A surprising party has joined the race for TikTok, as Walmart joined forces with Microsoft to buy the U.S. assets of the popular short video app. The bid could total $30B or even more, and as odd as that coupling seems, CNBC reports that Walmart originally sought majority ownership of TikTok in a consortium with Alphabet and SoftBank. "We believe a potential relationship could provide Walmart with an important way for us to reach and serve omnichannel customers as well as grow our third-party marketplace and advertising businesses," the company said in a statement. Oracle is another U.S. company vying to acquire the assets of TikTok, and parent ByteDance is expected to pick a bidder to enter into exclusive talks as early as today. (SA)

Gold and silver have outshone most assets, but another commodity is shaping up to be this year’s best performer: lumber.  Prices for the wood have hit a record high after demand surged as homeworking as a result of Covid-19 spurred a wave of renovation projects, from fences to sheds, at a time when inventories were running low.  Lumber prices have soared 104 per cent this year — almost four times gold’s percentage increase — to $828 per thousand board feet. In early August, prices broke through the previous record of $651 set in 2018 when harsh winter weather in Canada caused transportation problems for months. Last week alone, they gained 13 per cent. (FT)

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Josh Fenili.

Laura is now expected to strengthen to a category 4 hurricane, producing a life-threatening storm surge, extreme winds and flash flooding when it makes landfall over eastern Texas and Louisiana later today. The hurricane is projected to inflict billions in damages and keep some of America's largest oil refineries shut for months. Oil is holding steady close to five-month highs with investors expecting any impact to supply from the hurricane to be short-lived. (Bloomberg)

Ant Group revealed it earned $2.6bn in net profit last year as it filed documents for an initial public offering that may raise a record $30bn.  The Chinese payments company has said it wants to sell at least 10 per cent of its shares in a dual offering in Hong Kong and Shanghai, and one person close to the process suggested it was considering selling as much as 15 per cent at a valuation of between $200bn to $300bn. Ant’s valuation rests on the dominance of Alipay, which is used monthly by more than 700m people and 80m businesses in China to make mobile payments, invest in mutual funds, buy insurance and pay bills.  Ant processes $17tn worth of payments annually, about twice as much as Visa.  (FT)

Data analytics firm Palantir has filed to go public, confirming prior reports that the company would pursue a direct listing - the same unconventional route taken by Slack and Spotify.  The secretive tech business co-founded by Peter Thiel is reportedly hoping for a valuation of about $26B, despite losing $588M in 2019. Another Thiel-backed business, called Luminar, went public on Monday via a $3.4B SPAC merger, while workplace app Asana filed for direct listing on NYSE. (SA)

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Josh Fenili.

The Federal Reserve minutes yesterday showed a subtle shift in its commitment to an extended period of ultra-loose monetary policy, hitting stocks along the way. Its July meeting minutes fell short of laying out a path for rate liftoff and also seemed to suggest yield control isn't in the offing. The previous set of minutes indicated policy makers were keen to sharpen their so-called forward guidance at upcoming meetings. Guidance would have included rough criteria for zero rates targeted around inflation, unemployment, or both. The lack of clear bars to cling to came with warnings about "considerable risks" to the economy in the medium term, damping the ebullient stock mood. (Bloomberg)

China and the United States will meet "in the coming days" to discuss the progress of the Phase 1 trade deal reached in February. Earlier this week, the White House signaled that no high-level trade talks were on the schedule. Phase 1 requires China to import $77B more than 2017 levels of certain U.S. goods within the first year, and official data suggests China is running far behind schedule on the target. (SA)

Airbnb said it had filed with regulators for an initial public offering, marking a swift reversal from earlier this year when the coronavirus pandemic had appeared to put those plans on hold.  The San Francisco-based company said it had filed a confidential draft registration statement with the US Securities and Exchange Commission. It did not provide further details about the size or timing of the planned offering. Airbnb revived its plans to go public as it saw signs of a rebound that followed a huge disruption to its business at the onset of the pandemic, which led the company to raise $2bn in emergency debt funding.

