Month: August 2024

While yields have been tumbling in recent days amid unprecedented flight to safety following the collapse of the yen carry trade, today’s action has seen fast selling of the rates complex with 10Y yields rising to session highs ahead of today’s 3Y auction, the first sale of coupon paper this week, followed by 10Y and 30Y auctions tomorrow and Thursday. Yet despite the aggressive selloff which pushed yields by 10bps higher, demand for today’s sale of $58 billion in 3Y paper was stellar.

The auction priced with a high yield of 3.810%, a plunge from last month’s 4.399% and the lowest in 16 months: the last time it was this low was in May 2023 when it was 3.695%. It also stopped through the When Issued 3.812% by 0.2bps, the second consecutive stop through after sizable tails in both June and April.

The bid to cover was mediocre at 2.551, down from last month’s 2.667, and right around the six-auction average of 2.569.

The internals were also solid, with Indirects taking down 64.4%, up from 64.0% in July and the highest since May (if below the recent average of 65.0% due to that stellar March auction where Indirects took down 70.0%). And with Directs allotted 20.25%, Dealers were left holding 15.35%, above last month’s 14.78%, but below the recent average of 16.5%.

Overall, this was a solid if not spectacular auction, one where despite today’s jump in yields, demands was clearly present, if hardly spectacular. And even though the auction left little to be desired, the continued unwind of the recent flight to safety meant that yields rose to session highs despite the solid reception.

America First Legal (AFL) has filed a lawsuit against Maricopa County, Arizona recorder Stephen Richer for failing to remove non-citizens from county voter rolls.

On Monday the legal organization founded by former senior Trump adviser Stephen Miller sued Richer and Maricopa County on behalf of the Strong Communities Foundation of Arizona and a registered voter and naturalized citizen, for allegedly refusing to verify the citizenship of voters registered in the county, Just the News reports.

On July 16, AFL sent letters to all 15 Arizona counties demanding that election officials follow state and federal law by ensuring that non-citizens were unable to vote, and warned of legal action if they didn’t by the following week.

Richer replied via his legal counsel, claiming that he’s following the law by verifying the citizenship of voters – however AFL says he’s lying, as voter rolls have had an increase in the number of registered voters without confirmed citizenship under his watch, and that databases have not been accessed which would verify voters’ citizenship.

AFL has sued Richer for allegedly violating state law by not performing the monthly list maintenance required to verify the citizenship status of registered voters who have not provided proof of citizenship.

In Arizona, registered voters without proof of citizenship can vote only in federal elections, not state elections.

The lawsuit alleges the number of registered voters without proof of citizenship has jumped from 21,595 in April to 26,108 in July. -Just the News

“Maricopa County, in direct violation of state law, is refusing to remove illegal alien voters from the rolls,” Miller said Tuesday. “We are taking decisive action: suing Maricopa County for unlawfully permitting illegal aliens and foreign citizens to interfere in the 2024 election.“

Read the filing below:

By Bas van Geffen, CFA, Senior Macro Strategist at Rabobank

Calm finally appears to be returning. The Japanese Nikkei 225 is up some 10% on the day. That still doesn’t make whole the -12.4% loss from Monday’s session, but at least it takes some of the ‘panic’ out of the selling. Japanese data were much better than expected, and appear to vindicate the Bank of Japan’s decision to adopt a more hawkish stance last week. Additionally, the turnaround may be induced by reports of a three-way meeting between the Bank of Japan, the Ministry of Finance, and the Financial Services agency to “discuss international markets.”

Although the extent of the decline in Japanese markets stood out like a sore thumb, red figures were a theme across the globe yesterday. On Friday market action largely seemed driven by weak US data, but yesterday it evolved into more of a risk-off driven move as investors rebalanced their portfolios. The S&P 500 lost some 4.8% across Friday and Monday, and the EuroStoxx 600 was down a cumulative 4.9%.

But both indices had deeper intraday lows yesterday, which – of course – prompted for urgent calls of emergency rate cuts. Or, failing that, outsized cuts at the remaining scheduled meetings for the year. Because market economy, I guess.

