The third important ingredient for achieving peak performance is attitude. Attitude is how you deal with the inevitable adverse situations that occur in the markets. Attitude is also how you handle the daily grind, the constant 2 steps forward and 2 steps back. — Linda Raschke

1. US Job Openings Decline to 8.83 Million, Lowest Since Early 2021 — US job openings fell in July by more than expected to a more than two-year low, offering fresh evidence that labor demand is cooling. The number of available positions decreased to 8.83 million from 9.17 million in June, the Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey, or JOLTS, . It marked the sixth decline in the last seven months. The so-called quits rate, which measures voluntary job leavers as a share of total employment, dropped to 2.3%, the lowest since the start of 2021. That implies Americans are less confident in their ability to find another job in the current market.
2. US Second-Quarter Growth Rate Cut to 2.1% on Business Spending — Gross domestic product rose at a revised 2.1% annualized pace in the second quarter, below the government’s previous estimate. The downward revision to GDP reflected less inventory and nonresidential fixed investment. Household spending, the engine of the US economy was revised higher, to a 1.7% pace. A gauge of the income generated and costs incurred from producing goods and services — gross domestic income — rose 0.5% after contracting in the prior two quarters, Bureau of Economic Analysis figures showed Wednesday. A measure of US profit margins widened. After-tax profits as a share of gross value added for nonfinancial corporations, a measure of aggregate profit margins, rose in the second quarter to 14.3% from 13.8%.
Meanwhile, key inflation gauges watched closely by the Fed were revised lower. The personal consumption expenditures price index excluding food and energy rose at a 3.7% pace in the second quarter, the slowest in more than two years.
3. Core personal consumption expenditures price index Rise Moderately — The core personal consumption expenditures price index, which strips out the volatile food and energy components, rose 0.2% in July for a second month. The overall PCE price index also increased 0.2%, Bureau of Economic Analysis data showed. The subdued inflation figures underscore the progress the Fed has made over the past year in taming price pressures. That said, the central bank is far from declaring victory, and the strength of consumer spending presents a fresh concern for policymakers seeking to ensure inflation continues to dissipate.
Low unemployment, pandemic-era savings and wage growth are providing Americans the wherewithal to keep spending, allowing the economy to power ahead. Many economists have had to push out their recession calls, or in some cases, scrap them altogether as a result. The latest figures point to a strong start to economic growth in the third quarter.
4. Money-Market Fund Assets Climb to Fresh Record $5.58 Trillion — about $14.37 billion poured into US money-market funds in the week through Aug. 30, according to data from the Investment Company Institute. Total assets reached $5.58 trillion, versus $5.57 trillion the previous week. Investors have piled into the money funds ever since the Federal Reserve began one of the most aggressive tightening cycles in decades last year to quell runaway inflation. Last month officials raised their main policy rate to between 5.25% and 5.5%, the highest in 22 years. Money funds have been quicker to pass on the benefits to investors than banks. In a breakdown for the week to Aug. 30, government funds, which invest primarily in securities like Treasury bills, repurchase agreements and agency debt saw assets rise to $4.59 trillion, an $8.44 billion increase. Prime funds, which tend to invest in higher-risk assets such as commercial paper, saw assets rise to $878 billion, about a $4 billion increase.
5. US Payrolls Rise by More Than Forecast While Wage Growth Cools — Nonfarm payrolls rose by 187,000 after the prior two months were revised significantly lower, a Bureau of Labor Statistics report showed Friday. The unemployment rate climbed to 3.8%, the highest since early last year and largely reflecting a pickup in participation.
The payrolls figure also showed a combined drop of 54,000 jobs in the film and trucking industries, mainly due to an entertainment strike and the shutdown of a major carrier, the report showed. The unemployment and pay figures likely add to the case for the Federal Reserve to hold interest rates at a 22-year high this month and potentially leave them there for awhile. However, officials have indicated they may still consider another hike this year, especially if inflation fails to keep cooling.

The week ahead — Economic data from Econoday.com:

The good traders are the ones who can hold their ground the majority of the month and participate in that small handful of trades that are windfalls. — Linda Raschke

