💳 US Consumer Debt Keeps Going...?

Good morning. US stock futures dipped in Tuesday morning trading as the major averages rebounded from their worst week in 2024.

💳 US consumer borrowing continues to trend higher

📝 Our report: Looks like the credit card is getting quite the workout! U.S. consumer borrowing surged in July, hitting the highest level since November 2022, with non-revolving debt and credit card balances leading the charge.

 🔑 Key points:

• Total credit outstanding increased $25.5 billion, according to recently releases Federal Reserve data. The gain exceeded all forecasts in a Bloomberg survey of economists. The figures aren’t adjusted for inflation.

• Revolving debt outstanding, which includes credit cards, increased $10.6 billion, the most in five months. Non-revolving credit, such as loans for vehicle purchases and school tuition, surged $14.8 billion in more than a year.

• While Fed policymakers are gearing up to take the first step in reducing their benchmark rate, it will likely take time for their actions to filter through into cheaper financing costs for consumers.

💡 So what: The increase in U.S. consumer borrowing in July, driven by jumps in non-revolving debt and credit card balances, suggests that consumers may be relying more on credit to sustain their spending habits amid inflation and rising living costs. While this might support short-term economic activity, it also indicates a potential rise in household financial strain. Higher debt levels could lead to increased defaults, particularly if interest rates remain high, impacting consumer confidence and reducing future spending capacity. Moreover, as credit card balances grow, consumers may face more difficulty managing their debt, leading to long-term financial instability for many.

Tuesday - NFIB Optimism Index

Wednesday - US Consumer Price Index

Thursday - Monthly US Federal Budget

Friday - Consumer Sentiment (prelim)

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🚗 Retail chain files for bankruptcy

WHAT: Big Lots Inc., the discount retailer, has filed for bankruptcy protection and is planning to sell off its assets and business through a court-supervised process. Big Lots sought court protection after suffering from years of declining same-store sales and closing locations. The company listed assets and liabilities of $1 billion to $10 billion in its court petition.

WHY: Big Lots is among a number of troubled retailers that have been hurt by a slowdown in home spending. Retailers Conn’s Inc. and LL Flooring Holdings Inc. also filed bankruptcies in recent months.

💸 Crypto scam losses skyrocket in 2023

WHAT: Crypto scams surged 45% in 2023, racking up over $5.6 billion in losses as scammers gleefully exploited the speed and irreversible nature of digital asset transactions, the FBI reported. "Since cryptocurrencies eliminate the need for financial intermediaries to validate and facilitate transactions, criminals can exploit these characteristics to support illicit activity such as thefts, fraud, and money laundering," the FBI said.

WHY: While crypto transactions are recorded on publicly available blockchains, allowing law enforcement to easily trace funds, often money is transferred quickly overseas, where U.S. officials can encounter obstacles like lax anti-money laundering laws in certain jurisdictions, the FBI said.

📱 Apple launches new iPhone

WHAT: Apple just unveiled the iPhone 16, with CEO Tim Cook announcing it’s been built with AI in mind "from the ground up." The iPhone 16 and 16 Plus will be available in new colors and get a customizable Action button that had only been available on higher-end models, Apple said during a presentation streamed from its headquarters in Cupertino, California.

WHY: Apple is playing catch-up in the world of generative artificial intelligence, where tech peers like Alphabet Inc.’s Google and Microsoft Corp. have made strides.

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