>>> US Closing Stock Market Summary

Closing Stock Market Summary
Stocks closed out this first day of September on a mixed note. The three main indices closed with only modest gains or losses while the Russell 2000 (+1.1%) outperformed. The S&P 500 maintained a position above 4,500 today, reaching 4,501 at its low.

A jump in market rates, a view from Cleveland Fed President Mester (2024 FOMC voter) that inflation remains too high, and a sharp increase in oil prices ($85.55/bbl, +1.92, +2.3%) acted as headwinds for the stock market.

Treasuries saw some improvement immediately after the release of the August Employment Situation Report, which showed a softening in nonfarm payrolls after accounting for revisions, a jump in the unemployment rate to 3.8% from 3.5%, and a moderation in average hourly earnings growth to 4.3% year-over-year from 4.4%. Separately, the ISM Manufacturing Index for August was stronger than expected at 47.6% (Briefing.com consensus 46.7%), but remained below 50.0%, which is the dividing line between expansion and contraction, for the tenth consecutive month.

The 2-yr note yield fell to 4.78% and the 10-yr note yield hit 4.05% after the jobs report before an increase in selling activity took yields higher. To be fair, yields had already dropped sharply this week in the wake of some other soft data, so today's weakness was partly driven by a sell-the-news response.

The 2-yr note yield rose two basis points today, and fell 17 basis points this week, to 4.88%. The 10-yr note yield rose eight basis points today, and fell seven this week, to 4.17%.

Mega caps and growth stocks were relatively soft, reacting to the bump in rates and cooling off from a stronger showing earlier in the week. The Vanguard Mega Cap Growth closed flat while the Invesco S&P 500 Equal Weight ETF (RSP) logged a 0.4% gain and the market-cap weighted S&P 500 rose 0.2%. The Russell 3000 Value Index rose 0.6% versus a 0.1% gain in the Russell 3000 Growth Index.

On the earnings front, Elastic (ESTC 74.27, +12.39, +20.0%), MongoDB (MDB 392.88, +11.58, +3.0%), lululemon athletica (LULU 404.19, +22.93, +6.0%), and Dell (DELL 68.19, +11.95, +21.3%) were winning standouts following some pleasing earnings results and/or outlooks. Broadcom (AVGO 872.52, -50.37, -5.5%), meanwhile, sold off after its earnings report.

Roughly half of the 11 S&P 500 sectors closed in the green. The energy sector (+2.1%) saw the largest gain, rising alongside oil prices, while the consumer staples sector (-0.8%) registered the biggest decline.

As a reminder, equity and bond markets will be closed on Monday for Labor Day.
  • Nasdaq Composite: +34.1% YTD
  • S&P 500: +17.6% YTD
  • S&P Midcap 400: +9.9% YTD
  • Russell 2000: +9.1% YTD
  • Dow Jones Industrial Average: +5.1% YTD
Reviewing today's economic data:
  • August Nonfarm Payrolls 187K vs Briefing.com consensus of 175K; July was revised to 157K from 187K
  • August Nonfarm Private Payrolls 179K vs consensus of 160K; July was revised to 155K from 172K
  • August Avg. Hourly Earnings 0.2% vs consensus of 0.3%; July was 0.4%
  • August Unemployment Rate 3.8% vs consensus of 3.6%; July was 3.5%
  • August Average Workweek 34.4 vs consensus of 34.3; July was 34.3
    • Altogether the key takeaway from the report is that it was a Goldilocks report as it pertains to the market's thinking that the Fed won't be raising rates again.
  • August S&P Global US Manufacturing PMI - Final 47.9 (July was 47.0).
  • July Construction Spending 0.7% vs Briefing.com consensus of 0.6%; June was revised to 0.6% from 0.5% "
    • The key takeaway from the report is that residential spending continues to be powered by new single family construction to meet demand that cannot be satisfied through the existing home market.
  • August ISM Manufacturing Index 47.6% vs consensus of 46.7%; July was 46.4%"
    • The key takeaway from the report is that manufacturing demand remains soft, yet conditions in the manufacturing sector, slow they may be, appear to be stabilizing.

>>> US This week's biggest % gainers/losers

This week's biggest % gainers/losers
The following are this week's top percentage gainers and losers, categorized by sectors (over $300 mln market cap and 100K average daily volume).

This week's top % gainers
  • Healthcare: TLRY (2.98 +27.35%)
  • Consumer Discretionary: PDD (103.13 +29.06%), GCO (33.68 +25.05%), CVNA (50.87 +23.47%), CAL (29.63 +22.32%)
  • Information Technology: UPLD (3.72 +47.04%), ESTC (74.74 +24.5%), DELL (68.07 +21.1%), NANO (136.74 +20.37%), SHOP (66.63 +19.97%)
  • Financials: LX (2.65 +35.2%)
  • Energy: MMLP (3.11 +30.13%)
  • Utilities: HE (15.07 +55.99%)
This week's top % losers
  • Healthcare: NVCR (22.27 -25.2%), FGEN (1.05 -13.64%), CARA (2.42 -13.13%), PDCO (30.19 -10.27%), LXRX (1.67 -8.74%), GH (34.96 -8.7%)
  • Materials: OLN (51.98 -10.45%)
  • Consumer Discretionary: DG (130.42 -15.85%), MCFT (22.71 -11.22%), GRPN (11.78 -9.31%)
  • Information Technology: BOX (26.59 -12.84%), AMBA (63.86 -8.88%)
  • Financials: RA (12.68 -24.66%), SQQQ (17.83 -10.07%)
  • Consumer Staples: HAIN (10.44 -11.97%)

>>> S&P issues quarterly rebalance of several indices; Blackstone (BX) and Airbn

S&P issues quarterly rebalance of several indices; Blackstone (BX) and Airbnb (ABNB) will join S&P 500
Full press release attached
S&P Dow Jones Indices announces many changes to the S&P 500, S&P 100, S&P MidCap 400 and S&P SmallCap 600 indices effective prior to the open of trading on Monday, September 18, to coincide with the quarterly rebalance.

