THE WELL-TH NOTES

By Morgan Buswell on August 26, 2024

Weekly data-driven insights on the markets and economy

Fourth Week of August 2024

Retail Sales to the Rescue. Higher than expected retail sales and a softer inflation report have helped jittery investor sentiment this week. The S&P 500 and Nasdaq Composite posted their eight straight positive sessions on Aug. 19. The CBOE Volatility Index fell to around 15 after hitting above 65 back on August 5. This week investors are awaiting the Fed’s annual Jackson Hole Economic Symposium, as well as looking forward to viewing language from the minutes of July’s policy meeting mid-week.[i]

Pricing in 100% Chance of Rate Cut. Fed fund futures are pricing in a 100% probability that the central bank will lower borrowing costs at its September meeting. The 10-year Treasury and 2-year Treasury were held in a tight range awaiting more Fed speak from Jackson Hole. Although analysts don’t expect firm guidance from any of Powell’s comments, they will look to his latest thinking to see whether that cut will be 25 or 50 basis points, after annualized inflation hit 2.9% in July.[ii]

Canadian Rail Disruption Could Mean US Agricultural Woes. While still hoping for a last-minute agreement to avoid a shut down, the Canadian National Railway and Canadian Pacific Kansas City plan to shutter nearly all freight rail services in Canada for the first time at midnight Thursday. Such a stoppage will halt shipments of US spring wheat from Minnesota and the Dakotas to the Pacific Northwest, and Canadian meat producers warn of millions of dollars in losses and waste. The Teamsters are demanding better wages, benefits and crew scheduling.[iii]

Morgan Stanley International Chairman Missing After Yacht Tragedy. Jonathan Bloomer, Morgan Stanley’s International Chairman, and British tech entrepreneur Mike Lynch are still reporting missing after a luxury yacht sank off the coast of Sicily. The yacht is owned by Lynch’s wife who has survived the disaster. Mike Lynch was the former CEO of Autonomy Corp., which sold to Hewlett-Packard in 2011. The 184-foot yacht overturned off the Italian coast sometime after 5 a.m. during bad weather with 10 crew members and 12 passengers on board.[iv]

Good to Be Golden. What does $1 million buy you these days? Apparently, a single gold bar. A single gold bar consists of 400 troy ounces, which for the first time ever, hit $2,500 per troy ounce equating to $1 million per bar.[v]

Electric Vehicle Vs. Gas? Depends Where You Live. Which is cheaper depends on your geography and other factors, according to Consumer Reports and J.D. Power. The relative financial benefits of an EV depends heavily on a case-by-case basis, such as driver’s geographic location. Cities that are particularly friendly to EVs have things in common like the low cost of electricity, high gasoline prices, and moderate climates, whereas in Texas it’s hard to compete with the low cost of gas. However, small and low-range EVs had a less expensive cost of total ownership across all cities in the studies.[vi]

[i] Harring, Alex and Kim, Hakyung, “S&P 500 tracks for first losing day in 9 as comeback rally takes a breather: Live updates,” CNBC, August 20, 2024, https://www.cnbc.com/2024/08/19/stock-market-today-live-updates.html. Accessed August 20, 2024.

[ii] Harring, Alex, “Treasury yields hover as investors await Fed updates,” CNBC, August 20, 2024, https://www.cnbc.com/2024/08/20/treasury-yields-hover-as-investor-await-fed-updates.html. Accessed August 20, 2024.

[iii] Polansek, Tom and Mukherjee, Promit, “Canda rail stoppage poised to disrupt North American agriculture,” Yahoo!Finance, August 20, 2024, https://finance.yahoo.com/news/canada-rail-stoppage-poised-disrupt-164809154.html. Accessed August 20, 2024.

[iv] Arias, Pilar, “Morgan Stanley International chairman, wife and 4 others still missing after luxury yacht sinks off Sicily,” FOXBusiness, August 20, 2024, https://www.foxbusiness.com/business-leaders/morgan-stanley-international-chairman-wife-4-others-still-missing-after-luxury-yacht-sinks-off-sicily. Accessed August 20, 2024.

[v] Murphy, Aislinn, “Value of gold bar hits $1 million for the first time ever,” FOXBusiness, August 20, 2024, https://www.foxbusiness.com/markets/value-gold-bar-hits-1-million-first-time-ever. Accessed August 20, 2024.

[vi] Iacurci, Greg, “How EVs and gasoline care compare on total cost – where you live can make a huge difference,” CNBC, August 20, 2024, https://www.cnbc.com/2024/08/20/how-evs-and-gasoline-cars-compare-on-total-cost.html. Accessed August 20, 2024.