⚡ Electricity Prices Set To Jump As...?

Good morning. US stock futures moved higher in Tuesday morning trading as investors awaited key corporate earnings and the beginning of the Federal Reserve’s policy meeting.

⚡ Million of Americans facing higher electricity prices

📝 Our report: Over 65 million Americans are bracing for a jolt as electricity prices are set to soar next year due to dwindling energy supply and skyrocketing demand on the largest U.S. electric grid. An increase for the year starting in June would follow a power auction held in 2023 that saw prices come in at a decade low of $28.92 per megawatt-day. The latest auction results are expected be two to four times higher according to analysts predictions.

 🔑 Key points:

• The jump comes as the grid pushes to rein in an oversupply of capacity just when states like Virginia ramp up power demand to feed its artificial intelligence and data centers.

• Closures of coal and natural-gas fired plants will also remove about 4 gigawatts of generating capacity from the grid — enough to power about 3.2 million homes.

• Baltimore may feel the biggest pinch in terms of prices — the city draws power from a coal-fired plant that is on the brink of closing. That threatens to drive up payouts to other generators in the area by more than fivefold to $400 per megawatt-day.

💡 So what: Soaring energy prices for 65 million Americans have significant implications, including financial strain for households, especially low-income families who may face energy insecurity. Businesses, particularly those that are energy-intensive, will experience increased operational costs, potentially leading to higher prices for goods and services. Additionally, rising energy prices could contribute to inflation, increasing the overall cost of living and posing broader economic challenges.

Tuesday - Consumer Confidence

Wednesday - FOMC Interest-Rate Decision, Fed Chair Powell Press Conference

Thursday - U.S. Productivity

Friday - U.S. Unemployment Rate

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🛢️ Biden admin refills strategic oil reserves

WHAT: The Biden administration has snapped up 4.65 million barrels of crude oil to refill the nation's emergency reserve, continuing efforts to top off the depleted stash. The Energy Department has been slowly replenishing the Strategic Petroleum Reserve, which reached a 40-year-low following an unprecedented drawdown in the wake of Russia’s invasion of Ukraine. In 2022, the Biden administration ordered the release of a record 180 million barrels from the emergency oil supply in the face of surging retail gasoline costs.

WHY: The reserve currently holds 375 million barrels of oil, according to Energy Department data. It held approximately 600 million barrels at the start of 2022.

✈️ Airline fee disclosure rule blocked by US court

WHAT: A U.S. appeals court hit the pause button on the Transportation Department's new rule requiring upfront airline fee disclosures, pending a full review. The court decision is a significant setback for the Biden administration that has taken a hard line on airline fee practices over the last three years. A three-judge panel of 5th U.S. Circuit Court of Appeals granted the industry's request to temporarily block the rules saying it "likely exceeds DOT's authority and will irreparably harm airlines."

WHY: Major carriers including American Airlines, Delta Air Lines, United Airlines and others joined by trade group Airlines for America filed suit in May to block the rules that were to require carriers to disclose fee data to third-party ticket agents by Oct. 30 and on their own websites by April 30, 2025.

🤖 Apple gives Nvidia cold shoulder for AI training, chooses Google

WHAT: Apple revealed that the AI models powering Apple Intelligence were pretrained on processors crafted by Google, a sign that Big Tech companies might be looking for alternatives to Nvidia when it comes to the training of cutting-edge AI. Apple’s choice of Google’s homegrown Tensor Processing Unit (TPU) for training was detailed in a technical paper just published by the company.

WHY: Nvidia’s pricey graphics processing units (GPUs) dominate the market for high-end AI training chips, and have been in such high demand over the past couple years that they’ve been difficult to procure in the required quantities. OpenAI, Microsoft, and Anthropic are all using Nvidia’s GPUs for their models, while other tech companies, including Google, Meta, Oracle and Tesla are snapping them up to build out their AI systems and offerings.

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