All companies being added to the S&P MidCap 400 are more representative of the mid-cap market space, and all companies being added to the S&P SmallCap 600 are more representative of the small-cap market space. The companies being removed from the S&P SmallCap 600 are no longer representative of the small-cap market space.

  • Blackstone (BX) and Airbnb (ABNB) will replace Lincoln National (LNC) and Newell Brands (NWL) in the S&P 500 respectively, and Lincoln National and Newell Brands will replace UNIQURE (QURE) and Universal Insurance (UVE) respectively in the S&P SmallCap 600.

  • S&P 500 constituent Deere (DE) will replace Walgreens Boots Alliance (WBA) in the S&P 100. Walgreens Boots Alliance is no longer representative of the mega-cap market space. Walgreens Boots Alliance will remain in the S&P 500.

  • Permian Resources (PR), Gaming and Leisure Properties (GLPI), GoDaddy (GDDY), Morningstar (MORN), Ally Financial (ALLY), Vistra (VST), Vail Resorts (MTN), Sensata Technologies (ST), Weatherford (WFRD) and Fidelity National (FNF) will replace Omnicell (OMCL), Papa John's (PZZA), Sensient Tech (SXT), Cathay General Bancorp (CATY), Energizer (ENR), Xerox (XRX), Highwoods Properties (HIW), Tripadvisor (TRIP), JetBlue Airways (JBLU), and Foot Locker (FL) respectively in the S&P MidCap 400.
    • The constituents being removed from the S&P MidCap 400 will be added to the S&P SmallCap 600 replacing Trinseo plc (TSE), Aaron's (AAN), NETGEAR (NTGR), Coherus Biosciences (CHRS), 8X8 (EGHT), Office Properties Income Trust (OPI), AngioDynamics (ANGO), Vanda Pharma (VNDA), Orion Office REIT (ONL), and Enanta Pharmaceuticals (ENTA) respectively.
  • Hannon Armstrong Sustainable (HASI), Blackstone Mortgage (BXMT), Liberty Energy (LBRT), Premier (PINC) and Apple Hospitality REIT (APLE) will replace FutureFuel (FF), RE/MAX (RMAX), Zynex (ZYXI), Anika Therapeutics (ANIK) and Computer Programs (CPSI) respectively in the S&P SmallCap 600.

  • RBC Bearings (RBC) will replace Hawaiian Electric (HE) in the S&P MidCap 400. Hawaiian Electric Industries is no longer representative of the mid-cap market space.

>>> Weekly Market Update

Weekly Market Update: Softening data bodes well for soft landing scenarios

The final week of August saw investors thankfully put a rough start to the month further into the rear view mirror. Trading volumes were some the lowest of the year which belied a week that offered a litany of key economic readings and developments, along with swath of influential tech and consumer related earnings reports. Animal spirits initially served as a tailwind when Monday saw several modest M&A announcements. None was more important than the news the FTC opened the door for the $28B Horizon Therapeutics/Amgen deal to be able to close as early as this fall. China stimulus headlines continued to serve as a buoy to underlying sentiment, culminating in confirmed changes to China’s mortgage market, and the PBOC’s 200 basis point cut to the forex reserve requirement ratio. The Yuan continued to creep up off of recent multi-month lows, while copper and crude prices remained on firmer footing.

Clearly the overarching narrative to trade this week was the softening economic data, and the implications for global central banks. Eurozone PMI figures remained well into contraction territory causing some ECB officials to dial back rhetoric, and along with that expectations they will raise rates in September. Importantly, Tuesday the US July JOLTS data sent both stock and bond prices sharply higher. The headline data fell to its lowest level in roughly 2-years, nearly 700K openings below estimates. It served as a precursor to Friday’s August US employment report. The unemployment and labor force participation rates both jumped more than expected, while wage growth decelerated. Payrolls remained robust and weekly hours ticked up, but regardless, the Fed is likely to cheer the signs of normalization seen filtering through labor market. The jobs readings were sandwiched around July PCE data which further supported the belief the Fed can look to hold rates here and see how their restrictive stance plays out before deciding if rates need to go any higher. Nevertheless risks remain for Fed officials, probably none more so than oil prices, which appear to breaking out to the upside. Saudi crude output continued to dwindle in August even as Aramco is said contemplating an historic $50B share offering. De-inverting along the US yield curve was prevalent throughout the week as traders’ focus moved away from whether the Fed will hike the funds rate again, towards betting on a soft landing and if and when they will start to consider cutting rates next year. For the week, the S&P gained 2.5%, the DJIA rose 1.4%, and the Nasdaq recouped 3.2%.

