Good morning. US stock futures rose slightly in Monday morning trading as Wall Street digested remarks from Federal Reserve Chair Jerome Powell.

"The more an idea is tied to your identity, the more you will ignore evidence it is false"

James Clear

Top News

US policies shift trade from China study shows

WHAT: The US trade tango with China has been getting a bit awkward lately thanks to some moves from both the Biden and Trump administrations. According to a report from the Federal Reserve, US trade has shifted away from China, but US reliance on China-linked supply chains has not been reduced, leaving consumers facing higher costs.

WHY: The study added that Vietnam and Mexico appear to have captured much of the reallocated trade, based on an analysis of goods import and export patterns.

Fed exec: Rate cuts may have to wait…

WHAT: If you thought the fight against inflation was over, think again! Cleveland Fed President Loretta Mester said another interest rate hike may be required before the Fed can begin looking at rate cuts. “The longer we let inflation remain above 2%, we’re building in higher and higher price levels” Mester said, as she delivered remarks in Jackson Hole, Wyoming.

WHY: Most Fed policymakers thought in June that they would be able to stop hiking once they got the policy to the 5.5%-5.75% range — a quarter point higher than it is currently.

IRS to ramp up tax regulations on crypto exchanges

WHAT: Uncle Sam’s taxman is putting on his cryptocurrency investigative hat! US crypto exchanges like Coinbase and Kraken are about to become BFFs with the Internal Revenue Services as they will be required to report detailed information on their clients transactions starting in 2026.

WHY: The IRS has stated in the past that unpaid digital-asset taxes contribute to the tax gap — the difference between taxes owed and collected — which totals more than $500 billion per year.

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In Other News

Pharmacy chain gears up for bankruptcy filing

WHAT: Another one bites the dust! According to reports from the Wall Street Journal, retail pharmacy chain RiteAid is preparing to file for Chapter 11 bankruptcy as it faces mounting losses related to opioid lawsuits.

WHY: The preparations come after the company was sued by the US government in April over its failure to detect what the Department of Justice called “red flags” around its filing of prescriptions for opioids and painkillers.

China turns to retail funds for economic revival

WHAT: Guess who’s giving their stock market a booster shot? China’s security regulator gave the greenlight for not one, but 37 retail funds as part of the government’s effort to revive an ailing stock market struggling for lift-off as China’s economy slows down.

WHY: China’s leaders vowed late last month to boost investor confidence and reinvigorate the stock market — the world’s second largest — which has been reeling as the post-pandemic recovery flags and a debt crisis in the property market deepens.

Pizza Hut under pressure in the UK

WHAT: Pizza Hut’s UK auditors are sounding the alarm over the company’s future and it’s not because they ran out of pepperoni! The group is currently in the hot seat, trying to refinance £31 million of its £73 million debt pile before its April 2024 repayment deadline. PwC, the company’s auditors, warned there was “material uncertainty” about the company’s ability to remain in business.

WHY: Pizza Hut UK operates 152 outlets and employs 4000 staff. Its takeaway outlets are run separately by franchisee partners.

Key Economic Events

• Monday - Dallas Fed Manufacturing Activity

• Tuesday - No Major Economic News

• Wednesday - GDP Annualized Q-o-Q

• Thursday - Initial Jobless Claims (wk end Aug-26)

• Friday - Unemployment Rate (Aug)

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