markets mix of toil and trouble is in the cauldron ready for a bear market in 2025, if not before.
Why?
- Fed to resist reducing rates to the market’s desired 3.50%.
- Profits unlikely from now on to fulfill expectations, because the U.S. economy is slowing.
- AI sector is in or close to ‘bubble territory’.
- Debt.
- Geopolitical concerns.
These concerns are now all combining, and it will likely add-up to a bear market of around 25% in 2025 (this is my best guess).
Remember – make your own decisions and always, always do your own careful research. Seek professional financial advice if in doubt.
RESEARCH! RESEARCH! RESEARCH!
China’s consumer price index (CPI) increased by 0.5% – more than expected
In July 2024, China’s consumer prices index (CPI) increased by 0.5% from the previous year, as reported by the Chinese National Bureau of Statistics on Friday 9th August 2024.
The increase surpassed the 0.3% predicted by analysts.
The core consumer price index, excluding food and energy, climbed by 0.4% from a year earlier in July, a decrease from the 0.6% increase in June.
S&P 500 enjoys its best day since 2022 after market rout just 4 days before
Stocks rose on Thursday 8th August 2024 as the latest U.S. employment data bolstered investor confidence in the economy, following a significant market downturn earlier in the week.
The S&P 500 increased by 2.3%, closing at 5319.31, marking its best day since November 2022. The Dow Jones Industrial Average jumped by 683.04 points to 39446.49.
S&P 500 5-day chart as of 8th August 2024
The Nasdaq Composite climbed to 16660.02. And all these gains just 4 days after the market rout on Monday 5th August 2024.
The most recent weekly unemployment claims were lower than expected, easing some of the recent worries about the U.S. labour market.
The initial claims for unemployment benefits last week were 233,000, a decrease of 17,000 from the previous week.
“So many books, so little time.” – Frank Zappa
Frank Zappa, 1940 – 1993
Frank Vincent Zappa (1940 – 1993) was an American musician, composer, and bandleader. In a career spanning more than 30 years.
Is the Fed fighting its own shadow?
Has the Fed over-cooked it this time by waiting too long to reduce interest rates?
U.S. stock markets threw a wobbly after the latest employment data and after the Fed delayed its first rate cut… again. September 2024 now looks likely for that first cut – but by how much: 0.25% or as high as 0.50%?
The latest batch of bad news for the U.S. economy has actually became bad news for stocks this time. For too long the ‘bad news’ has been taken as ‘good news’, especially regarding the likelihood of a Fed interest rate cut – and for the markets in general.
The Federal Reserve (Fed) is grappling with several challenges, including inflation, interest rates, and the broader U.S. and global economies.
Inflation
The Fed has been trying to control high inflation rates, which have been a significant concern. To combat inflation, the Fed has raised interest rates multiple times. Higher interest rates can help reduce inflation by slowing down borrowing and spending, but they can also slow economic growth.
Interest rates
By increasing interest rates, the Fed aims to make borrowing more expensive, which can help cool down an overheated economy. However, this can also lead to higher costs for consumers and businesses, potentially leading to reduced investment and spending.
Economic growth
The Fed’s policies are a balancing act. While they aim to control inflation, they also need to ensure that the economy doesn’t slow down too much. This balancing act can be challenging, especially when external factors like global economic conditions and geopolitical events come into play.
In essence, the Fed’s efforts to manage these issues can sometimes feel like ‘fighting its own shadow,’ as the consequences of their actions can create new challenges.
The timing of interest rate adjustments by the Federal Reserve is a topic of much debate among economists and policymakers.
Inflation control
The Fed’s primary goal in raising interest rates has been to control inflation. If inflation remains high, the Fed might be cautious about reducing rates too quickly to avoid a resurgence of inflation.
Economic indicators
The Fed closely monitors various economic indicators, such as employment rates, consumer spending, and GDP growth. If these indicators suggest that the economy is still strong, the Fed might delay reducing rates to ensure that inflation is fully under control.
Market reactions
Rapid changes in interest rates can cause volatility in financial markets. The Fed often aims for a gradual approach to avoid sudden shocks to the economy.
Global factors
The Fed also considers global economic conditions. For example, if other major economies are experiencing slow growth or financial instability, the Fed might be more cautious in adjusting rates.
Ultimately, the decision to reduce interest rates involves balancing the need to support economic growth with the risk of reigniting inflation. It’s a complex decision with significant implications for the U.S. and global economies.
Looks like the Fed overcooked it this time – but by how much?
U.S. stocks recovery attempt fizzles out
Stocks closed lower on Wednesday 7th August 2024, failing to fully recover from Monday’s sell-off.
The Dow Jones Industrial Average dropped 234 points to 38763.45. The S&P 500 fell to 5199.50, while the Nasdaq Composite closed at 16195.81.
During the day, the Dow had surged around 480 points, the S&P 500 had climbed 1.73%, and the Nasdaq had risen over 2%.
Dow Jones one day chart 7th August 2024
S&P 500 one day chart 7th August 2024
Nasdaq Composite one day chart 7th August 2024
However, a downturn in Nvidia and other major tech stocks, after an initial rise, led to a significant drop in the afternoon. Nvidia retracted by 5.1%, Super Micro Computer plummeted 20.1% following its fiscal Q4 earnings missing analyst predictions, Tesla fell 4.4%, and Meta Platforms decreased by 1%.
Nvidia one day chart 7th August 2024
One month chart Super Micro Computer 7th August 2024
Nvidia one day chart 7th August 2024
The U.S.10-year Treasury yield continued to rise, increasing by about six basis points to 3.95%, returning to its level before the disappointing job figures last Friday, which had sparked concerns of an economic slowdown.