Corporate news this week continued to highlight the struggle to get a clear picture of what is happening in retail. Dollar General, a discount chain that usually fares well when consumers are strapped, reported a stinker of a quarter and cut its outlook, laying much of the blame on ‘shrink.’ Walgreens Boots cuts its fiscal year forecast as it announced its CEO will step down. Costco reported another month of lukewarm same store sales growth in the low single digits. Meanwhile, Best Buy beat earnings expectations handily and affirmed its forecast that tech product demand should bottom out this year and stabilize in 2024. High tech names were also a mixed bag. Salesforce reported a good EPS beat and raised guidance and Dell blew out estimates, sending its shares up more than 20% on Friday. Broadcom was a different case, providing mostly in-line results and guidance, and noting that it would not have made its numbers if not for strong AI-related spending from customers.


SUN 8/27
BP.UK CEO: BP needs rapid and 'just' energy transition; To invest up to 50% of its capital in energy transition by end of the decade - financial press
(CN) China Securities Regulator (CSRC): To slow pace of IPO's at the current stage; Exchanges to lower margin requirements - financial press
3333.HK Reports H1 FY23 (CNY) Attributable Net -33.0B v -64.2B y/y, Op -17.4B, Rev 128.2B v 89.3B y/y; Warns that ability to continue as a going concern still depends on (i) whether it can successfully complete the Proposed Offshore Debts Restructuring, (ii) whether it can successfully negotiate with the remaining lenders on extensions or deferrals

MON 8/28
(CN) China Foreign Ministry: From Aug 30th, inbound travelers to China will no longer need pre-departure antigen test for COVID
(US) US and China agree to launch 'Export Control Enforcement Exchange'; Both countries agree to communicate regularly - US press after US Commerce Sec Raimondo meeting with China Commerce Min Wan
1211.HK Reports H1 (CNY) Net 10.95B v 3.60B y/y, Rev 206.1B v 150.6B y/y
(US) AUG DALLAS FED MANUFACTURING ACTIVITY: -17.2 V -19E
(JP) Japan govt annual economic white paper: Notes Japan may be at an inflection point in its 25-year battle with deflation as price and wage rises show signs of broadening - press
7203.JP Confirms to halt all 14 plants in Japan on Tues night following systems failure; Does not believe it was a cyberattack

TUES 8/29
(CN) CHINA BIGGEST STATE-OWNED BANKS CONSIDER FURTHER DEPOSIT RATE CUTS FOR A THIRD TIME IN A YEAR IN ORDER TO BOOST GROWTH - PRESS
7203.JP Reportedly likely to gradually resume vehicle production at domestic factories in Japan from tomorrow, Aug 29th; Continues to investigate cause of malfunction - press
PDD Reports Q2 (CNY) 10.47* v 7.13e, Rev 52.3B v 31.4B y/y; Saw a positive shift in consumer sentiment, leading to a rise in demand across various product sectors
(US) White House announce first 10 prescription drugs selected for Medicare price negotiations as part of Inflation Reduction Act (as expected); New prices will be announced Sept 1, 2024 and go into effect Jan 1, 2026
(CN) US Commerce Sec Raimondo: China asked US to reduce export controls but US rejected it; Hope export control dialogue with China to boost compliance; Will wait and see if there is action from China - comments from China
MMM Confirms Combat Arms settlement; To contribute a total of $6.0B between 2023-2029, including $5.0B in cash and $1.0B in 3M common stock; Notes agreement is not an admission of liability
BBY Reports Q2 $1.22 v $1.06e, Rev $9.58B v $9.52Be; Continue to expect that this year will be the low point in tech demand after two years of sales declines, but consumer electronics industry should see stabilization in 2024
BBY Guides Q4 SSS -3% to slightly positive; Holiday shopping to return to near pre pandemic patterns; Comp sales -6% y/y first four weeks of Aug - conf call
(US) AUG CONSUMER CONFIDENCE: 106.1 V 116.0E
(US) JULY JOLTS JOB OPENINGS: 8.83M V 9.50ME (lowest since May 2021)
GBTC US federal appeals court rules SEC was wrong to reject Grayscale application for a spot bitcoin ETF
HPQ Reports Q3 $0.86 v $0.86e, Rev $13.2B v $13.4Be; Cuts FY guidance
(US) Weekly API Crude Oil Inventories: -11.5M v -2.4M prior
3382.JP Sogo & Seibu union to go on strike on Aug 31st (first such strike in Japan since 1950s) - Japanese press