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Josh Fenili.

Stocks were higher again yesterday.  The S&P 500 briefly rose above its Feb. record closing high again during intraday trading. Amazon led a rally in mega-cap tech stocks, and Tesla jumped more than 11% to a record high. The Nasdaq also closed at a record high.

Potential home buyers flooded into model homes across the nation, and that has builders feeling better about their business than at any time over the past 20 years.  But rising lumber prices could sap the market’s momentum this fall.  Builder confidence in the newly built, single-family home market jumped 6 points to 78.  The index is now at the highest level in the 35-year history of the index.

FHA mortgages -- the affordable path to homeownership for many first-time buyers, minorities and low-income Americans -- now have the highest delinquency rate in at least four decades.  The share of late FHA loans rose to almost 16% in the second quarter, up from 9.7% in the previous three months and the highest level in records dating back to 1979. The delinquency rate for conventional loans, by comparison, was just 6.7%.
 
With Northwest Quadrant Wealth Management, I’m Tyler Simones.
 

The U.S. and China postponed talks aimed at reviewing progress at the six-month mark of their phase-one trade agreement, people familiar with the matter said. The president has now officially ordered the Chinese owner of the popular music video app TikTok to sell its U.S. assets, citing national security grounds, and hinted that further executive action could be forthcoming, specifically mentioning Alibaba. (Bloomberg)

In earnings news, Home improvement behemoths Home Depot and Lowe's are expected to report same-store sales growth of 10.9% and 14.3%, respectively, this week for fiscal Q2. The surge in demand, which surprised even veteran executives, is being driven by people remaining at home during the pandemic who are devoting time and resources to home upgrades. Foot traffic at HD is up 35% since April. (SA)

Gold miners are enjoying an extended rally, exclusive of the COVID-19 sell-off in March, as the price of the ore continues to climb, up ~28% this year. For gold miners, the bad news is the expected long-term rise in mining costs due to the difficulties in extracting the precious metal in less-hospitable places. The grade of ore being mined and the amount of metal per ton of rock extracted, is also falling, now 1.46 grams per ton, far below more than 10 grams in the early 1970s. Executives, wary of the costly overexpansion during the last run-up, have used the bull market to pay down debt and increase dividends rather than start new projects. (FT)

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Josh Fenili.

Stocks traded lower yesterday as traders digested unemployment data and monitored the stalemate in stimulus negotiations.

Initial U.S. weekly jobless claims fell to 963,000 according to the Labor Department. That was below economists estimate of 1.1 million. It was also the first time since March that jobless claims came in below 1 million.  Those collecting benefits for at least two weeks, known as continuing claims, totaled nearly 15.5 million, a decrease of 604,000 from a week ago, but still well above pre-pandemic levels.

The number of empty apartments for rent in Manhattan soared to their highest level in history, topping 13,000, as residents fled the city and landlords struggled to find new tenants.  The number of apartments for rent, or listing inventory, more than doubled over last year and set a record since data started being collected.  This is also playing out in cities around the country.  July also saw the largest fall in rental rates in nearly a decade, dropping 10%. Landlords are now offering an average of 1.7 months of free rent to try to lure tenants.

An impasse over the next round of coronavirus aid looks likely to drag on after Democrats and Republicans described themselves as hopelessly far apart on a deal to combat raging economic and health-care crises.  Don’t expect a deal anytime soon as most of the House and Senate have left for their August recess.

With Northwest Quadrant Wealth Management, I’m Tyler Simones.

Stocks were higher yesterday, the S&P 500 briefly rallied above its record closing high from February 19. The blue-chip index has now climbed more than 50% from its March low.  Leadership in the S&P 500 flipped back to the technology stocks.

U.S. consumer prices jumped 0.6% in July as gasoline prices continued to rise.  The Labor Department reported that the increase last month in its consumer price index matched a 0.6% rise in June. The uptick was about twice what economists expected. But inflation remains in check: Consumer prices are up just 1% over the past year.

