Coffee With Greta: Stocks Slip After Best Month In 2 Years
DJIA Futures: -86 (-0.3%)
SPX Futures: -17 (-0.4%)
NASDAQ Futures: -38 (-0.3%)
Good morning friends!
Futures are falling as traders begin a new month of trade.
Let’s get right to it!
Fed Is Laser Focused on Inflation Amid Recession Debate
Minneapolis Fed President Neel Kashkari says inflation poses a larger risk to the economy than a potential recession.
He told CNBC over the weekend, “I’m focused on the inflation data. I’m focused on the wage data. And so far, inflation continues to surprise us to the upside. Wages continue to grow.”
Kashkari seemed to downplay fears that the U.S. economy is already in a recession, touting the strength of the labor market.
He said, “Typically, recessions demonstrate high job losses, high unemployment, those are terrible for American families. And we’re not seeing anything like that.”
But he said even though Americans are still employed, they’re receiving a function “wage cut” because inflation is still outpacing wage gains.
Kashkari said, “We are a long way away from achieving an economy that is back at 2% inflation. And that’s where we need to get to.”
The Fed meets again in September.
Treasury Yields Rise As Traders Weigh Recession Prospects
Treasury yields are rising on the first day of August as debate continues over whether the U.S. is in a recession.
The key 2-year/10-year curve remains inverted.
The 2-year yield is up 2 basis points to 2.90% while the 10-year yield is up 3 basis points to 2.68%.
July was the strongest month since 2020 for stocks as mostly positive corporate earnings provided some relief.
The big piece of data for the market this week will be Friday’s jobs report.
Economists expect that to show the U.S. added 250,000 jobs in July.
Romeo Power Surges On Nikola Acquisition
Romeo Power (RMO) shares are surging 20% ahead of the open after Nikola (NKLA) announced a $144 million deal to acquire the battery pack supplier.
Nikola will buy Romeo in an all-stock transaction at $0.74 per share, a 34% premium to Friday’s closing price.
Nikola will provide $35 million in interim funding to Romeo to continue its operations until the deal closes.
The electric truck maker has been Romeo’s largest customer and Nikola’s CEO said, “Given our strong relationship with Romeo and ongoing collaboration, we are confident in our ability to successfully integrate and deliver the many expected strategic and financial benefits of this acquisition.”
Oil Prices Drop After Weak Chinese Factory Data
Oil prices are falling today as demand concerns jump following the release of weak factory data from China and Japan.
West Texas Intermediate crude futures are down 2.3% to $96 bbl while Brent crude futures are down 1.7% to $102 bbl.
China’s manufacturing PMI fell to 50.4 in July from 51.4 in June as fresh Covid lockdowns dampened activity.
Manufacturing activity in Japan also expanded at the slowest pace in 10 months.
The market is also looking ahead to this week’s OPEC+ meeting.
The group meets Wednesday to decide on output levels for September.
Most analysts expect the group to keep output levels steady.
Gas Prices Are Still Falling
U.S. gas prices fell for the 46th day in a row today.
AAA shows the national average for regular gas fell to $4.212/gal.
That price is down more than $0.80 from the record-high in June but still $1.039 higher than a year ago.
The national average for diesel is down to $5.279/gal.
Diesel has fallen $0.537 from its record-high but is still $1.995 higher than the same time last year.