WED 8/30
(ES) SPAIN AUG PRELIMINARY CPI M/M: 0.5% V 0.5%E; Y/Y: 2.6% V 2.5%E (2nd month above target and highest annual pace since May)
(UK) JULY MORTGAGE APPROVALS: 49.4K V 51.0KE
(CN) US Commerce Sec Raimondo: Did NOT get resolution of specific issues during China trip; Had productive, candid and constructive meetings in China; Raised the tough issues with Chinese govt; US policy not decoupling - comments from China
(US) NHC on Idalia: Now a major hurricane at Category 4; Still has a few hours left to intensify before it makes landfall near Wakulla/Jefferson County line in Florida; Expected to keep the system near hurricane strength for longer over southeastern Georgia and South Carolina
(US) NHC on Major Hurricane Idalia: Downgraded back from Category 4 to Category 3 ahead of landfall; After landfall, Idalia is forecast to turn toward the northeast and east-northeast, moving near or along the coasts of Georgia, South Carolina, and North Carolina late today and Thursday
000002.CN Reports H1 (CNY) Net 9.87B v 12.2B y/y, Rev 201B v 207B y/y
MCFT Reports Q4 $1.30 v $1.08e, Rev $166.6M v $162Me; Guides FY24 very weak citing significant uncertainty which is limiting retail demand visibility
(DE) GERMANY AUG PRELIMINARY CPI M/M: 0.3% V 0.3%E; Y/Y: 6.1% V 6.0%E
(US) Q2 PRELIMINARY GDP ANNUALIZED Q/Q: 2.1% V 2.4%E; PERSONAL CONSUMPTION: 1.7% V 1.8%E
(US) Q2 PRELIMINARY GDP PRICE INDEX: 2.0% V 2.2%E; CORE PCE Q/Q: 3.7% V 3.8%E
(US) Nevada reports July casino gaming Rev $1.32B, +6.7% y/y, Las Vegas strip Rev $773.4M, +8.0% y/y
(US) JULY PENDING HOME SALES M/M: 0.9% V -1.0%E; Y/Y: -13.8% V -15.7%E
(US) DOE CRUDE: -10.6M V -2ME; GASOLINE: -0.2M V -1.5ME; DISTILLATE: +1.2M V -0.5ME
2007.HK Reports H1 (CNY) Net -48.9B v +612M y/y, Rev 226.3B v 162.4B y/y; Declares no interim dividend; Will continue to actively adjust sales and pre-sale activities to respond to market changes and capture demand
CRM Reports Q2 $2.12 v $1.90e, Rev $8.60B v $8.52Be; Raises FY24 guidance
CRWD Reports Q2 $0.74 v $0.56e, Rev $732M v $726Me; Raises FY24 outlook
V Reports Aug US payment volume +7%, credit +6% y/y; Global processed transactions +10% y/y - filing
COST Reports Aug Total SSS +4.1% y/y (ex-gas and FX); US SSS +3.2% (ex-gas and FX) v +4.5% prior

THRS 8/31
UBSG.CH Reports Q2 Pretax $29.2B* v $2.62B y/y, Rev $9.54B v $8.92B y/y; Aim to achieve gross exit-rate cost saving >$10B by end-2026; Credit Suisse (Schweiz) AG to be fully integrated
(CN) China reportedly exploring ways to make its own AI memory chips despite US sanctions; May take some China firms up to four years to deliver its own high-bandwidth memory (HBM) chips - SCMP
AAL 99.47% of flight attendants at American Airlines voted to authorize union leaders to call for a possible strike if contracts talks fail
(DE) ECB’s Schnabel (Germany): Underlying price pressures remain stubbornly high; Cannot predict where peak rate is going to be; EU growth prospects are more dire than officials predicted in June
(CN) China Defense Ministry: Rumours that PLA Type 093 submarine had accident near Taiwan strait are completely false
(DE) GERMANY AUG NET UNEMPLOYMENT CHANGE: +18K V +10.0KE; UNEMPLOYMENT CLAIMS RATE: 5.7% V 5.7%E
(EU) EURO ZONE AUG ADVANCE CPI ESTIMATE Y/Y: 5.3% V 5.1%E; CPI CORE Y/Y: 5.3% V 5.3%E
(IT) ITALY AUG PRELIMINARY CPI M/M: 0.4% V 0.4%E; Y/Y: 5.5% V 5.4%E
(CN) China govt raises deduction in personal income tax collection - press
(AT) ECB’s Holzmann (Austria, hawk): Aug inflation is a conundrum for ECB; Another hike or two are possible
(IN) India Aug monsoon rains was the lowest amount in over a century, 36% below long-term average - India Meteorological Department (IMD)
GCO Reports Q2 -$2.79 v $0.59 y/y, Rev $523M v $535.2M y/y; Notes during Q3-to-date, sales trends for the Back-to-School season improved a little further
DG Reports Q2 $2.13 v $2.49e, Rev $9.80B v $9.94Be; Cuts FY23 outloook
(CN) CHINA PBOC CUTS RATES ON SOME EXISTING MORTGAGES, EFFECTIVE SEPT 25TH (as speculated)
(US) JULY PERSONAL INCOME: 0.2% V 0.3%E; PERSONAL SPENDING: 0.8% V 0.7%E
(US) JULY PCE DEFLATOR M/M: 0.2% V 0.2%E; Y/Y: 3.3% V 3.3%E
(US) INITIAL JOBLESS CLAIMS: 228K V 235KE; CONTINUING CLAIMS: 1.73M V 1.71ME (highest continuing claims since July 20th)
(US) AUG CHICAGO PURCHASE MANAGER’S INDEX (PMI): 48.7 V 44.2E
(RU) Russia Dep PM Novak: Russia and OPEC+ have agreed on further action and will announce new main parameters and further steps next week
(US) Atlanta Fed GDPNow: Cuts Q3 GDP forecast from 5.9% to 5.6%
(EU) ECB's de Guindos (Spain): Latest data from July and Aug point towards economic deceleration in Q3 and probably in Q4; Rate decision in Sept is still up for debate
(US) July Dallas Fed Trimmed Mean PCE (m/m) +2.4% v +2.6% prior
NDA.DE Identifies serious indications of shortfall in metals; believes it has been target of further criminal activity; Damages potentially in 3-digit million euro range; Will not achieve prior FY guidance
INTC CEO Gelsinger: Q3 is above mid-point of guidance (guided EPS $0.20 v $0.21e, Rev $12.9-13.9B v $13.5Be) - DB conf comments
UPS Seeks to reduce pilot headcount by offering voluntary separation for 'eligible' pilots amid drop in air freight volumes - press
OXM Reports Q2 $3.45 v $3.46e, Rev $420M v $428Me; Cuts FY23 outlook and guides Q3 weak noting recently seen consumers become a bit more cautious
DELL Reports Q2 $1.74 v $1.13e, Rev $22.9B v $20.8Be
DELL Raises FY24 EPS $6.10-6.50 v $5.56e (prior $5.25-5.75); Guides Q3 $1.35-1.55 v $1.36e, Rev $22.5-23.5B v $21.4Be; Encouraged with some of the signs we are seeing in the macro environment as we move into H2 - earnings call comments
AVGO Reports Q3 $10.54 v $10.42e, Rev $8.88B v $8.86Be
AVGO CEO: All of growth comes from AI-related spending; Without AI, chip unit would have been flat y/y; Believe will get approval for VMware deal by Oct 30th - conf call comments
(US) ILWU says union members voted 75% in favor of approving the new 6-year agreement for West Coast port workers
(US) UAW President Fain: We are far apart in talks; Filed unfair labor practice complaint against GM and Stellantis in the agreement talks, says the companies refuse to bargain in good faith; Did NOT file a complaint against Ford Motor, as the company responded to the UAW’s demands with a counterproposal he heavily criticized
F Said to have made UAW contract offer, said to include 'significant' pay increases; Offered a 9% wage increase through 2027 v the 46% wage hike being sought by the UAW union - press
(CN) CHINA AUG CAIXIN PMI MANUFACTURING: 51.0 V 49.0E (moves back into expansion, highest since Feb)
TSLA Tesla US cuts Model X prices by ~19% from ~$98.5K to ~$80.0K, now qualifies for US tax credit; Tesla China also cuts price of existing stocks of Model S and Model X by up to 21% following official introducing of new refreshed Tesla Model 3 - press

