Economy

Market darling Nvidia (NASDAQ:NVDA) is set to report its latest quarterly results Wednesday, and these numbers could be key in determining market sentiment going forward.Nvidia’s market value has ballooned thanks to its dominance of the computing hardware behind artificial intelligence (AI), resulting in its market capitalization soaring to $3.2 trillion, briefly becoming the world’s most valuable company in June.The chipmaker’s market value was around $390 billion on the eve of the launch of AI chatbot, ChatGPT, less than two years ago.Its sheer size and position as an industry bellwether mean its earnings, due after the U.S. close, can move the entire market.Options pricing shows that traders anticipate a move of around 9.8% in the company’s shares on Thursday, a day after it reports earnings, data from analytics firm ORATS showed. Given Nvidia’s market capitalization, a 9.8% swing in the shares would translate to over $300 billion, likely the largest expected earnings move for any company in history, analysts said.Nvidia is expected to have recorded a year-over-year jump of about 112% in second-quarter revenue to $28.68 billion, according to LSEG data. But its adjusted gross margin likely dropped more than 3 percentage points to 75.8% from the first quarter, burdened by the cost of a production ramp-up to meet growing demand.It remains to be seen whether even a doubling of revenue, if it was to occur, will be sufficient to impress the market given investors have tended to take a less forgiving view this season of big tech companies whose earnings failed to justify rich valuations or prodigious spending on AI. U.S. stock futures were largely unchanged Wednesday, with investors warily awaiting the release of the latest quarterly results from chipmaking giant Nvidia. By 04:00 ET (08:00 GMT), the Dow futures contract was 35 points, or 0.1%, higher, S&P 500 futures climbed 2 points, or 0.1%, while Nasdaq 100 futures fell by 3 points, or 0.1%.The results from AI darling Nvidia are due after the close [see above], and could determine whether investor enthusiasm for all things artificial intelligence continues into the fall.Aside from Nvidia, investors will also have the chance to study quarterly results from the likes of Bath & Body Works (NYSE:BBWI), Foot Locker (NYSE:FL) and Kohl’s (NYSE:KSS) before the open, while Salesforce (NYSE:CRM) releases its earnings later in the session.Elsewhere, Nordstrom (NYSE:JWN) stock gained strongly premarket after the retailer beat earnings expectations in the second quarter, helped by its crucial Anniversary Sale event.Semiconductor developer Ambarella (NASDAQ:AMBA) stock jumped over 18% after hours on upbeat revenue guidance in the third quarter, while PVH (NYSE:PVH), owner of Calvin Klein, slumped more than 7% after reporting a drop in second-quarter sales.The day after Apple (NASDAQ:AAPL) announced the departure of its long-standing chief financial officer Luca Maestri, Bloomberg has reported that the tech giant has also cut about 100 jobs in its digital services group amid shifting priorities in the company.The biggest cuts were in teams working on Apple’s bookstore services, Bloomberg reported, and the move marks a rare instance of job cuts by the company which has tended to retain staff amid a growing wave of layoffs across its major tech peers. The firm is set to unveil the latest iteration of its flagship iPhone in early-September, and will also start rolling out a slew of artificial intelligence features in its devices. This event will initiate the “biggest upgrade cycle” in Apple’s history, “with AI now on the doorstep,” said analysts at Wedbush, in a note.“In our view Apple could sell north of 240 million iPhone units in FY25 as this AI-driven upgrade cycle takes hold,” the analysts continued. “China remains the linchpin of growth for Apple and now this key region is set to see improving growth once again starting with iPhone 16 heading into fiscal 2025.”Bitcoin, the world’s largest cryptocurrency, fell on Wednesday, extending a sharp downturn from the prior session, dropping below the key $60,000 level.By 04:00 ET, Bitcoin fell 6.7% to $58,806.0, down more than 3% on the week and over 11% lower this month. Whale Alert, an X profile that tracks large crypto transactions using on-chain data, said about 30,000 Bitcoin tokens, worth $1.88 billion at current rates, were transferred from a cold wallet to crypto exchange Binance on Tuesday.This transfer raised the possibility of a large sale given that it showed a large amount of Bitcoin being moved onto an exchange. A report from blockchain research firm Glassnode also showed that net capital inflows into Bitcoin had “markedly cooled” in recent months, suggesting investor optimism over the launch of spot Bitcoin exchange-traded funds had cooled.There could also be a political element to the recent weakness, with the race for the White House now looking a lot tighter than a few months ago after President Joe Biden withdrew his candidacy. Trump has positioned himself as the pro-crypto candidate in the upcoming U.S. presidential election. Vice President Kamala Harris, the Democratic candidate, has yet to share a public view on the industry, but Biden’s administration has tended towards a heavy-handed regulatory view.Crude prices edged slightly lower Wednesday, struggling for support despite another outsized draw in U.S. inventories. By 04:00 ET, the U.S. crude futures (WTI) dropped 0.2% to $75.38 a barrel, while the Brent contract fell 0.2% to $78.47 a barrel.Data from the American Petroleum Institute, an industry body, showed U.S. oil inventories fell 3.4 million barrels in the week to August 23, more than expectations for a draw of 3 million barrels.The data also showed sustained draws in gasoline and distillate stockpiles.If confirmed by the official inventory data, which is due later on Wednesday, U.S. inventories have fallen for eight of the past nine weeks, driving hopes that demand in the world’s biggest fuel consumer remains strong despite recent signs of cooling in the economy. But with September comes the end of the travel-heavy summer season, which could see some cooling in U.S. fuel demand. Prices fell more than 2% on Tuesday, snapping a three-day streak of gains of more than 7%, amid lingering concerns over a global economic slowdown. 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They believe that this uncertainty, coupled with stronger supply, “should both work to shake the Fed from its gradualist guidance, even before this uncertainty is resolved.”JPMorgan argues that a reduction in labor market pressure could boost confidence that service price inflation will decline, reinforcing the belief that the Fed’s current policy stance is sufficiently restrictive.“Importantly, it reduces lingering concerns that inflation salience and elevated wage inflation could generate a feedback loop that entrenches inflation and undermines Fed credibility,” the bank’s economists explain.Recent comments by Fed officials, including the FOMC minutes and Chair Powell’s Jackson Hole speech, signal that the Fed may respond by reducing rates by approximately 100 basis points by the end of the year.However, JPMorgan notes that while the U.S. might experience easing job growth and a supply-side boost that raises unemployment rates, this trend is not as apparent in other economies.They caution that, based on previous instances, the impact of Fed policy changes on other economies tends to be limited unless there is a synchronized shift in macroeconomic fundamentals or financial market conditions. Therefore, economists believe the Fed’s expected shift away from gradualism will not be mirrored more broadly.While the growing uncertainty around the sources of what JPMorgan describes as “new US exceptionalism” might lead to a roughly 100 basis point easing in the coming months, it leaves the outlook for 2025 unclear, the note continues.Economists argue that how this uncertainty plays out—whether it stems from weakened demand or an ongoing supply boost—could result in very different policy directions.For instance, if labor demand weakens significantly and pushes the economy toward a recession, it could lead to outsized cumulative Fed rate cuts of at least 300 basis points.Such reductions “would almost certainly have broad global repercussions,” economists emphasize.“Alternatively, stabilization in labor demand at a still solid pace would likely moderate Fed growth concerns and reinforce a view that the near-term neutral rate is elevated,” they added.Together with the growth boost expected from the initial easing, intended to counter risks that don’t materialize, the policy adjustment may slow and possibly stall as rates approach 4%. More