A mild recession, or at the very least a slowdown in growth, was always to be expected if central banks were to get inflation back under control. Is it really up to the Fed to rescue markets again?

The Fed’s Goolsbee was scheduled to appear on a CNBC interview, and used his slot to remind traders that this selloff occurred after a July employment report that makes for just one datapoint: “the central bank’s job is not to react to one month of weaker labour data,” adding that the error margin around the non-farm payrolls estimate is as high as 100,000 jobs.

None of what Goolsbee said sounds like the Fed is actually inclined to make emergency cuts, or even go beyond the usual 25bp rate cut in September: “As you see jobs numbers come in weaker than expected but not looking yet like recession, I do think you want to be forward looking of where the economy is headed for making the decisions.” In other words, the Chicago Fed President still believes the best path is a gradual easing of the currently restrictive policy stance. “The Fed’s job is very straightforward: maximize employment, stabilize prices, and maintain financial stability. If the conditions collectively start coming in that there’s deterioration on any of those three parts, we’re going to fix it. There’s no bad weather, there’s only bad clothing.”

Collectively is the key word here. Because, while the market is now focusing on some signs of weakness in the labour market, yesterday’s ISM survey took some sting out of Friday’s non-farm payrolls. Moreover, the purchasing managers’ survey reiterated that inflationary risks haven’t suddenly disappeared over the past few sessions.

The ISM services index rebounded from 48.8 to 51.4. This ISM survey has been volatile in recent months, and it does not indicate strong growth, but it also does not suggest that the US economy is about to take a nosedive off a cliff. The survey’s employment index rose to 51.1. That’s the highest level since September. Furthermore, the prices paid index re-accelerated to a level that is more in line with the average over the past year.

Likewise, PMI survey for the Eurozone signalled an acceleration of input cost inflation across the euro area. Faster increases in operating expenses were seen at both manufacturers and service providers, although the latter continued to experience the sharpest pressures. The overall pace of input price inflation was the joint-quickest in 14 months (level with April and February). Especially the German services sector reported significant wage cost pressures, but French firms also “often linked higher operating expenses to salary increases.”

At least for July, these costs seem to be absorbed in margins, with output charges rising less rapidly. However, would any central bank really want to cut 50 basis points in September, given these lingering risks? Goolsbee may have listed “financial stability” as another key part of the Fed’s mandate, but stability does not mean that equities can only go up.

Yet, several shops called for 50bp cuts from the Fed at the September and November meetings. The market traded in line with this for most of yesterday, to an extent that the 2s10s Treasury spread even un-inverted. But rate cut bets have lessened since then, and the market is now priced for ‘only’ one 50bp cut in September, followed by 25bp cuts at the other two remaining meetings of the year – although Fed funds futures still price significant downside risks to the fed funds path.

An affiliate of Saudi Arabia’s Public Investment Fund has thrown struggling electric car maker Lucid Group a $1.5 billion lifeline (second one of the year). This comes as Lucid prepares to launch its first sport utility vehicle amid a downturn in the EV automotive space. 

Lucid revealed it entered into agreements with its majority stockholder, Ayar Third Investment Company, an affiliate of the Saudi PIF, to purchase $750 million of convertible preferred stock through a private placement and provide a $750 million unsecured loan. 

Lucid already received $1 billion from Ayar in March. Shortly after, the EV maker announced plans to slash about 6% of its workforce by the end of Q3. This follows a brutal 2023 of production woes, workforce reductions, and a shakeup in its top management. 

CEO Peter Rawlinson told Reuters that the new funds from Ayar will be used to produce the Gravity SUV and build a factory in Saudi Arabia, with an annual capacity of 150,000 vehicles. 

Shares of Lucid soared as much as 16% in premarket trading on the new funding from Ayar. However, for the year, shares are down nearly 29% (as of Monday’s closing price). Lucid’s float is 26.29% short. 