FRI 9/1
(HK) Macau Aug Casino Rev (MOP): 17.2B v 16.7B m/m; Y/Y: +686% v +678%e
(CN) Reportedly China’s Pres Xi is likely to skip the G20 Summit in India on Sept 9-10th - Indian press
(UK) AUG NATIONWIDE HOUSE PRICE INDEX M/M: -0.8% V -0.4%E; Y/Y: -5.3% V -4.9%E (weakest since July 2009)
(CN) CHINA REPORTEDLY SET TO TAKE MORE ACTION TO REVIVE PROPERTY SECTOR, INCLUDING LIFTING HOME-PURCHASING CURBS IMPOSED SINCE 2010 IN KEY CITIES - PRESS
(CH) SWISS AUG CPI M/M: 0.2% V 0.2%E; Y/Y: 1.6% V 1.5%E (3rd straight reading within SNB's target)
(EU) ECB’s Villeroy (France): Very close to peak rates; Options are open at next and upcoming rate meetings; After overall inflation peaked, underlying inflation has also peaked since April and appears to have begun its decline
(CH) Swiss Aug PMI Manufacturing: 39.9 v 40.5e (8th month of contraction, stays below pandemic lows for 2nd mont
(IT) ITALY AUG MANUFACTURING PMI: 45.4 V 45.7E (5th month of contraction but highest since May 2023)
(DE) GERMANY AUG FINAL MANUFACTURING PMI: 39.1 V 39.1E (confirms 14th straight contraction)
ABBN.CH CEO: China is not really developing as we hoped in the beginning of the year; ABB has been impacted by a softening in China’s property sector; It will be challenging for the rest of the year - CNBC
(SA) Reportedly Saudi crude oil exports dropped to 5.6Mbpd in Aug v 6.8Mbpd in June - press
WBA Sees FY23 adj EPS at or near the lower end of the guidance cut on June 27th ($4.00-4.05 v $4.00e); Rosalind Brewer to step down as CEO; Names Ginger Graham as Interim CEO; effective H1 2024
(HK) Hong Kong raises typhoon warning signal to 10 (maximum) for Super Typhoon Saola - press
(IN) India's 26 opposition parties partner to challenge PM Modi's Hindu nationalist party in May 2024 elections - press
(US) AUG UNEMPLOYMENT RATE: 3.8% V 3.5%E (highest since Feb 2022)
(US) AUG AVERAGE HOURLY EARNINGS M/M: 0.2% V 0.3%E; Y/Y: 4.3% V 4.3%E
(US) AUG FINAL S&P MANUFACTURING PMI: 47.9 V 47.0E
ARAMCO.SA Reportedly considers selling $50B in shares; Would be the largest in capital markets history
(US) Weekly Baker Hughes Rig Count: 631 v 632 prior (-0.2% w/w)

FT : Gabon coup brings abrupt end to Bongos’ improbable 56-year dynasty

Gabon coup brings abrupt end to Bongos’ improbable 56-year dynasty
Veteran president removed this week inherited the huge wealth of the oil-rich country and the lavish tastes of his father

By the time Omar Bongo Ondimba died in 2009 after 41 uninterrupted years as president of Gabon he had fathered as many as 50 children. In that crowded field it was the French-educated Ali Bongo, one of seven “official sons” and a jazz-funk musician, who emerged as his successor.

Ali, now 64, was elected president a few months after his father’s death, a position he held until this week when he became the latest African head of state to be swept out of office in a coup. Thousands poured on to the streets of Libreville, the seaside capital, to celebrate the apparent demise of the Bongo dynasty.

