InvestMacro

By JustMarkets

As of Tuesday’s stock market close, the Dow Jones (US30) index decreased by 0.51%, while the S&P500 (US500) index lost 0.28%. The NASDAQ Technology Index (US100) closed positive 0.06% yesterday. Yesterday’s US economic news was mixed for stocks after July’s existing home sales fell more than expected to a 6-month low. Still, the August manufacturing report from the FRB Richmond unexpectedly rose to a 7-month high. The 3-day symposium of the US central bank in Jackson Hole starts as early as tomorrow, where the main focus of investors is directed towards the speeches of US Fed chief Jerome Powell on Friday. Markets rate the odds of a 25bp rate hike at the September 20th FOMC meeting at 16% and a 25bp hike at the First of November FOMC meeting at 49%.

According to economists, Canada is likely sitting on the biggest housing bubble of all time. Canadians’ level of debt relative to their income puts many in a precarious position if mortgage rates continue to rise, which is likely. The worst thing for a housing bubble is when a credit bubble forms underneath it, as it did in the United States in 2008.

Equity markets in Europe traded higher yesterday. Germany’s DAX (DE40) increased by 0.66%, France’s CAC 40 (FR 40) gained 0.59% on Tuesday, Spain’s IBEX 35 (ES35) added 0.59%, and the UK’s FTSE 100 (UK100) closed up 0.18%. French retail sales in July fell by 2.1% y/y, marking the fourteenth consecutive decline in sales. Today, the Eurozone is expected to publish data on business activity in the manufacturing and services sectors. Analysts expect negative data, which will put additional pressure on the ECB.

Oil prices are falling for the second day in a row, with the price of oil in the US stopping below the critical support of $80 per barrel amid concerns about the economic slowdown in China and the possibility of further rate hikes by the Federal Reserve. The excitement over Saudi Arabia and Russia cutting oil production has receded into the background but is helping the price not to fall too deeply.

Asian markets were mostly up yesterday. Japan’s Nikkei 225 (JP225) added 0.92% for the day, China’s FTSE China A50 (CHA50) increased by 0.68%, Hong Kong’s Hang Seng (HK50) gained 0.95% on Tuesday, and Australia’s S&P/ASX 200 (AU200) ended the day positive 0.09%. Concerns about China persisted after the People’s Bank disappointed markets with a smaller-than-expected cut in interest rates this week. Additional stimulus measures promised by the government earlier were not announced, which also had a negative impact on Chinese equities.

In New Zealand, total retail sales in June declined by 1% from March. This is the third consecutive quarterly decline, following a 1.6% decline in March and 1.1% in December. Seasonally adjusted retail sales totaled 25 bln. The decline in retail sales indicates that consumers are spending less money in stores and saving more. This usually occurs in recessionary and pre-recessionary scenarios.

In Japan, the business activity level in the manufacturing sector rose from 49.6 to 49.7. The service sector increased from 53.8 to 54.3. Core inflation, which the Bank of Japan monitors, rewrote the highs and amounted to a modest by global standards, but still a record for Japan at 3.3%. According to analysts, the Bank of Japan still controls the situation. Still, when you print yen with one hand and keep the rates around zero, and with the other hand, you try to prevent devaluation – sooner or later, significant problems may arise.

S&P 500 (F)(US500) 4,387.55 −12.22 (−0.28%)

Dow Jones (US30) 34,288.83 −174.86 (−0.51%)

DAX (DE40)  15,705.62 +102.34 (+0.66%)

FTSE 100 (UK100) 7,270.76 +12.94 (+0.18%)

USD Index  103.59 +0.29 (+0.28%)

• – New Zealand Retail Sales (q/q) at 01:45 (GMT+3);
• – Australia Manufacturing PMI (m/m) at 02:00 (GMT+3);
• – Australia Services PMI (m/m) at 02:00 (GMT+3);
• – Japan Manufacturing PMI (m/m) at 03:30 (GMT+3);
• – Japan Services PMI (m/m) at 03:30 (GMT+3);
• – Singapore Consumer Price Index (m/m) at 08:00 (GMT+3);
• – German Manufacturing PMI (m/m) at 10:30 (GMT+3);
• – German Services PMI (m/m) at 10:30 (GMT+3);
• – Eurozone Manufacturing PMI (m/m) at 11:00 (GMT+3);
• – Eurozone Services PMI (m/m) at 11:00 (GMT+3);
• – UK Manufacturing PMI (m/m) at 11:30 (GMT+3);
• – UK Services PMI (m/m) at 11:30 (GMT+3);
• – Canada Retail Sales (m/m) at 15:30 (GMT+3);
• – US Manufacturing PMI (m/m) at 16:45 (GMT+3);
• – US Services PMI (m/m) at 16:45 (GMT+3);
• – US New Home Sales (m/m) at 17:00 (GMT+3);
• – US Crude Oil Reserves (w/w) at 17:30 (GMT+3).