Lucid also reported second-quarter earnings. Revenue of $200.6 million exceeded the average Wall Street estimate of $185.8 million. However, it lost 29 cents a share on an adjusted basis for the quarter, with analysts forecasting a 27 cents-a-share loss. 

Here’s a snapshot of the second quarter earnings (courtesy of Bloomberg):

• Revenue $200.6 million, +33% y/y, estimate $185.8 million (Bloomberg Consensus)

• Adjusted loss per share 29c vs. loss/shr 38c y/y, estimate loss/shr 27c

• Loss per share 34c vs. loss/shr 40c y/y

• Adjusted Ebitda loss $647.6 million, -8.8% y/y, estimate loss $560.9 million

• Vehicles Delivered 2,394, estimate 1,999

Andres Sheppard, senior equity analyst at Cantor Fitzgerald, said, “The $1.5 billion helps to solidify the relationship between PIF and Lucid further. There was some investor concern out there that should the PIF become frustrated with the company that they wouldn’t provide any additional commitments.” 

Here’s more commentary from Wall Street analysts (courtesy of Bloomberg):

Citi analyst Itay Michaeli (neutral)

• Says the new $1.5 billion capital raise is expected to extend Lucid’s liquidity runway into 4Q 2025

• The results were encouraging with free cash flow burn narrower

RBC analyst Tom Narayan (sector perform)

• Says the extra liquidity cushion provided by the Saudi deal, investor focus on the liquidity topic, as well as on how committed PIF is to Lucid’s long-term success, can all push the shares up sharply on this news

• Lucid expects start of production for the Gravity SUV later this year and reservations should begin before that

• Adds that there should be some indication of demand in the 3Q, and the analyst expects deliveries to begin in 1Q of 2025

• Notes that Lucid management has said on a few occasions that it does not want to take reservations too early as this can lead to cancellations and the long lead time can upset customers

Bloomberg Intelligence analyst Steve Man

• Says unlike the $5 billion commitment Rivian received from Volkswagen, Lucid’s $1.5 billion capital raise doesn’t fully address the company’s “liquidity needs to launch a high-volume, medium-sized vehicle, which is scheduled to debut in late 2026”

Earlier this year, Morgan Stanley’s autos guru, Adam Jonas, said the EV sales slowdown would trigger four potential paths for collaboration for legacy OEMs and EV startups. So far, Rivian made a deal with Volkswagen… 

Meanwhile, the EV industry (excluding Tesla) might face a reckoning next year if Trump wins in November. That’s because the former president has stated that EV subsidies will be eliminated. Even Musk supports this move. 

Musk recently said: “Take away the subsidies. It will only help Tesla. Also, remove subsidies from all industries!” 

Authored by Tom MitchelHill via CoinTelegraph.com,

OpenAI co-founder John Schulman has left the artificial intelligence startup he co-founded in 2015 for competitor AI firm Anthropic, leaving just three original co-founders still serving the firm.

In addition to Schulman’s departure, OpenAI’s product manager Peter Deng also quietly left the company some time ago while president Greg Brockman is taking an extended leave of absence, according to an Aug. 5 report from The Information.

In an Aug. 6 post to X, Schulman announced his departure from OpenAI after working there for nearly nine years, saying he’d made the “difficult decision” to move to Anthropic to focus on “AI alignment” and pursue more “hands-on technical” work.

Source: John Schulman

“I’ve decided to pursue this goal at Anthropic, where I believe I can gain new perspectives and do research alongside people deeply engaged with the topics I’m most interested in,” Schulman wrote on X.

Despite the whirling controversy around OpenAI’s approach to AI safety, research, and regulation, Schulman clarified that he wasn’t leaving the company due to a lack of personal or professional support.

“I’m not leaving due to lack of support for alignment research at OpenAI. On the contrary, company leaders have been very committed to investing in this area,” Schulman said.

“My decision is a personal one, based on how I want to focus my efforts in the next phase of my career.”

Anthropic — a fierce rival of OpenAI — was founded in 2021 by OpenAI’s former vice president of research Dario Amodei and his sister Daniela Amodei, who was also an early employee at the firm.