“The army has decided to turn the page,” said Brice Oligui Nguema, a longtime confidante of both Bongos and head of the presidential guard, who led the coup. Nguema, a cousin of Ali, said the president, who had a stroke in 2018, was not competent to run the country and that the elections he had supposedly won — after an internet shutdown and a delay in counting — had not been transparent.

Ali, born Alain Bernard, struggled throughout his 14 years as president to shake off the impression that Gabon, a densely forested country of 2.4mn people, was little more than a family slush fund.

His father became president in 1967 when Ali was eight-years-old and the young boy was dispatched to Neuilly, a wealthy suburb of Paris, to be educated. Fluent in French and English, but not in the languages of Gabon, he later graduated in law from the Sorbonne.

“In life, children are going to be influenced by what their parents do,” he told the Financial Times in a 2012 interview, rejecting the idea that he should have refrained from following his father into office. “How many doctors’ sons become doctors? How many lawyer’s sons become a lawyer?” he asked.

Yet Omar Bongo, born into a peasant family in Gabon’s Bateke region, was no doctor or lawyer. After an improbable rise to the presidency, he lived like a king and renamed Lewai, the town of his birth, Bongoville.

As his country got rich on oil, producing about 230,000 barrels a day, he spent prodigiously on mansions, cars and, reputedly, on women.

Ivette Santa Maria, a 22-year-old Miss Peru, described how she had been flown to Libreville and propositioned by the then 67-year-old Gabonese leader. “He pressed a button and some sliding doors opened, revealing a large bed,” she told the Associated Press.

Bongo senior amassed a huge portfolio of property in France. A 2007 French police report said the Bongo clan had 39 properties in France, including some exclusive addresses. Prized possessions included a luxury Paris property acquired from the aristocratic Pozzo di Borgo family on Rue de l’Université and a fleet of luxury cars, including Ferraris and Mercedes.

Bongo senior was the personification of the close relations that persisted between African leaders and France, which came to be known as Francafrique. So close were the ties that, even after independence in 1960, postboxes in Libreville carried three headings: Gabon, France and Foreign Countries.

Omar, who was alleged to have funded the presidential campaign of French politicians, including Jacques Chirac and Nicolas Sarkozy, was quoted as saying of the symbiotic relations: “Gabon without France is like a car with no driver. France without Gabon is like a car with no fuel.”

After his father’s death, Ali, more diffident and earnest, worked hard to reshape his country’s image. He sought to widen Gabon’s ties by joining the Commonwealth last year. A committed environmentalist, he staked his reputation on protecting the abundant gorillas and elephants that inhabit the vast forests, which cover some 90 per cent of the country.

In 2010, he banned the export of unprocessed logs and encouraged investments to process wood into furniture and finished products. As oil reserves began to dry up he sought to turn the country into a “green superpower”, one that could potentially receive billions of dollars in carbon credits.

Gabon is one of the few countries to absorb more carbon than it emits. Last month it negotiated a $500mn debt-for-nature swap, arranged by Bank of America, that freed $163mn for marine protection.

Still, Bongo junior hobnobbed with celebrities from the UK’s King Charles III, with whom he shared an interest in conservation, and the likes of footballer Lionel Messi and Michael Jackson, the late singer, whom he entertained in Libreville. He often played jazz piano for visiting dignitaries.

Mark Pursey, chief executive of BTP Advisers, which advised Bongo’s recent election strategy, said the president had gone some way to changing perceptions of Gabon. “You go to a newspaper stand in Gabon and you’ll see opposition newspapers. This was not a Stalinist state,” he said. “In his father’s time that was simply not allowed.”

Pursey said Bongo had personally polled well, although his government’s performance was criticised, particularly in its ability to convert the country’s large, if declining, oil wealth into infrastructure, jobs and opportunity.

Bongo’s environmental policies played better abroad than at home, he said. Domestically, farmers blamed elephants for ruining their crops and people worried that protecting forests was incompatible with development.

Pursey said Bongo liked to give the impression that he had come to the presidency reluctantly. “Ali was quite shy and unassuming. He would have been very happy being a musician,” he said.

Nguema, the transitional leader, suggested in an interview with Le Monde this week that Bongo, now under house arrest, would finally get his wish. “He is retired and enjoys all his rights,” he said. “He is a normal Gabonese, like everyone else.”

FT : Lloyds in talks with Barclay family over Very Group

Lloyds in talks with Barclay family over Very Group
Lender that seized Telegraph Media Group holds a guarantee over the retail and financial services business

Lloyds Banking Group is in talks with the Barclay family and private equity firm Carlyle over the future of the Very retail and financial services business months after seizing the Telegraph Media Group.

The UK lender holds a guarantee in the overseas holding companies controlling Very Group, that is linked to the distressed debt behind the Telegraph, according to people with knowledge of the discussions. Very is the former Littlewoods and Shop Direct business based in Liverpool owned by the Barclays.

This potentially puts the holding companies on the hook for the £1.1bn in debt owed by the Barclay family to Lloyds, which placed the Telegraph into receivership in June, according to two people close to the situation.

The discussions will spark fresh scrutiny over the remaining businesses owned by the Barclay family after they lost control of the Telegraph. The Barclay family are seeking offers for delivery business Yodel, which is backed by about £180mn of debt provided by HSBC.

The existence of the debt guarantee could further complicate the relationship between the Barclays and Lloyds.

The family and the lender have been in discussions over the debt and the guarantee, one person said. Carlyle, which holds debt in the loan structure that backs Very, is also involved in the talks, the people added.