By JustMarkets

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

By William Brady, Northwestern University 

People’s daily interactions with online algorithms affect how they learn from others, with negative consequences including social misperceptions, conflict and the spread of misinformation, my colleagues and I have found.

People are increasingly interacting with others in social media environments where algorithms control the flow of social information they see. Algorithms determine in part which messages, which people and which ideas social media users see.

On social media platforms, algorithms are mainly designed to amplify information that sustains engagement, meaning they keep people clicking on content and coming back to the platforms. I’m a social psychologist, and my colleagues and I have found evidence suggesting that a side effect of this design is that algorithms amplify information people are strongly biased to learn from. We call this information “PRIME,” for prestigious, in-group, moral and emotional information.

In our evolutionary past, biases to learn from PRIME information were very advantageous: Learning from prestigious individuals is efficient because these people are successful and their behavior can be copied. Paying attention to people who violate moral norms is important because sanctioning them helps the community maintain cooperation.

But what happens when PRIME information becomes amplified by algorithms and some people exploit algorithm amplification to promote themselves? Prestige becomes a poor signal of success because people can fake prestige on social media. Newsfeeds become oversaturated with negative and moral information so that there is conflict rather than cooperation.

The interaction of human psychology and algorithm amplification leads to dysfunction because social learning supports cooperation and problem-solving, but social media algorithms are designed to increase engagement. We call this mismatch functional misalignment.

Why it matters

One of the key outcomes of functional misalignment in algorithm-mediated social learning is that people start to form incorrect perceptions of their social world. For example, recent research suggests that when algorithms selectively amplify more extreme political views, people begin to think that their political in-group and out-group are more sharply divided than they really are. Such “false polarization” might be an important source of greater political conflict.

Functional misalignment can also lead to greater spread of misinformation. A recent study suggests that people who are spreading political misinformation leverage moral and emotional information – for example, posts that provoke moral outrage – in order to get people to share it more. When algorithms amplify moral and emotional information, misinformation gets included in the amplification.

What other research is being done

In general, research on this topic is in its infancy, but there are new studies emerging that examine key components of algorithm-mediated social learning. Some studies have demonstrated that social media algorithms clearly amplify PRIME information.

Whether this amplification leads to offline polarization is hotly contested at the moment. A recent experiment found evidence that Meta’s newsfeed increases polarization, but another experiment that involved a collaboration with Meta found no evidence of polarization increasing due to exposure to their algorithmic Facebook newsfeed.

More research is needed to fully understand the outcomes that emerge when humans and algorithms interact in feedback loops of social learning. Social media companies have most of the needed data, and I believe that they should give academic researchers access to it while also balancing ethical concerns such as privacy.

What’s next

A key question is what can be done to make algorithms foster accurate human social learning rather than exploit social learning biases. My research team is working on new algorithm designs that increase engagement while also penalizing PRIME information. We argue that this might maintain user activity that social media platforms seek, but also make people’s social perceptions more accurate.

About the Author:

The Research Brief is a short take on interesting academic work.

William Brady, Assistant Professor of Management and Organizations, Northwestern University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

By JustMarkets

As of Monday’s stock market close, the Dow Jones Index (US30) increased by 0.19%, while the S&P500 Index (US500) added 0.69%. The NASDAQ Technology Index (US100) closed positive by 1.56% yesterday. But analysts still believe that the dollar is poised for further gains, especially as government bond yields rose following positive US economic data. Markets expect the Fed to have to keep rates “higher for longer” in response to robust US data.

Technology stocks rose thanks to a more than 6% rise in NVIDIA Corporation (NVDA) ahead of the chipmaker’s quarterly results due on Wednesday. Nvidia is riding a wave of optimism about artificial intelligence. Shares of Tesla Inc (TSLA) rose more than 6% as investors bought into the electric car maker’s recent stock slump amid a new positive outlook from Wall Street for TSLA. Baird listed Tesla as a “best idea,” noting several favorable factors, including the launch of Cybertruck, wider adoption of self-driving software, and continued growth in the energy business, that could overshadow concerns about margin erosion from recent price declines.