Ride-hailing company Lyft just reported second-quarter earnings including a 61% revenue drop versus the same period last year, but a glimmer of hope in their core ride-hailing business with monthly rides increasing 78% in July, as compared to April. Shares rose 6% on the news.

According to the Mortgage Banker’s Association mortgage applications rose 6.8% last week, and mortgage refinancing activity increased by 9% year over year.  Loan types such as 30 year fixed, 15 year fixed, and jumbo loans are all at all-time-low interest rates creating unnatural demand.
 
 With Northwest Quadrant Wealth Management, I’m Tyler Simones.

The S&P 500 got very close to trading at a record high yesterday before selling off late in the day to snap a 7 day win streak as tech stocks sold off again.

Confidence in the US economy among small-business owners slipped in July amid a continued surge in new Covid-19 cases across the country, according to the National Federation of Independent Business. The NFIB Small Business Optimism Index stood at 98.8 in July - a 1.8 point decline month-on-month and shy of analyst expectations for a reading of 99.9.

U.S. producer prices increased by the most in more than 1-1/2 years in July, but the overall trend in producer inflation remained subdued amid signs the economy’s recovery from the recession was faltering.  The jump in producer prices reported by the Labor Department, further diminished the risk of deflation.

According to the Beacon Report the median price of a single-family home in Bend rose to $529,000, an increase of $59,000 compared to the same time the year before.  The 12.5% increase in price in July is being driven by out-of-area buyers whose pockets are stuffed with cash from having sold property in higher-priced markets.
 

With Northwest Quadrant Wealth Management, I’m Tyler Simones.

Stocks were marginally higher yesterday led higher by economically sensitive stocks.  The S&P 500 is now less than 1% away from an all-time-high.

Shares of the major airlines saw their biggest one-day percentage gain in nearly a month after federal data showed air travel at the highest volume in nearly five months and as political support grew for more federal aid for the struggling sector.  The number of people passing through TSA checkpoints at U.S. airports rose for a second consecutive week with over 800K people on Sunday alone, its highest level since March 17.  Despite the uptick, TSA traffic is still down by about 70% from the same time a year ago.

A California judge granted a preliminary injunction requiring Uber and Lyft to stop classifying their drivers as independent contractors pending further action by the court. The order will take effect after 10 days, as the companies requested a brief stay during the appellate review process.  Shares of both companies are lower on the news.

 Shares of the cruise line operator Royal Caribbean jumped 10% after their CEO said there was pent-up demand and “remarkable” bookings for their  international cruises in 2021, despite reporting a $1.6 billion loss for the second quarter and a cash burn rate in excess of $250 million a month.
 
With Northwest Quadrant Wealth Management, I’m Tyler Simones.
 

Stocks had a strong week last week led higher by gains in the big technology stocks.  The S&P 500 is now just 1.2% below its Feb. 19th record high.

Warren Buffett’s Berkshire Hathaway announced a $9.8 billion writedown and 10,000 job losses at their Precision Castparts aircraft parts unit based here in Oregon.  Despite the writedown, Berkshire said second-quarter net income surged 87% because of gains in their stock investments like Apple as markets rebounded.  Berkshire also bought back of $5 Billion worth of their stock in the quarter.

Amazon is in discussions with mall-owner Simon Property Group about using closed J.C. Penney and Sears stores for Amazon fulfillment centers.  For Amazon, more fulfillment centers near residential areas would speed up the crucial last mile of delivery. For the mall owner Simon, turning over what was once prime mall space to fulfillment centers shows they would be willing to relinquish an essential way to bring in more mall traffic to secure a steady tenant.

If it seems like you keep hearing about mortgage rates hitting yet another record low, that's because you are. The 30-year mortgage rate just hit its eighth record low so far this year.  The average interest rate on a 30-year fixed-rate mortgage fell to a record low of 2.88% this past week, according to Freddie Mac. That's the lowest level in the nearly 50 years of the mortgage giant's survey. The 15-year fixed-rate mortgage dropped to 2.44%.