“[There are] discussions — the bank hasn’t enforced the guarantee, but it could in theory. It has sorted the Telegraph side and now the question is the Very Group”, one person said.

The person added that the talks were “ongoing and productive” and Very was not in any distress. The business enjoyed a boom in ecommerce sales during the pandemic and whilst this has faded, it is still profitable.

The talks instead concern the complex financial structures that sit above the operating companies, some of which can be seen in Companies House filings and through charges registered against offshore-based groups.

The Very Group has more than £1.5bn in securitised loans, and bonds of £575mn in its operating companies. However, Carlyle is owed debts of more than £300mn, which sit in holding companies above these groups, according to a person familiar with the situation.

Companies House filings show that shares in The Very Group were pledged as collateral for this holding company loan in July 2021.

Carlyle lent this money to Very in 2021 to help repay outstanding commitments of £280mn to Greensill Capital, the supply chain financing group that was at the time in administration. People close to the deal at the time said that the family had hoped to list the Very group to help reimburse the debt. 

While the Carlyle debt is more senior in the overall corporate structure, the people close to the process said that Lloyds in theory could enforce its guarantee and take charge of the holding companies sitting above this debt.

A spokesperson for the Barclay family said other assets owned by the family including the Very Group “are unaffected and continue to operate as normal” by the Telegraph receivership.

The person added: “This is a matter between the shareholders and Lloyds Banking Group only, and The Very Group is materially removed from it. The businesses across the group are performing well, have strong liquidity and have their own distinct funding arrangements.”

A spokesperson for Carlyle said: “We have a good relationship with the Barclay family and remain fully supportive of The Very Group, which is performing strongly.”

Lloyds declined to comment. HSBC could not immediately comment.

The Very Group is an online retailer and financial services provider formed through merger of the former Littlewoods and Shop Direct companies, bringing together companies that have their roots in mail order and the football pools.

In results for the 39 week period ended 1 April 2023, revenue increased slightly to £1.7bn, with earnings before interest, tax, depreciation and amortisation of £190.1mn, down from £221mn the year before. Pre-tax profit was £11.7mn, down from £58.5mn.

FT : UN ‘alarmed’ by deaths during protest against its DRC peacekeeping force

UN ‘alarmed’ by deaths during protest against its DRC peacekeeping force
Human rights groups accuse military of shooting civilians during unrest that left dozens of people dead

The UN said it was “extremely alarmed” after dozens of people were killed in the eastern Democratic Republic of Congo this week in protests against a longstanding peacekeeping mission in a region besieged by rebel groups.

Members of a religious group had gathered in the city of Goma to demonstrate against the UN peacekeeping mission known as Monusco and the East African Community organisation over escalating violence.

Human rights groups accused the DRC’s military of shooting civilians during Wednesday’s unrest in which at least 43 people were killed, including a policeman, and 56 injured.

Volker Türk, the UN human rights chief, on Friday said: “People have a right to express themselves freely and to assemble peacefully, even if in protest at the United Nations.” He said the UN had received information indicating that the death toll may be higher.

Monusco peacekeepers have been in the country since 1999, but have faced criticism over their failure to stop rebel violence, particularly the resurgence of the M23 armed group, which has been terrorising parts of the region.

Last year, amid claims that the UN had failed to protect civilians, anti-Monusco protests led to the deaths of several people, including peacekeepers.

On Thursday, the Congolese government said 158 people had been arrested and that a military investigation into the bloodshed had been opened.

The victims were reportedly killed in Goma, the capital of the province of North Kivu, after the army confronted a “mystic-religious sect”, called Natural Judaic and Messianic Faith Towards the Nations, which had gathered to protest.

Officials in the Congolese capital, Kinshasa, said the group “carried out actions which undermined public order, and which caused the death by stoning of a police officer,” leading to an intervention by the security forces.

In a statement on Thursday Monusco said the Congolese security forces had “in accordance with their primary responsibility for security in the country,” tried to prevent a demonstration that was expected to turn violent. Bintou Keita, head of Monusco, said she deeply regretted “the banned demonstration has caused the death of civilians, police and members of the Congolese armed forces”.

“Congolese military forces appear to have fired into a crowd to prevent a demonstration, an extremely callous as well as unlawful way to enforce a ban,” said Thomas Fessy, senior Congo researcher at Human Rights Watch. “For two years, the military authorities have used the ‘state of siege’ — martial law — in North Kivu province to brutally crack down on fundamental liberties.”

Violence in the region has been escalating in recent years, especially since M23 rebels resurfaced with renewed strength after a hiatus of almost 10 years.

John Banyene, a civil society leader in Goma who has joined protests against the peacekeepers in the past, said. “There’s a dissatisfaction from the population with regard to Monusco, which has had a presence here for more than two decades, but now the security situation is only deteriorating.”

In 2021, the government of President Felix Tshisekedi declared “a state of siege” in eastern DRC, with military officers taking over from civilian administrators in areas where government troops are fighting more than 100 rebel groups vying for resources and territorial control. 

The M23 — which Congolese officials, local people, the UN, US, and EU claim is backed by neighbouring Rwanda, something Rwanda’s government denies — resumed fighting in November 2021 and has since been waging a brutal offensive in eastern Congo. The group has been accused of mass killings and the rape of civilians. Almost 1mn people have been displaced by violence since the M23’s resurgence, the International Organization for Migration said in April.