Warren Buffett’s Berkshire Hathaway fund invested in housing, putting $814 million into the shares of 3 homebuilders: Lennar, NVR, and DR Horton. A small bet in the context of Berkshire’s roughly $350 billion equity portfolio, but it speaks to Buffett’s optimism about the housing market in the US, despite its unaffordability today when mortgage rates are near multi-year highs.

Equity markets in Europe traded flat yesterday. Germany’s DAX (DE40) increased by 0.19%, France’s CAC 40 (FR40) added 0.47% on Monday, Spain’s IBEX 35 (ES35) decreased by 0.05%, and the UK’s FTSE 100 (UK100) closed down 0.06%. In its monthly report, Germany’s Bundesbank said, “The German economy remains in a phase of weakness. Output will likely remain largely unchanged in the third quarter of 2023.” In Germany, the PPI (which displays the inflation rate between factories and plants and is a leading indicator of consumer inflation) fell by 6.0% annually, the sharpest drop in 13 years. The main reason for the year-over-year decline in producer prices was lower energy prices, as well as lower prices for intermediate goods.

Crude oil and gasoline prices stopped rising on Monday and closed moderately lower. Economic malaise in China, the world’s second-largest crude oil consumer, threatens to curb its energy demand and has a bearish effect on prices. On the other hand, oil’s fall is limited by a shortage of global crude oil inventories.

Asian markets were predominantly down yesterday. Japan’s Nikkei 225 (JP225) added 0.37% for the day, China’s FTSE China A50 (CHA50) fell by 1.36%, Hong Kong’s Hang Seng (HK50) lost 1.82% on Monday, and Australia’s S&P/ASX 200 (AU200) ended the day negative by 0.46%.

On Monday, the Nikkei stock index rally reduced demand for the Japanese yen as a safe haven. In addition, the yen is under pressure as data from Bloomberg shows that the Bank of Japan is buying Japanese bonds at a record pace this year as it tries to keep long-term bond yields low as part of its yield curve control program. An update from JP Morgan shows analysts’ interest in the 150 yen per dollar mark as a level that could trigger currency intervention.

The New Zealand dollar is on the verge of the longest losing streak in its history. On Monday, the currency fell for the 10th consecutive day. Such a drop has yet to occur seen since March 2020. If the NZD declines further today, it will be the longest drop in the currency’s history.

S&P 500 (F)(US500) 4,399.77 +30.06 (+0.69%)

Dow Jones (US30) 15,603.28 +29.02 (+0.19%)

DAX (DE40)  15,603.28 +29.02 (+0.19%)

FTSE 100 (UK100) 7,257.82 −4.61 (−0.063%)

USD Index  103.35 −0.03 (−0.03%)

• – US Existing Home Sales (m/m) at 17:00 (GMT+3);
• – US FOMC Member Bowman Speaks at 21:30 (GMT+3).

By JustMarkets

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

By ForexTime

• SPX500_m returns above 4,400
• Big Tech rebound helps S&P 500 pare biggest weekly drop since March
• Gold resurfaces above $1900 after hitting 5-month low
• Higher Treasury yields should be headwind for stocks, gold
• Look out for Nvidia earnings, Powell’s speech this week

US stock futures are building on Monday’s gains, after a strong rebound in technology stocks.

The SPX500_m has broken past the psychologically-important 4,400 mark, making an about-turn after halting a four-day drop.

This rebound comes after global stocks had their biggest weekly drop since March last week.

The “magnificent seven” of megacap tech stocks – Alphabet, Amazon, Apple Meta, Microsoft, Nvidia and Tesla – lost more than $900 billion in value over three consecutive weeks of falls. That was their worst run of combined market cap decline this year.

But yesterday saw Tesla jump over 7% while Nvidia rose 8.5% ahead of its results after the closing bell on Wednesday which will be a key focus.

Oversold gold finds a bid

Gold dipped $1885 to post a five-month low yesterday which came after four straight weeks of losses, something not seen since February.

Rampant Treasury yields are not a good sign for bullion as it is a non-interest-bearing asset.

