Score One For Crypto Enthusiasts

Recent economic data is encouraging but Citi’s Economic Surprise Index suggests that the trend could be changing:

Markets

Prices as of 4 pm EST, 8/29/23

Macro

@macro_daily

The labor market is showing signs of cooling. That's the message being sent by yesterday's JOLTs data which revealed "just" 8.8 million job openings in July. The figure was below market expectations of 9.4 million vacancies and marked the lowest reading since March 2021. While numbers remain elevated relative to pre-pandemic levels, openings have declined for 3 consecutive months as the labor market continues to slow. Over that period, the US has shed over 2.5 million job openings, the largest 3-month decline ever. The number of quits, meanwhile, fell to its lowest in nearly 2 and half years and is now in line with pre-pandemic levels.

@newslambert

U.S. home prices are still rising. According to the Case-Shiller national home price index, home values in the country's 20 largest cities rose for the 5th consecutive month in June, increasing by 0.9%. On an annual basis, prices fell by 1% but if we zoom out, they still sit just 0.02% below their all-time highs set in June 2022. Comparing the current market to previous housing corrections (chart), it appears the recovery in today's home prices is running ahead of schedule.

Stocks

Score one for crypto enthusiasts. Yesterday, a D.C. circuit court ruled that the Securities Exchange Commission (SEC) was wrong to deny Grayscale permission to convert its Bitcoin trust into an exchange-traded fund (ETF). Effectively, the court called the SEC's explanation for rejecting Grayscale's proposal "incoherent". Coins around the cryptoverse surged on the news, naturally. The SEC has 45 days to review the decision and request the court to reconsider. According to Bernstein, Bitcoin ETFs could account for 10% of the cryptocurrency’s market value within 3 years.

Google is launching a suite of AI-powered tools for corporate clients. The move follows OpenAI's release of ChatGPT Enterprise aimed at businesses. The tools, which will be available to corporate Gmail customers for $30 a month (per person), provide an alternative to Microsoft's recently introduced, AI-powered Microsoft 365 offering. The company is also adding client access to other AI tools like Meta's Llama 2 large language model and Anthropic's Claude 2 chatbot.

Energy

US crude inventories dropped by more than expected. Stockpiles plunged by 11.5 million barrels in the week ending August 25, according to the American Petroleum Institute. Estimates called for a modest 2.9 million barrel decline. With Hurricane Idalia making its way through the Gulf of Mexico towards the eastern US (where 15% and 5% of US oil output and natural gas production occur, respectively), inventories have now fallen in 8 out of the last 12 weeks, including the last 3.

Earnings

Yesterday’s highlights:

Best Buy BBY: $1.22 EPS (vs. $1.06 expected), $9.58 billion in revenue (vs. 9.52B expected).

• Despite posting a double beat, executives cautioned demand could fade from here.

• The company narrowed its full-year guidance for revenue while raising its profit outlook modestly.

• Beyond 2023, the retailer anticipates demand to stabilize and possibly grow in 2024.

What we’re watching today:

• Salesforce CRM

• Crowdstrike CRWD

• Brown-Forman (NYSE: BF-A)

• Veeva Systems VEEV

• Cooper Companies COO

• Chewy CHWY

• Okta OKTA

• Pure Storage PSTG

• Five Below FIVE

Top Headlines

• Putin travels: Vladimir Putin will visit China in his first foreign trip since a global warrant for his arrest was issued in March.

• Hurricane season: Category 4 Hurricane Idalia is set to strike Florida's Gulf Coast by tomorrow morning.

• Debt requirements: US regulators plan to impose debt-raising requirements on regional banks.

• Household health: Household interest payments as a percentage of interest income is at its highest since 1959.

• Financial stress: An increasing share of Americans are struggling with food and rent affordability.

• AI buzz: Once hyped AI startups are facing layoff challenges and declining user interest.

• Wonderlust: Apple has set September 12 as the launch date for the unveiling of its new iPhone and Apple Watch models.

• Lego slump: Toymaker Lego has suffered its largest profit decline in nearly 2 decades.

Deals

• Sales tech unicorn: Sales tech platform Apollo.io raised $100 million at a $1.6 billion valuation.

• Beauty M&A: e.l.f. Beauty will acquire Naturium for $355 million.

• Cosmetics sales: Natura is exploring the potential sale of The Body Shop.

• Insurance sales: Lufthansa is considering selling its insurance brokerage and insurance business.

• Casino real estate: Gaming and Leisure Properties has acquired land under the Hard Rock Casino in Rockford, IL.