The M23 on Friday released a statement condemning in “the strongest terms the brutal slaughtering of unarmed civilians”, claiming the death toll kept rising and it “provisionally stands at 97 dead, including women and children.”

FT : Aurubis: green aims blackened in recycling scandal

Aurubis: green aims blackened in recycling scandal
The potential for fraud will not diminish given growing recycling requirements

Recycling offers a green alternative to disposal of unwanted goods. Free waste gets turned into green dollars in the reclamation of metals. Unfortunately, the buyers of scrap metals and products which contain these cannot be sure what they have purchased.

Tell that to Aurubis, the Frankfurt-listed metals smelter and one of the world’s largest metal recyclers. It has discovered “considerable discrepancies” in its expected metals inventories after paying for recyclable materials. These include items such as computer circuit boards. It had already reported missing metal worth €20mn earlier this year. Prosecutors are investigating possible links.

Issues with the provenance of higher value metals such as gold, copper and nickel have popped up before. Commodities trader Trafigura has accused Prateek Gupta and New Alloys Trading of defrauding it of half a billion dollars in a nickel transaction. Both deny any fraud. Bags of nickel in a London Metal Exchange warehouse actually contained stones and had come via another warehouse owned by rival trader Glencore. Other scandals involving metals have occurred in the west and China in recent years.

This “theft”, according to Aurubis, could be costly and worth €100mn-€200mn. Its share price plummeted 14 per cent on Friday, which suggests the problem could be larger than that. Analysts had estimated Aurubis would make an operating profit of €450mn this year, the equivalent of that decline. It has suspended profit guidance for this year.

Recycling non-ferrous metals, especially from used electronic equipment, requires time-consuming screening and extraction. Suppliers usually get paid first. Others, such as Swedish miner Boliden and Mitsubishi Materials, have European metals recycling facilities.

The potential for fraud, either from external suppliers or internal testers, will not diminish given growing recycling requirements.

FT : US labour data raises hope of Goldilocks scenario as economy cools

US labour data raises hope of Goldilocks scenario as economy cools
Expectations grow that Fed will halt interest rate rises as unemployment hits 3.8% and wage raises slow

The US labour market showed signs of cooling in August, giving financial markets renewed hope that the Federal Reserve is orchestrating a soft landing for the world’s largest economy.

Investors hailed a possible Goldilocks scenario in which inflation comes under control without causing a recession, as Friday’s figures revealed an uptick in the unemployment rate, subdued jobs growth and wage rises back at pre-Covid rates.

“If the Fed could have put together their ideal employment report, it would look something like today,” said Andrew Hollenhorst, an economist at Citi, who described the combination as “ideal” for the central bank’s purposes.

But he added: “We should be careful about looking at one month of data and saying we’re all clear.”

The vast majority of investors already expected the central bank to keep rates steady at its next meeting in late September.

But, following Friday’s data release, futures markets cut the probability of a rate rise at the subsequent November meeting from just below 50 per cent to roughly 40 per cent. 

Investors and policymakers are watching closely for signs that the US labour market is cooling, since jobs and wage growth are key contributors to inflation.

The Bureau of Labor Statistics data showed that unemployment edged up to 3.8 per cent last month compared with economists’ predictions it would remain steady at near multi-decade lows at 3.5 per cent.

Monthly wage growth of 0.2 per cent was also lower than forecast, though the year-on-year growth rate of 4.3 per cent remained well above levels considered consistent with the Fed’s 2 per cent inflation target.

The economy created 187,000 new non-farm jobs in August — higher than forecasts of 170,000 but the third consecutive month below the 200,000 mark.

Totals for the previous two months were also revised to a cumulative 110,000 lower.


The wage and unemployment trends were helped by more people returning to the workforce, with the first increase in the labour force participation rate since February. Such an increase in labour supply may also serve to slow wage rises.

Natixis portfolio manager Jack Janasiewicz said that, as “getting people off the sidelines and into the jobs market” continued, it would “put downward pressure on wages in general”.

Friday’s numbers followed separate data published this week that also suggested labour demand is easing, with the number of job vacancies falling more than expected.

“The report shows the labour market is rebalancing in a good way — increases in labour force participation are what we want to see ,” said Sonal Desai, chief investment officer for Franklin Templeton Fixed Income.

“A rate hike in September is now very unlikely but it's too soon to say that all rate hikes are off the table.”

But other economists expressed fears the Fed would squeeze the economy too much.

“The odds of a hard landing keep growing as long as the Fed keeps talking about the potential for hikes,” said Priya Misra, a portfolio manager at JPMorgan Asset Management.

“Just keeping their options alive means that restrictive real rates remain,” she added, referring to the impact of expectations on real borrowing costs.

In his annual speech at the Fed’s economic symposium in Jackson Hole, Wyoming last week, Fed chair Jay Powell stressed that the central bank was “prepared to raise rates further if appropriate”, but said policymakers would be cautious as they try to balance controlling inflation with minimising damage to the broader economy.

Stock and bond prices rose after the data was released. US equities opened higher, with the S&P 500 up 0.3 per cent in mid-morning trade. 

The yield on the interest rate-sensitive two-year US Treasury fell initially before rebounding to trade 0.01 percentage points higher at 4.86 per cent. Yields fall when prices rise.

The benchmark 10-year Treasury yield dipped to 4.06 per cent, its lowest since August 10 but recovered to trade 0.09 percentage points higher at 4.18 per cent.