Indeed, the 10-year “real” yield has hit 2% for the first time since March 2009. However, prices have been oversold on momentum indicators and buyers have stepped in recently as we are now seeing a third day of gains this morning.

The yellow metal still currently trades below the 200-day simple moving average (SMA), though has resurfaced above the psychologically-important $1900 level for the time being.

We also note that hedge funds cut their gold longs to a six-month low in the week to August 15 while ETF holdings have seen 12 straight weeks of outflows.

Of course, investors and traders will be wondering whether or not this rebound has legs.

Markets have half an eye on Fed Chair Powell’s speech on Friday at Jackson Hole while trying to navigate surging borrowing costs.

Higher rates for longer should be a headwind for stocks and also gold, potentially exerting an ultimate cap on how high these assets can climb.

But for now, markets are putting such thoughts aside, with US stocks and gold attempting to enter the tail-end of August on a less dour note.

Article by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

By JustMarkets

At Friday’s close, the Dow Jones (US30) index increased by 0.07% (-2.19% for the week), while the S&P 500 (US500) index was down by 0.02% (-1.98% for the week). The NASDAQ Technology Index (US100) closed Friday by negative 0.20% (-2.27% for the week). August is a seasonally weak month for stock indices, and this time is no exception. This is partly due to the vacation period in the banking sector. Partly it is because the latest economic data in the US showed that the economy is not in danger of recession in the near future. As a result, rising government bond yields have lifted the dollar index, causing stock indices to decline.

The Jackson Hole Symposium is scheduled to begin on Thursday of this week. Various academics, bank chiefs, and central bank governors gather to discuss monetary policy and financial markets. The policymakers will give their interviews at the end of the conference. These interviews could cause significant volatility as they could foreshadow future monetary policy dynamics. In particular, investors will be waiting for Fed Chairman Jerome Powell to speak to clarify the economic outlook and the future trajectory of interest rates.

Equity markets in Europe were mostly down on Friday. Germany’s DAX (DE40) decreased by 0.65% (-1.54% for the week), France’s CAC 40 (FR40) fell by 0.38% (-2.22% for the week) on Friday, Spain’s IBEX 35 (ES35) fell by 0.19% (-1.73% for the week), and the UK’s FTSE 100 (UK100) closed on negative 0.65% (-3.48% for the week). This week, a slew of manufacturing and service sector business activity data will be released on Wednesday. This data could provide insight into whether the European Central Bank will raise interest rates again in September and whether the Bank of England will decide to raise rates more aggressively at its next meeting.

On Friday, crude oil prices broke a seven-week winning streak. Investors are now focused on the distinct possibility of lower energy demand rather than the certainty of supply cuts. Over the past few weeks, increasingly contradictory economic news has come out of China, crowned by the release of alarming consumer price data indicating that the country is in complete deflation. Problems at some significant real estate construction companies further underscore the slowdown in China’s economic recovery. Over the weekend, another major real estate developer Country Garden found itself in the grip of a debt crisis. China is the world’s largest energy importer, and any sign of economic stagnation will always be bad news for oil bulls.

Asian markets were also down last week. Japan’s Nikkei 225 (JP225) fell by 3.10% for the week, China’s FTSE China A50 (CHA50) lost 0.88%, Hong Kong’s Hang Seng (HK50) ended the week down by 3.99%, and Australia’s S&P/ASX 200 (AU200) ended the week on negative 2.62%.

On Monday, the People’s Bank of China (PBoC) lowered the benchmark one-year lending rate (LPR) to 3.45% from 3.55% previously (3.40% expected). Meanwhile, China’s Central Bank kept the five-year interest rate unchanged at 4.20%. The rate cut is being implemented to support economic development, which is a positive for Chinese stocks. It is also a positive factor for countries with close trade cooperation with China, Singapore, New Zealand, and Australia.

S&P 500 (F)(US500) 4,369.71 −0.65 (−0.02%)

Dow Jones (US30) 34,500.66 +25.83 (+0.075%)

DAX (DE40)  15,574.26 −102.64 (−0.65%)

FTSE 100 (UK100) 7,262.43 −47.78 (−0.65%)

USD Index  102.85 +0.33 (+0.32%)

• – New Zealand Trade Balance (q/q) at 01:45 (GMT+3);
• – China PBoC Loan Prime Rate at 04:15 (GMT+3);
• – German Producer Price Index (m/m) at 09:00 (GMT+3).

By JustMarkets

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.