KOFU/TOKYO (Reuters) -Bank of Japan Deputy Governor Ryozo Himino on Wednesday reiterated the central bank’s stance that it would continue to raise interest rates if inflation stayed on course, while also closely monitoring financial market conditions.His comments echo those from Governor Kazuo Ueda last week, who suggested that recent market volatility would not derail its long-term rate hike plans.The central bank would, however, first need to monitor financial markets with the “utmost vigilance” as they remain unstable, Himino said in a press conference after he met business leaders in the central Japanese city of Kofu.The BOJ will examine the impact of recent market volatility, the interest rate hike in July and the course of the U.S. economy on its economic and price outlook, he said.”There is no change to our stance that we would adjust monetary easing if economic activity and prices are likely to meet projections,” he said.The BOJ surprised markets in July by raising interest rates to a 15-year high and signalling its readiness to hike borrowing costs further on growing prospects that inflation would durably hit its 2% target.The BOJ’s hawkish tone led the battered yen to soar and Tokyo stocks to plunge in their biggest single-day rout since 1987’s Black Monday sell-off though markets have since stabilised.Ueda was summoned in parliament last week to explain the July decision. Speaking to lawmakers, he reaffirmed his resolve to raise interest rates if inflation stayed on course to sustainably hit the BOJ’s 2% target.A poll by Reuters showed a majority of economists expect the BOJ to hike rates again this year, but more see the chance of it happening in December rather than October.Prior to the press conference, Himino in a speech to business leaders expressed confidence in the outlook for the Japanese economy.”I believe that the baseline scenario for the future remains that growth and inflation will develop in line with the BOJ’s outlook,” he said, according to the text posted on the central bank’s website.He pointed out that the yen’s recent rebound may alleviate the pain of rising import costs and profit squeeze many small and medium-sized firms currently face.While the stronger yen could pressure profits at export-oriented companies, there is not a wide gap between current yen rates and the rates assumed in their business plans, he said.Stock price volatility “need not affect business sentiment too much” as Japanese firms have transformed themselves and formed competitive edges, he added.Private consumption, previously a weak spot of the economy, will be underpinned by wage growth and moderating inflation, although the BOJ needs to be mindful of risks that inflation will not moderate and continue to push down real wages, he said. More

