MARKET WRAPS
Watch For:
Federal Reserve Governor Michelle Bowman and FRB Atlanta President Raphael Bostic speak at Fed Listens event; financial markets in Canada closed
Today's Top Headlines/Must Reads:
- Buckle Up for Another Round of Inflation Data
- A Real-Estate Haven Turns Perilous With Roughly $1 Trillion Coming Due
- Stocks for the Short Run
- Yellow Files for Bankruptcy, Will Liquidate
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Opening Call:
Stock futures recovered a portion of last week's losses on Monday as earnings season continued, and with closely watched inflation data due in the coming days.
Investors awaited Thursday's consumer price index, a key data point in determining if the Federal Reserve's campaign of interest-rate increases has further to run.
Last week, a bullish run came to a halt as concerns about elevated Treasury issuance pushed bond yields higher and investors parsed a mixed bag of corporate earnings.
The lurch higher in bond yields left stocks looking relatively less attractive, according to some analysts.
"The difference between the expected earnings yield of the S&P 500 and the yield on the 10-year Treasury bond has decreased to around 1%. We haven't seen this level since the tech bubble burst in 2002. It's important to remember that high valuations alone are not enough to cause issues, but the current yield environment suggests that things may be getting a bit expensive," SPI Asset Management said.
"Investors will monitor U.S. yields closely, as a rise could harm global stocks, particularly if this week's CPI numbers exceed projections," SPI added.
Overseas indexes mostly weakened, with Europe's Stoxx 600 index edging lower, while in Asia, the Nikkei 225 index rose 0.2% while the Shanghai Composite index fell 0.6%.
Pre-Market Movers
Berkshire Hathaway swung to a second-quarter profit of $35.9 billion, boosted by its insurance division and strong gains in its massive investment portfolio. Its Class B shares rose 1.5%.
Lucid reduced prices on most of its lineup of Air luxury sedans. Shares were rising 0.5%.
Nikola sank 26% on Friday after its chief executive stepped down and it posted a drop in second-quarter sales. Nikola looked set to regain some ground Monday, with the stock trading up 6.8% premarket.
Yellow fell 23% after the company filed for bankruptcy and said it would be closing the business.
Friday's Post-Close Movers
Astra Space, which cut 70 jobs, said its workforce reduction and reallocation of Launch Services resources is expected to delay the timing of test launches and paid commercial launches. Shares fell 2.8%.
ElectraMeccanica Vehicles may explore strategic options for its business, including the selling of assets. Shares rose 4.2%.
Ideanomics widened its loss as revenue declined sharply in its first quarter. Shares fell 6.6%.
Forex:
The dollar recovered from falls on Friday following the non-farm payrolls data, but gains will be limited as investors look ahead to key inflation data for July, MUFG said.
"Last month's price action highlights that the dollar would be vulnerable to another selloff if the CPI report is weak on Thursday."
If the data again show a much slower pace of core inflation it would reinforce expectations that the Fed could be in a position to stop raising interest rates, MUFG said.
Energy:
Oil prices hovered close to their highest level since mid-April as investors weighed the impact of a Ukrainian attack on a Russian-flagged oil tanker.
Over the weekend, a Ukrainian naval drone damaged an oil tanker that had been sanctioned by the U.S. for working with the Russian military while Ukrainian officials said that Russian Black Sea ports should be considered subject to "military threat."
The attacks could threaten a new risk to Black Sea commodity flows and boost shipping insurance rates in the region.
Metals:
Base metals were mixed, while gold prices fell in early London trade, with worries over demand keeping prices low, though tight supply is likely providing a floor to prices.
Marex said metals have had a messy start to August with a third of the sharp gains made in July erased last week on poor demand signals from China.
Goldman Sachs also highlighted that stocks for goods like copper are low. Goldman said that the latest weekly data showed onshore social and bonded stocks at just 150,000 metric tons, which would represent just four days of inventory cover.
TODAY'S TOP HEADLINES
Fast-Food Customers Are Giving Up on Dining In
Americans are eating their burgers, fries and nuggets at home, in their cars and at the office-increasingly anywhere but at the fast-food restaurants themselves.
At McDonald's and Burger King, booths are often empty. Customers pick up their orders and head out. People sitting at tables sometimes are workers on their breaks.
Siemens Energy Sees EUR4.5 Bln Loss on Wind-Turbine Unit Charges - Update
Siemens Energy expects its net loss to widen significantly in fiscal 2023 as mounting challenges at its troubled wind-turbine business will lead to costs of 2.2 billion euros ($2.42 billion).