1. U.S. Home Sales Fell in July, Extending Prolonged Slump — Home sales fell in July for the fourth time in five months, extending one of the deepest housing slumps in recent memory.
Sales of existing homes, the majority of purchases, decreased 2.2% in July from the prior month to a seasonally adjusted annual rate of 4.07 million, the National Association of Realtors reported. That was the slowest monthly sales pace since January, and the slowest July pace since 2010. The combination of high mortgage rates, near-record home prices and limited inventory has been suffocating sales, which were down 16.6% from a year earlier in July. With mortgage rates last week rising back above 7% to a two-decade high, sluggish home sales activity is expected to continue for a while.
2. China, Russia Deliver Broadsides Against the West at Brics Summit — Russia and China used a summit of countries known as the Brics this week to air their grievances against Western powers, present themselves as defenders of developing economies and set out the case for an alternative international order. Leaders of Brics nations Brazil, India, China and South Africa, gathered in Johannesburg with Putin—who faces an international arrest warrant for alleged war crimes in Ukraine—joining by video.
3. Dick’s Sporting Goods, Macy’s Flash Warning Signs on U.S. Consumer Spending — The sporting-goods chain slashed its profit targets for the year after missing Wall Street forecasts for the second quarter. Sales slowed after a pandemic-fueled surge for outdoor gear, leaving it with excess inventory. Executives said thefts of merchandise were also higher than they expected.
Macy’s reported declining sales in the June quarter and warned that more shoppers are late on their credit-card payments. Delinquencies are viewed as a proxy for consumer health, and missed payments endanger a key source of revenue for the department-store chain. The readouts from Dick’s and Macy’s illustrate the economic challenges that persist among sellers of consumer goods. Spending on items such as apparel, electronics and sporting goods surged early in the pandemic but slowed significantly starting last year, causing whiplash among retailers that bet on buying patterns continuing at higher levels.
4. Powell Says Fed Will ‘Proceed Carefully’ on Any Further Rate Rises — Federal Reserve Chair Jerome Powell cautioned that past interest-rate increases had yet to fully slow the economy, an argument for holding rates steady for now, even though stronger and sustained growth could require higher rates to keep inflation declining. Fed officials lifted their benchmark federal-funds rate last month by a quarter-percentage-point to a range between 5.25% and 5.5%, a 22-year high, continuing the most rapid series of increases in four decades. Their next meeting is Sept. 19-20.
Powell’s speech illustrated how he is trying to thread the needle between slowing hiring, investment and spending to bring down inflation without providing so much restraint as to create a needlessly severe economic slowdown.

The week ahead — Economic data from Econoday.com:

“I really value the fact that I’ve learned to trade as a craft. Like any craft, such as piano playing, perfection may be elusive – I’ll never play a piece perfectly, and I’ll never buy the low and sell the high – but consistency is achievable if you practice day in and day out.” – Linda Raschke

1. Retail Sales Rose in July for Fourth Straight Month — Retail sales—a measure of spending at stores, online and in restaurants—rose a seasonally adjusted 0.7% last month from the month before, the Commerce Department reported. That was a faster pace than in June and was higher than the 0.2% increase in consumer prices last month, a sign that Americans’ spending is outpacing inflation. Consumer spending is driving a resilient economy, despite rate increases by the Federal Reserve. Employers added jobs at a steady pace in July and wages rose briskly, the Labor Department said earlier this month. Inflation is also easing, providing consumers with some relief from rapid price increases in recent years and likely deterring the Fed from raising interest rates at its September meeting.
2. China Cuts Rate by Most Since 2020 as Economic Woes Deepen — the People’s Bank of China lowered the rate on its one-year loans — or medium-term lending facility — by 15 basis points to 2.5% on Tuesday, the second reduction since June. All but one of the 15 analysts surveyed by Bloomberg had predicted the rate would stay unchanged. A short-term policy rate was also cut by 10 basis points. The surprise move came shortly before the release of disappointing economic activity data for July showing growth in consumer spending, industrial output and investment sliding across the board and unemployment picking up. The surprise policy move suggests heightened concern from policymakers about the deteriorating outlook, especially in the real estate market, where another major property developer now faces a debt crisis and home sales continue to decline. Risks are also spreading to the financial sector, where an affiliate of a major financial conglomerate, which had exposure to the real estate sector, missed payments on some investment products.
3. Fed minutes of July 25-26 policy meeting — “Most participants continued to see significant upside risks to inflation, which could require further tightening of monetary policy,” according to minutes of the US central bank’s July 25-26 policy meeting published Wednesday in Washington. But two Fed officials favored leaving rates unchanged or “could have supported such a proposal,” instead of the rate hike the Federal Open Market Committee ultimately authorized at the conclusion of the meeting, the minutes showed. The July rate hike brought the target range for the Fed’s benchmark rate to 5.25% to 5.5%, the highest level in 22 years. That marked a resumption of increases after officials left rates unchanged at the previous gathering for the first time since they began tightening in early 2022.
4. Mortgage Rates Hit 7.09%, Highest in More Than 20 Years — the average mortgage rate rose to 7.09%, its highest level in more than 20 years, according to data released last week by mortgage giant Freddie Mac. The increase extends a lengthy stretch of high borrowing costs that has slowed the housing market to a crawl. This marked the first time since last fall that the rate on a 30-year, fixed-rate mortgage rose above 7%. A year ago, rates were around 5%.
The housing market is the part of the economy hit most directly by the Federal Reserve’s high-rate policies. The resulting slowdown in refinancing and purchase activity has battered some mortgage lenders, leading to tens of thousands of layoffs in the industry and weighing on economic growth.
5. U.S. Plans New Tariffs on Food-Can Metal From China, Germany and Canada — the Commerce Department said an investigation found that steelmakers from the three countries sold their tinplate products in the U.S. at unfairly low prices, justifying new import duties. Chinese products would be subject to the highest tariffs of the three countries—a levy of 122.52% of their import value. That rate partly reflects Chinese companies’ refusal to cooperate with the investigation to prove their independence from the Chinese Communist Party, an administration official said. The U.S. presumes state-owned companies from economies such as China sell products in the U.S. at prices distorted by subsidies, unless these enterprises can prove otherwise.
The tariff rates—still preliminary until a final ruling in January—are proposed at much lower rates of 7.02% for German companies including Thyssenkrupp Rasselstein and 5.29% for Canadian companies such as ArcelorMittal Dofasco.

The week ahead — Economic data from Econoday.com:

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