The Volatility Index (CBOE), the so called ‘fear gauge‘ was trading at around 29, having dropped to as low as 22 earlier in the day. This sharp decrease from Monday 5th August 2024 suggests that investor fears are subsiding, however, they remain higher than at the beginning of the month.
The Volatility Index (CBOE) on 7th August 2024
China’s rival to Elon Musk’s Starlink internet launches satellites to low Earth orbit
On Tuesday 6th August 2024, China launched its inaugural batch of internet satellites, which are expected to be part of a constellation designed to compete with SpaceX’s Starlink.
The constellation, named “Thousand Sails,” comprises over 15,000 satellites in low-Earth orbit that are anticipated to provide worldwide internet coverage.
China plans to have 648 satellites in orbit by 2025 as part of the first phase of the constellation’s deployment, aiming to establish a global internet network, as reported by state media CCTV.
The satellite system will be in direct competition with Elon Musk’s Starlink.
Judge ruling says Google’s monopoly of online searches is illegal
Too much monopolistic power held by too few
A U.S. judge has ruled that Google illegally maintained a monopoly in online searches and related advertising. The lawsuit, brought by the Department of Justice, charged Google with controlling around 90% of the online search market.
It was reportedly noted by the judge that Google’s billions of dollars in investments to become the default search engine on smartphones and browsers could be anticompetitive.
The decision, issued on Monday 5th August 2024, could potentially change how tech giants operate.
It was reported that in his extensive 277-page decision, Judge Mehta remarked, “Google has acted as a monopolist and engaged in anticompetitive practices to maintain its monopoly.”
This represents a significant victory for federal antitrust enforcers who have pursued similar cases against other leading technology companies for illegal monopolistic behaviours.
Companies like Meta Platforms, which operate Facebook and WhatsApp, as well as companies like Amazon and Apple., have also faced lawsuits from federal regulators.
The judgment comes after a 10-week trial where it was argued that Google’s substantial payments to remain the primary search engine have impeded the competition’s ability to challenge effectively.
This is a seismic shift in the way search engines and advertising may operate in the future. Already with the advent of AI, search engines look and feel different.
Recently, OpenAI launched ‘SearchGPT’ – and Microsoft have named it a competitor in the world of search engines.
Times are changing.
U.S. stock markets rise after days of turmoil
U.S. shares gained on Tuesday 6th August 2024, signalling a tentative stabilisation in global markets after a period of significant declines.
The Nasdaq, known for its tech-centric portfolio, along with the Dow Jones Industrial Average and the S&P 500, all ended the day in more positive territory.
This ‘lift’ came after a period of muted activity in UK and European markets, with London’s FTSE 100 experiencing an initial surge before retreating.
In Japan, the Nikkei 225 stock index recorded a substantial rise of 10.2%, or 3217 points, marking its largest single-day point increase following a steep drop the day before.
The recent turmoil in the stock market was triggered on Friday 2nd August 2024 by unsatisfactory U.S. job data for July 2024, which indicated an increase in unemployment, raising alarms over a potential recession.
Additionally, there has been growing apprehension that stocks of major technology firms, especially those with significant investments in artificial intelligence (AI), may have been excessively valued, leading to challenges for some of these companies.
Fickle markets – Japan’s Nikkei sees best day since October 2008
The Nikkei ended the trading day at 34675 on 6th August 2024, up around 10% hitting its largest daily gain since October 2008 and highest ever spike in terms of index points.
This recovery came after experiencing its worst session in history just the previous day. The Nikkei index still sits some 7000 points off its recent high.
The Dow plunged by 1000 points, and the S&P 500 experienced its most significant decline since 2022 amid a worldwide stock market rout
On Monday 5th August 2024, stocks plummeted, marking the Dow Jones Industrial Average’s worst performance in nearly two years, igniting a worldwide market downturn due to concerns about the U.S. economy’s stability.
The Dow fell 1033.99 points closing at 38703. The Nasdaq Composite dropped to close at 16200, while the S&P 500 declined 3%, ending the day at 5186. Both the Dow and S&P 500 experienced their most significant daily losses since September 2022.
Dow 1 day and 5 day charts
The Japanese stock market suffered its steepest fall since Black Monday of 1987, adding to the global market anxiety.
The primary driver of the worldwide market collapse was the fear of a U.S. recession, triggered by the disappointing July jobs report released on Friday.
Additionally, there is growing concern among investors that the Federal Reserve has delayed reducing interest rates to support the slowing economy.
$1 trillion rout as Markets punishes tech stocks
The seven most valuable U.S. tech companies experienced a combined loss of $1 trillion in market value at the start of Monday’s trading session – 5th August 2024
The Nasdaq declined over 3% following its sharpest three-week drop in two years.
Nvidia’s shares fell approximately 6%, while Apple’s dropped more than 4%.
On Monday, as the U.S. markets commenced trading, the market capitalization of the largest tech companies plummeted by about $1 trillion, exacerbating a decline that pushed the Nasdaq into correction territory the previous week.
Markets go up and markets go down
In early trade Nvidia’s market cap decreased by over $300 billion, but it swiftly regained about half of that loss. The chipmaker’s shares ultimately closed down 6.4%, equating to a $168 billion loss. Apple and Amazon saw their valuations fall by $224 billion and $109 billion at market open. Apple’s market cap finished 4.8% lower, a $162 billion decrease. Amazon’s valuation fell by 4.1% at closing, a $72 billion reduction.
Including significant drops in Meta, Microsoft, Alphabet, and Tesla, the top seven tech giants saw a $995 billion loss in market value in the initial moments of trading, although they did recover somewhat as the day went on.