The German energy company on Monday said that its net loss should be around EUR4.5 billion in the fiscal year, from previous expectations that it would exceed the prior year's level of EUR712 million by up to a low triple-digit million amount.
Pratt & Whitney Engine Problems Lead Some Airlines to Reduce Flights
Airlines in the U.S., Europe and Asia are temporarily reducing some flights and routes to inspect aircraft affected by the recall of hundreds of Pratt & Whitney jet engines, leaving the unit of the aerospace and defense company RTX facing a potential multibillion-dollar bill.
Some 137 engines used on Airbus single-aisle jets will need to be inspected over the next several weeks, RTX said Friday. That is fewer than the 200 originally expected but still a problem for carriers that were already dealing with staffing shortages and air-traffic control congestion.
German Industrial Production Weakened More Than Expected in June
Germany's industrial production fell more than expected in June, suggesting weak demand and adding to the likelihood of a slowdown in the eurozone economy ahead.
Output declined 1.5% compared with the previous month, seasonally and on a calendar-adjusted basis, missing economists' forecasts of a 0.5% fall, according to data set out Monday by German statistics office Destatis.
China's Forex Reserves Rose in July
China's foreign-exchange reserves rose for a second month in a row in July, boosted by higher asset prices, according to data released by the People's Bank of China on Monday.
Forex reserves rose $11.27 billion in July to $3.204 trillion, according to data released by the central bank. The result was slightly lower than the median forecast of $3.207 trillion made by economists surveyed in a Wall Street Journal poll.
Investors Bet That High Rates Will Linger
The yield on the benchmark 10-year U.S. Treasury note has surged close to its highest level in more than a decade, lifted by new bets that a strong economy could support years of higher interest rates.
The 10-year yield settled Friday at 4.060%, according to Tradeweb, slipping after a mixed monthly jobs report. But that was still up from 3.968% a week earlier and within touching distance of its 14-year high of 4.231% from October.
Violations of the Constitution Aren't Crimes, Trump Lawyer Says
WASHINGTON-Even if Donald Trump violated the Constitution when he pressured former Vice President Mike Pence not to certify the results of the 2020 election, that doesn't make it a crime, Trump's lawyer said Sunday.
"A technical violation of the Constitution is not a violation of criminal law," John Lauro, a lawyer for Trump, told NBC News. He also argued that Trump's expression of concerns about election irregularities was protected speech under the First Amendment.
Jack Smith Is Known to Take On Tough Cases. But He Doesn't Always Win.
Jack Smith, the special counsel who brought historic, back-to-back indictments of a former president, has developed a reputation as an aggressive prosecutor known for trying high-stakes, politically explosive cases.
But he hasn't always prevailed.
Ukraine's Ammunition Chief Battles to Boost Production
KYIV, Ukraine-Like any good boss, Oleksandr Kamyshin keeps on top of production numbers for the factories he oversees. But for Kamyshin, Ukraine's minister of strategic industries, it is a matter of life and death: The figures that land on his desk every morning show ammunition output at dozens of Ukrainian factories.
The availability of artillery shells could prove decisive in the next phase of the war with Russia, and the 39-year-old is in charge of boosting Ukraine's production. Western stocks have been run down by nearly 18 months of fighting, and the U.S. and its allies are struggling to increase production.
Write to ina.kreutz@wsj.com
TODAY IN CANADA
Earnings:
Nothing major scheduled
Economic Indicators (ET):
Civic Holiday. Financial markets closed
Expected Major Events for Monday
05:00/JPN: Jun Indexes of Business Conditions - Preliminary Release
06:00/GER: Jun Industrial Production Index
06:00/UK: Jul Halifax House Price Index
14:00/US: Jul Employment Trends Index
19:00/US: Jun Consumer Credit
23:01/UK: Jul BRC-KPMG Retail Sales Monitor
23:30/JPN: Jun Household Spending
23:50/JPN: Jul Provisional Trade Statistics for 1st 20 days of Month
23:50/JPN: Jul Bank Lending
23:50/JPN: Jun Balance of Payments
23:50/JPN: Jul International Transactions in Securities
All times in GMT. Powered by Kantar Media and Dow Jones.
Expected Earnings for Monday
Air Industries Group (AIRI) is expected to report for 2Q.
Arcus Biosciences Inc (RCUS) is expected to report for 2Q.
CSI Compressco LP (CCLP) is expected to report for 2Q.
(MORE TO FOLLOW) Dow Jones Newswires
08-07-23 0627ET
