 | | |  Good morning. In math, the concept of delta refers to the rate of change. For an economy based on expansion through debt creation, one key measure is how much growth is created through the addition of a new dollar of debt. This is known as the fiscal multiplier.
While there are a lot of assumptions that go into it, the general consensus by economists is that the more debt in an economy, the less value for economic growth occurs. In the 1950s, for instance, government investing in the national highway system led to more than $2 of economic growth for every $1 invested. Today, the returns on a new dollar of government spending are closer to $0.50. Logically, it doesn't make sense to continue. Politically, it does.
It's this slowdown in growth despite spending – a new "delta variant" if you will—that could point to why many countries heavily in debt get into trouble. It could only take one small event, like the collapse of a key investment bank or real estate developer, to ripple through the entire economy and create a debt collapse. That may not happen in the US anytime soon, but these fears will likely remain while the Evergrande implosion continues to make headlines. Stay cautious.
Now here's the rest of the news: | | | | | |
| | |  | DOW 34,798.00 | +0.10% | | | | S&P 4,455.48 | +0.15% | | |  | NASDAQ 15,047.70 | -0.03% | | | | | *As of market close | | | • | Stocks traded flat into the weekend, making for a quiet end to a volatile week. | | | • | Oil rose 1percent, closing at $74.02 per barrel. | | | • | Gold declined 0.2 percent, last going for $1,747 per ounce. | | | • | Cryptocurrencies moved lower, with Bitcoin at $42,366 at the stock market close. | | | | | | | |
| | | One of the World's Top Retailers Continues to Demonstrate its Strength | | | | Retail still makes up the backbone of consumer spending, and thus the economy. That's why providing investors with sales data can provide a clue as to how the economy is performing outside other measures like employment or housing costs.
One such retailer is Costco (COST). The company recently released its latest earnings, which shows that consumers are continuing to spend at a good pace, and even increasing in some areas such as fresh food.
» FULL STORY | | | | |
| | Insider Trading Report: Evergy Inc (EVRG) | | | | David Campbell, President and CEO at Evergy (EVRG), recently bought 7,850 more shares. The buy increased his stake by over 12 percent and came to a total purchase price of just under $500,000.
He was joined by the company CFO, who bought 7,875 shares on the same day. That buy increased his stake by 55 percent, and cost just over $501,000.
» FULL STORY | | | | |
| | Unusual Options Activity: Johnson Controls International (JCI) | | | | Shares of engineering and construction materials firm Johnson Controls International (JCI) have been in a steady uptrend for more than a year. One trader is betting that steady progress higher will continue.
That's based on the April 2022 $75 calls. With 199 days until expiration, over 5,200 contracts traded against a prior open interest of 134, for a 39-fold rise in volume. The buyer of the calls paid $4.60 to make the trade.
» FULL STORY | | | | |
| | • | Evergrande Fails to Make Bond Payment
Chinese property developer Evergrande failed to make a bond payment of $83.5 million on Thursday, according to investors expecting to receive payment. While the company has worked out a partial deal with domestic lenders, it's likely that the company is going bankrupt and assets will be liquidated to make bondholders whole, a process that could take months and keep markets volatile. | | | | • | Trillion-Dollar Coin Idea Floated Again
With the US closing on its debt ceiling limit, a proposal from 2011 is making the rounds again. By minting a $1 trillion coin, and depositing it with the Federal Reserve, the government can continue paying its bills (at least until the trillion is spent). The alternative, a default, could be devastating to the recovering economy, which is why many see a last-minute increase taking place. | | | | • | Firms Warn on More Inflation into the Holidays
Companies such as FedEx (FDX), Nike (NKE) and Costco (COST) have all warned on rising prices continuing into the holiday season. That's at odds with the official "transitory" narrative on inflation right now. Some signs point to increases in inflation stalling out, but that still leaves inflation rates at their highest levels since 1995. | | | | • | California Mandates Zero-Emission Autonomous Vehicles By 2030
The state of California has mandated that all autonomous vehicles operating in the state will be zero-emission by 2030. That adds on to the state's mandate banning the sale of new gas and diesel-powered cars by 2035, whether autonomous or not. California has an estimated 15 million vehicles on its roads. | | | | • | Crypto Drops as China Announces Ban (Again)
Cryptocurrencies dropped on Friday, as China announced that it was, once again, banning the use of cryptocurrencies. Some speculate that this is to avoid steeper losses from the Evergrande fallout, as individuals would be able to move their wealth into cryptocurrencies rather than leave it invested in one of the few official places to store wealth in China, the country's real estate market. | | |
| | | | TOP | | | PXD | 3.41% | | | | COG | 3.29% | | | | CCL | 3.02% | | | | NCLH | 3.04% | | | | RCL | 2.81% | | | | BOTTOM | | | NKE | 5.94% | | | | TPR | 2.53% | | | | WELL | 2.28% | | | | PKI | 1.98% | | | | EXR | 1.87% | | | | |
| | |  | | If Evergrande fails, the exposure outside of China appears limited, and since the government will do whatever it takes to contain it. If China is successful, global risk appetite may not be dealt that much of a blow. | | - Edward Moya, senior market analyst at Oanda, on why the Evergrande implosion spooked markets early last week before a quick jump higher later in the week. | |
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