U.S. Indexes closed lower as this week’s theme continues to be dominated by higher yields, oil prices, and continuing hostilities in the Middle East. Today, Iran fired on tankers transiting the Strait of Hormuz, the US responded with fresh strikes on IRGC targets/radars near the Strait, and in turn, the Iranians fired back at the US. As such, oil prices settled USD 4%+ higher per barrel, short-end and belly yields hit new YTD highs, the Dollar was firmer, whilst Gold’s positive correlation with geopolitical risk in August has continued to unwind, now trading down to USD 4,335/oz from 4,458 seen at the start of the week. President Trump did not seem keen on a call with Fox News to pursue diplomacy, “I think an agreement with them isn’t worth the paper it’s written on. He warned, if Iran responds, they will be ‘totally wiped out as a country’. Sectors were generally in the red. Consumer Discretionary was the worst performer as heavyweights Amazon and Tesla both traded lower. Industrials and Materials also faced losses; meanwhile, Energy outperformed on higher oil prices. Utilities also saw gains, helped by a moderate rebound in PG&E (PCG +6.0%) and Equinix (EIX +8.9%) after reports that the California Assembly will kill the wildfire liability plan that the California Legislature and Governor Newsom agreed to days ago. Given the influence on recent geopolitical developments over price action across assets, US data took the backseat. ISM Manufacturing PMI fell short on the headline, with prices remaining elevated, whilst JOLTS increased less than expected. At the Fed, Governor Barr said if inflation does not moderate soon, it will be time for an interest rate hike. ISM Manufacturing for August fell to 54.6 from 55.6, and below the forecasted 55.2. Looking at the sub-components, Employment declined to 51.2 (exp. 52.5, prev. 52.8), while Prices was unchanged M/M at 71.1, but above the expected 70.5. New orders tumbled to 53.7 (exp. 56.8, prev. 56.7). Supplier deliveries ticked up to 59.3 from 58.9, while Inventories edged down to 50.6 from 51.2. Backlog of orders fell but remained above 50; export orders ticked up while imports declined. In the August report, 42% of the comments were positive, and 58% were negative, with pricing volatility mentioned in 57% of negative comments, the Iran war 30%, increasing lead times 46% and tariffs 29%. Overall, the past relationship between the Manufacturing PMI and the overall economy indicates that the headline corresponds to a 2.4% increase in real GDP on an annualised basis. ING writes that another firm ISM Manufacturing Index boosts confidence in the durability of the recovery in the sector, fuelled by the ongoing surge in tech-related capex. However, ING adds, the economy continues to create limited numbers of jobs, with wage pressures remaining remarkably benign. US JOLTS Job Openings rose to 7.271 million in July from 7.182 million, but below the expected 7.330 million. Quits rate ticked lower to 1.9% from 2.0% M/M, while vacancy rate was unchanged at 4.4%. Hiring rate fell to 3.2% in July from 3.4% in June, and declined in several industries, led by a larger 0.8% fall for professional and business services. Labour turnover is also softening in the AI-exposed information sector again, supporting Oxford Economics opinion that AI is so far having only a modest impact on the jobs market, in aggregate. Overall, OxEco writes that the JOLTS report reinforced the story of a no-hire, no-fire labour market, and the labour market conditions are balanced because weak hiring is being matched by fewer workers seeking jobs. Elsewhere, Oil closed higher by a hefty 5% while Gold was weak ending Tuesday’s session with a fall of almost 3%.
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For anyone following my Platinum Service it made 300 points on the first trading day of September after ending the month of August with a gain of 2645 points after closing July with a gain of 8031 points, after ending June with a new record of 10527 points after ending May with a loss of 1104 points, having ended April with a gain of 1730 points, after ending March with a massive gain of 9002 points, having closed February with a strong gain of 5482 points after ending January with a gain of 4757 points, having closed December with a gain of 2599 points, after ending the month of November with a gain of 4542 points, after ending October with a nice gain of 5110 points after closing September with a gain of 3774 points while ending August with a gain of 3362 points after closing July with a gain of 3753 points after closing June with a gain of 3530 points, having closed May with a gain of 3606 points, after closing April with a gain of 7685 points after closing March with a gain of 2254 points while closing February with a gain of 4180 points. January ended with a gain of 2768 points while 1997 points were gained in December. October ended with a gain of 2179 points, after closing September with a gain of 4402 points, following a loss of 301 points in August. July gained 1908 points while June saw a gain of 2074 points. The Platinum Service made a previous record 9619 points in October 2022. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 2300 points. I have a YouTube Channel which contains recent interviews I have given This can be viewed by clicking HERE Please subscribe to this for new interview notification
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