With Northwest Quadrant Wealth Management, I’m Tyler Simones.

With some very, very large numbers, it can be hard to keep your perspective.
Case in point: the U.S. government's fundraising effort, which has reached fresh extremes to stay ahead of the astronomical spending needed to support the world’s largest economy through the pandemic crisis. This week, the Treasury said it expects to sell more than $2 trillion of debt in the second half of the year, and the next auctions of notes and bonds will be among the largest on record.  One thing is clear, at least for now: the Treasury market isn’t buckling as the debt pile mounts.  Fitch Ratings just slapped a warning on the U.S.’s top-notch credit score -- bemoaning the lack of a “credible fiscal consolidation plan”.  (Bloomberg)

Speaking of piling on debt… There has so far been no progress on agreeing a new stimulus plan for the U.S. economy, with talks now on the brink of collapse. Treasury Secretary Steven Mnuchin said that the White House and Democratic leaders remain "very, very far apart on significant issues." House Speaker Nancy Pelosi called a proposal from the Trump administration "anorexic." It is unclear if the two sides will meet again today. (SA)

Uber reported second quarter results including revenue that beat analysts’ expectations but declined by about 29% from $3.17 billion during the same period last year. The stock dipped as much as 5% in after-hours trading.  The company was able to narrow its net losses to $1.8 billion, a major improvement from this quarter last year when Uber had a net loss of $5.24 billion. (FT)

Nonfarm payrolls rose by 1.763 million in July, vs 1.48 million expected.

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Josh Fenili.

Time is fast ticking down to lawmakers' self-imposed deadline to reach a new stimulus deal before the weekend with both sides seemingly no closer to actually reaching an accord. Treasury Secretary Steven Mnuchin said a plan would be hard to reach without "agreement on the major issues" after meeting leading Democrats yesterday. White House Chief of Staff Mark Meadows said that President Donald Trump was prepared to use executive authority to extend some measures such as supplemental unemployment insurance. (Bloomberg)
 
Rocket Companies, the parent company of mortgage lending giant Quicken Loans, has sold 100M shares at $18/share in its initial public offering, raising about $1.8B. The figures were below initial estimates, which forecast 150M shares would be sold at $20-22. Shares will begin trading on the New York Stock Exchange today under ticker symbol "RKT," though the weak demand raises questions as to whether the hot tech IPO market, which features DoorDash (DOORD) later this summer, might be cooling.
 
The latest weekly jobless claims number is out, 1,186,000 initial claims this week, the lowest level of the pandemic era. There were 16.1m continuing claims with both numbers coming in better than expected.  
 
With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Josh Fenili.

Contentious talks on the geopolitical front are also on the horizon, as the U.S. and China prepare to assess their phase-one trade agreement. Delegates led by U.S. Trade Representative Robert Lighthizer and Chinese Vice Premier Liu He are clearing their calendars for a discussion to take place on or around Aug. 15, six months after the agreement took effect, this according to Bloomberg.

While Disney continued to feel the impact of the COVID-19 pandemic on sectors like its parks business, where revenue tanked 85% from a year earlier, CEO Bob Chapek announced a new streaming service that will launch in fiscal 2021 under the Star brand acquired from Fox.  In total, Disney now has 100M paid subscribers across its streaming services, which include Disney+, Hulu and ESPN+. Disney+ reached 60.5M paid subscribers, hitting a goal of 60M-90M subscriptions by 2024, four years early. (SA)

The move to get displaced workers back to their jobs slowed sharply in July, with private payrolls increasing by just 167,000, ADP reported Wednesday.  That total was well below the 1 million expected from economists surveyed by Dow Jones and represented a tumble from the 4.3 million created in June, according to the report.  One bright spot was that the June total was revised sharply higher from the initial estimate. However, that month, combined with May’s 3.3 million increase, still leaves the jobs market well short of the 19.7 million positions lost in March and April as the U.S. economy went into shutdown mode. (CNBC)

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Josh Fenili.