ORLANDO, Florida (Reuters) -Jerome Powell’s Jackson Hole speech has turned Sept. 6 and Sept. 18 into the two most important dates for U.S. monetary policy in years, as events on both days center on the Fed’s new guiding light: the unemployment rate.    The first marks the release of the August non-farm payrolls report, and the second will see the Fed’s much-anticipated interest rate decision and, just as crucially, its updated Summary of Economic Projections (SEP).    The Fed will almost certainly cut rates on Sept. 18, as Powell signaled at Jackson Hole and as other officials have effectively confirmed since. The only questions now are whether the easing cycle starts with a 25- or 50-basis-point cut, and how much policy is loosened in the coming months. After these two pivotal days in September, investors should have their answers.DUAL PIVOTS    Powell essentially made two pivots in Jackson Hole. The first, as expected, is his clear signaling that a rate cut is forthcoming. The second, perhaps less anticipated, is his equally clear emphasis that unemployment, not inflation, is now the number one determinant of upcoming policy decisions.     Powell’s warning that the Fed does “not seek or welcome further cooling in labor market conditions” basically means the current unemployment rate of 4.3% – which is still fairly low by historical standards – is now a “line in the sand” that, if crossed, will likely trigger a policy response.”The unemployment rate is now around 90% of the Fed’s dual mandate, inflation is about 10%,” said John Silvia, founder of Dynamic Economic Strategy, adding that Powell’s pivot to unemployment from inflation is remarkable considering the economy isn’t in recession. ALL EYES ON SEPTEMBER    Of course, there’s more than one way of measuring the strength or otherwise of the labor market and, by extension, the economy. They include nominal job growth, the ebb and flow of the labor force, and one of the Fed’s favorites since the COVID-19 pandemic: the JOLTS estimates of outsized quits and job openings.    But for the public, markets at large and politicians, the unemployment rate offers the clearest picture of how well the labor market is holding up. This figure is doubly important now the U.S. presidential election is in full swing.The unemployment rate rose two-tenths of a percentage point in July to 4.3%, the highest level since October 2021. It triggered the so-called Sahm rule, which states that a 0.5-percentage point rise in the three-month average unemployment rate from the low of the past year typically signals recession. While economist Claudia Sahm, the rule’s creator, has poured cold water on claims that recession is now inevitable, she does note that the rise in unemployment is concerning. When it comes to rising unemployment, momentum typically cannot be slowed easily, much less reversed quickly.    What’s more, the current unemployment rate is now above Fed officials’ median long-term projection of 4.2%, published in the June SEP. And since the Fed began including median projections in its quarterly SEPs in 2015, major policy shifts have always coincided with the two crossing over.     This happened in late 2016 when the Fed started raising rates in earnest, in early 2020 when the pandemic prompted rates to be cut to zero, and in early 2022 when the Fed began its last hiking cycle.So that’s why it’s so significant that both the unemployment rate and the Fed’s long-term outlook will be updated within days of each other. Changes in either will go a long way in determining the Fed’s path for the rest of this year and early 2025.ROCKY OR SOFT LANDING?Traders expect 100 basis points of easing by year end, and at least another 100 bps next year. And even though futures markets are still betting on the Fed delivering a quarter-point cut in September, the probability of a half-point move has a one-in-three chance. So what happens if we see another solid rise in the unemployment rate on Sept. 6? This could seal the deal for a 50-basis-point cut on Sept. 18 and boost the case for similarly bold moves in the coming months.      A cutting cycle of that size and speed wouldn’t be easy for the Fed to navigate or communicate. Just as importantly, it will likely only occur if the U.S. truly is in the early stages of a recession, blowing apart the market’s “soft landing” narrative once and for all.    (The opinions expressed here are those of the author, a columnist for Reuters.)(By Jamie McGeeverEditing by Helen Popper) More

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Change in jobs +10% –10% +50% –50% More

At a bank event, Haddad said he made the suggestion to President Luiz Inacio Lula da Silva after discussing the issue with current central bank governor Roberto Campos Neto.The finance chief added that Lula has the information needed to finalize his pick to lead the South American nation’s monetary authority, but that no date has been set for the announcement.Brazil’s government initially planned to disclose the nomination in August in time for a Senate confirmation hearing in early September, but the idea has faced resistance from senators.Gabriel Galipolo, the central bank’s current monetary policy director, is widely seen as Campos Neto’s likely successor. More

Kyiv will also temporarily suspend payments for loans from Cargill Financial Services International, Inc, starting from Sept. 3, and on government-guaranteed bonds of Ukrainian power firm Ukrenergo starting from Nov. 9, according to the document. The GDP warrants and private debt obligations are not part of the country’s sovereign restructuring deal that the government of the war-torn country is expected to finalise any time now.With the Russian war in Ukraine now in its third year, the Kyiv government relies heavily on foreign financial aid to be able to finance its social and humanitarian payments. The bulk of Ukraine’s state revenues goes to defence efforts.The GDP warrant, an instrument linked to the country’s economic output growth was created during Ukraine’s 2015 debt restructuring in the wake of Russia’s annexation of Crimea as a sweetener to creditors. JPMorgan calculates that Ukraine owes $2.6 billion on this instrument.About $700 million is owed to U.S. agribusiness giant Cargill and the state grid company Ukrenergo has a government guarantee on a $830 million note. More