InvestMacro

By JustMarkets

As of Thursday’s stock market close, the Dow Jones Index (US30) decreased by 1.08%, while the S&P500 Index (US500) lost 1.36%. The NASDAQ Technology Index (US100) closed yesterday negative at 1.87%. Stocks were under a sell-off on Thursday, sending the Dow Jones Industrials Index to a 6-week low. The sell-off in technology stocks had a negative impact on the overall market. In addition, stronger-than-expected US economic news and hawkish comments from the Fed pushed bond yields higher and triggered the liquidation of long positions in equities ahead of Friday’s speech by Fed Chair Powell.

On Thursday, the Fed’s hawkish comments were bullish for the dollar index and bearish for stock indices. FRB Boston President Collins said it will take time for inflation to reach the Fed’s 2% target, and “we may need to raise rates further, and we may hold rates at restrictive levels for some time.” Former St. Louis Fed President Bullard said a pickup in economic activity this summer could delay the Fed’s plans to end its campaign to raise interest rates, “This acceleration could put upward pressure on inflation, stop the disinflation we’re seeing, and instead delay the Fed’s plans to change policy.” Philadelphia Fed President Harker believes policymakers have likely undertaken sufficient tightening and that the Fed has “probably done enough” and believes interest rates will be steady through the year’s end.

Today, markets await Fed Chairman Powell’s comments at the annual symposium of the world’s central banks in Jackson Hole, Wyoming. With inflation down from 40-year highs but still well above the Fed’s 2% target, Powell’s speech will be scrutinized for when the Fed might end its rate hike campaign. ECB President Lagarde will also speak at the event.

Equity markets in Europe traded flat yesterday. Germany’s DAX (DE40) decreased by 0.68%, France’s CAC 40 (FR40) lost 0.44% on Thursday, Spain’s IBEX 35 (ES35) added 0.10%, and the UK’s FTSE 100 (UK100) closed positive at 0.18%.

ECB Governing Council representative Centeno said yesterday that the ECB “should be cautious in deciding on additional rate hikes, as downside risks to the economy that were identified in June have materialized.”

The GkK report showed that UK consumer confidence rebounded in August as inflation showed signs of cooling and strong wage growth supported household finances. The figures starkly contrast the sharp fall in retail sales in July, with industry research suggesting the decline is likely to continue.

Crude oil and gasoline prices closed modestly higher on Thursday. Stronger-than-expected economic news from the US on Thursday signaled a strengthening economy favorable for energy demand and crude oil prices. Signs of tight supply also supported oil after the EIA’s weekly crude inventories data fell more than expected to a 7-month low on Wednesday. But a stronger dollar on Thursday limited gains in energy prices.

Natural gas prices rose moderately on Thursday after weekly natural gas inventories released by the EIA increased by 18 Bcf (billion cubic feet), below expectations of 31 Bcf. The rise in natural gas prices was capped by a forecast that cooler temperatures will arrive in the lower 48 US states next week, reducing demand for natural gas from power suppliers to run air conditioners.

Asian markets were mostly up yesterday. Japan’s Nikkei 225 (JP225) added 0.87% for the day, China’s FTSE China A50 (CHA50) rose by 1.15%, Hong Kong’s Hang Seng (HK50) ended Thursday up 2.05%, and Australia’s S&P/ASX 200 (AU200) ended the day positive at 0.47%.

Core inflation in Japan’s capital slowed in August for the second consecutive month (3.0%→2.8%) but remained well above the Сentral Bank’s 2% target. Analysts expect inflation to continue slowing in the coming months, reflecting the recent decline in commodity prices and the base effect of last year’s price surge.

S&P 500 (F)(US500) 4,376.31 −59.70 (−1.35%)

Dow Jones (US30) 34,099.42 −373.56 (−1.08%)

DAX (DE40)  15,621.49 −106.92 (−0.68%)

FTSE 100 (UK100) 7,333.63 +13.10 (+0.18%)

USD Index  104.00 +0.58 (+0.56%)

• – Japan Tokyo Core CPI (m/m) at 02:30 (GMT+3);
• – German GDP (q/q) at 09:00 (GMT+3);
• – German Ifo Business Climate (m/m) at 11:00 (GMT+3);
• – Jackson Hole Symposium at 15:00 (GMT+3);
• – US FOMC Member Harker Speaks at 16:00 (GMT+3);
• – US Michigan Consumer Sentiment (m/m) at 17:00 (GMT+3);
• – US Fed Chair Powell Speaks at 17:05 (GMT+3);
• – Eurozone ECB President Lagarde Speaks at 22:00 (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.

By JustMarkets

At Wednesday’s stock market close, the Dow Jones (US30) index increased by 0.54%, while the S&P500 (US500) index added 1.10%. The NASDAQ Technology Index (US100) closed positive by 1.59% yesterday. Stocks were boosted by weaker-than-expected economic news from the US and Europe on business activity, reinforcing speculation that the Fed and ECB may hold off on raising interest rates.

Shares of major technology companies rose ahead of Nvidia’s quarterly results. On Wednesday, NVIDIA Corporation (NVDA) reported better-than-expected second-quarter results and an encouraging outlook as the race to adopt artificial intelligence continues to drive demand for its chips. The stock price rose more than 9% in after-hours trading.

The US Central Bank’s annual symposium will begin today in Jackson Hole in the United States. Once a year, FOMC officials gather for a summer symposium in Jackson Hole, Wyoming, to exchange views on monetary policy and economic trends. While the event is mainly academic in nature, it has been used by Fed leaders over the years to signal future monetary policy plans. Investors will focus on whether the Fed chief believes further policy tightening will be needed to reduce inflation or whether sufficient progress has been made to keep rates unchanged.

According to Statistics Canada’s preliminary estimate released on Wednesday, retail sales rose just 0.4% last month. With goods consumption and the broader economy showing some signs of slowing, policymakers may have an opportunity to retake a wait-and-see stance and keep the overnight rate at 5% at their next meeting on September 6.

Equity markets in Europe traded higher yesterday. German DAX (DE40) rose by 0.15%, French CAC 40 (FR40) gained 0.08% on Wednesday, Spanish IBEX 35 (ES35) added 0.05%, British FTSE 100 (UK100) closed positive 0.68%. Eurozone business activity data disappointed investors. Despite an uptick in the manufacturing sector (42.7→43.7), the service sector fell back into contractionary territory (50.9→48.3). The manufacturing sector has been contracting, with new orders and backlogs declining. While goods sector inflation is falling due to lower costs and weak demand, services sector inflation is still high due to higher labor costs despite weaker demand. The hawks on the ECB board will be inclined to push for another rate hike as wage pressures push up services inflation.

Asian markets were mostly up yesterday. Japan’s Nikkei 225 (JP225) added 0.48% for the day, China’s FTSE China A50 (CHA50) decreased by 1.14%, Hong Kong’s Hang Seng (HK50) was up 0.31% on Wednesday, and Australia’s S&P/ASX 200 (AU200) was positive 0.38% on the day.

BRICS leaders agreed at a summit to expand membership. China is keen on expanding BRICS amid growing competition with the US, but the group’s other major power, India, does not share this interest. South African officials say several countries have submitted formal applications to join BRICS, which accounts for 40% of the world’s population and a quarter of the global economy. They include Saudi Arabia, UAE, Egypt, Argentina, and Iran. On his second overseas trip this year, Chinese President Xi Jinping said the bloc’s expansion would “pool our strength and our wisdom to make global governance more just and equitable.” The summit underscored differences with the West over the war in Ukraine and the support Russia is receiving from its BRICS partners at a time of global isolation. South Africa, China, and India did not condemn Russia’s invasion, while Brazil refused to join Western countries in sending weapons to Ukraine or imposing sanctions on Moscow.

S&P 500 (F)(US500) 4,436.01 +48.46 (+1.10%)

Dow Jones (US30) 34,472.98 +184.15 (+0.54%)

DAX (DE40)  15,728.41 +22.79 (+0.15%)

FTSE 100 (UK100) 7,320.53 +49.77 (+0.68%)

USD Index  103.59 +0.29 (+0.28%)

• – Jackson Hole Symposium at 15:00 (GMT+3);
• – US Core Durable Goods Orders (m/m) at 15:30 (GMT+3);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
• – US Natural Gas Storage (w/w) at 17:30 (GMT+3);
• – US FOMC Member Harker Speaks at 19:00 (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.

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.