Following the departure of Schulman, only three of the firm’s 11 original founders remain at the company. They include OpenAI CEO Sam Altman, president Greg Brockman, and the firm’s language head Wojciech Zaremba.

Schulman played a key role in the creation of the firm’s AI-powered chatbot ChatGPT, leading OpenAI’s reinforcement training organization, which is responsible for training generative AI models to follow human instructions.

Schulman’s departure comes less than a day after Tesla CEO Elon Musk filed a new lawsuit against OpenAI and Altman.

In the latest filing, Musk alleges Altman “intentionally courted and deceived Musk, preying on Musk’s humanitarian concern about the existential dangers posed by artificial intelligence” and “assiduously manipulated Musk into co-founding their spurious non-profit venture, OpenAI.”

Musk co-founded OpenAI alongside Altman in 2015 and first sued the AI startup in February for allegedly violating promises to operate as a nonprofit.

After Monday’s historic selloff that capped a three-week, $6.4 trillion rout in global equities as a brutal unwind in the carry trade driven by last week’s BOJ rate hike hammered most consensus trades, a dead cat bounce arrived as some investors looked for bargains and markets saw a hint of calm return on Tuesday, but the rebound has been decidedly more tepid than the rout, and doesn’t prove the meltdown is over. Futures on the S&P 500 and Nasdaq are poised to regain only a fraction of yesterday’s loss, while stocks in the UK and Europe gave up earlier gains to head lower. There were stronger moves in Japan, where the two key share gauges both jumped more than 9% at the close after tumbling 12% the day before. US futures higher in a volatile, shaky session, with small caps lagging the Nasdaq, as USD finds support and Japanese Equities rally 10% overnight, erasing much of Monday’s loss. As of 7:45am, S&P futures were up 0.8%, off session highs, while Nasdaq futures rebounded 1.1% falling more than 7% over past three sessions. That said, much of the overnight gains were pared after JPM’s co-head of FX Strategy Arindam Sandilya said that we may only be 50% – 60% through this carry trade unwind. Bond yields are 5-6bps higher as treasuries retreated, with the 10-year yield heading for the first increase in almost two weeks as traders curbed bets that the Federal Reserve will step in to support markets with early interest rate cuts. Commodities are weaker, with WTI and gold modestly in the green. For the remainder of the week, the macro catalysts are bond auctions and Fedspeak.

Overnight, the bulk of the action was once again in Japan, where the Nikkei 225 index surged 3,217.46 points on Tuesday – its largest single-day rise following the largest one-day drop in history – after US service sector data for July eased concerns of a recession. The average ended the day at 34,675.46, up 3,217.46 points, or 10.2%. The index’s previous biggest single-day jump dates back to October 1990, when it gained 2,676.55 points. By percent, it was the biggest increase since 2008 and the fourth-largest rise ever.

A big reason for Japan’s rebound is because of an emergency meeting between the BOJ and the MOF as Japan’s government and central bank sought to show a united front and restore calm to financial markets, after the biggest stocks plunge in more than three decades triggered criticism of monetary policy tightening and cast a shadow over efforts to get households to invest their assets. With some pointing fingers at the central bank’s decision to hike rates last week as part of the trigger for the market turmoil seen in the last few days, the government appears to be trying to show it’s standing with the BOJ remains unchanged, at least for now.

Anyway, back to the US, where in premarket trading, the Mag7 is higher with Semis up small. Alphabet (GOOGL US) edged 0.3% higher in premarket trading, as a global tech rebound allows the shares to look past Monday’s ruling by a US judge that Google illegally monopolized the search market through exclusive deals. Analysts say a modest stock move was expected, as Alphabet will appeal the verdict and the process will take time to resolve. Palantir shares are up 7.4%, after the data-analysis software company reported second-quarter results that beat expectations. It also raised its full-year forecast and touted the demand it is seeing from artificial intelligence software. Here are the other notable premarket movers:

• Apple (AAPL US) shares are largely flat in US premarket trading, as analysts note that Monday’s ruling on Google by a US judge might impact the $20B+ the iPhone maker collects annually from the search giant. The stock is fluctuating even as global tech stocks rebound on Tuesday.
• Cadence Design (CDNS US) shares rose 2.4% as Piper Sandler raised the recommendation on the software company to overweight from neutral after the recent decline in the stock.
• Celsius Holdings (CELH US) shares climb 8.1% after the energy-drink maker reported second-quarter revenue and earnings per share that topped Wall Street expectations.
• Chegg (CHGG US) shares slide 19% after the education technology company’s forecast for third-quarter adjusted Ebitda missed consensus estimates. Piper Sandler said this was a disappointing quarter from the company.
• CrowdStrike (CRWD US) rose 2.8% as Piper Sandler raised the recommendation on the cyber security company to overweight from neutral, saying investors should “opportunistically build positions at current levels.”
• Hims & Hers Health (HIMS US) shares rise 4.3% after the firm boosts full-year adjusted Ebitda guidance above the average analyst estimate. The telehealth company reported second-quarter revenue that beat estimates. Citi described the performance as “impressive,” but noted that the debate on GLP-1 weight loss drugs was far from over.
• Lucid (LCID US) shares jump 13% after the EV startup announced a commitment of as much as $1.5 billion from one of its biggest investors — an affiliate of Saudi Arabia’s Public Investment fund. Lucid also reported second-quarter revenue that beat the average analyst estimate.
• Lumen Technologies (LUMN US) shares soar 42% after the company said artificial intelligence demand has driven $5 billion of new business and that it is in talks for a further $7 billion in potential sales. Citi upgraded its rating on the stock to neutral from sell after the announcement.
• Yum China (YUMC US) shares jump 8.1%, after the fast-food chain operator’s restaurant margin held up better than expected in the second quarter despite a sluggish economy and weaker same-store sales. Analysts said the profit resilience was a result of stricter cost controls and initiatives such as staff and space sharing between neighboring restaurants.
• ZoomInfo Technologies (ZI US) shares drop 15% after the infrastructure-software company reported second-quarter results that missed expectations and cut its full-year forecast for adjusted earnings. KeyBanc Capital Markets, DA Davidson and Raymond James all downgraded their recommendations on the stock to a hold-equivalent rating.

Underscoring the broad market angst, investors are rushing to insure their portfolios against an extreme market crash. And Wall Street’s “fear gauge,” the VIX index, remains at the highest level in almost two years. 

“We don’t expect a lull in the coming days,” said Christopher Dembik, senior investment adviser at Pictet Asset Management. The unraveling of the yen carry trade will continue to trigger margin calls and losses, while a sustained recovery in stocks hinges on central banks measures and big-tech earnings, he said. “I’m expecting the month of August to be red-tainted.”

Even so, the small moves suggested some calm is returning to markets. In an attempt to awaken animal spirits, Goldman’s David Kostin said that buying the S&P 500 after a decline of 5% has usually been profitable in the past four decades. According to Kostin, investors typically profit when buying the S&P 500 index following a 5% sell-off. Since 1980, an investor buying the S&P 500 index 5% below its recent high would have generated a median return of 6% over the subsequent 3 months, enjoying a positive return in 84% of episodes.

Mohit Kumar, chief economist for Europe at Jefferies, echoed Kostin’s sentiment saying that “the violent market moves over the last few sessions, in our view, present a buying opportunity.”

European stocks started off well in the green, but the buying waned with most European bourses now flat or lower; a paring which has occurred without a fresh fundamental driver. The Stoxx 600 was down -0.2% near session lows. Tech outperforms as it rebounds with Deutsche Bank also upgrading the European sector while Banks come in a close second place as they trim recent rate-driven downside. Here are the most notable European movers:

• Abrdn shares rise as much as 5.7% after the investment company reported profit ahead of estimates and an improvement in flows during the first half.
• Clariane shares rise as much as 16%, the most in a month, after the nursing home operator reaffirmed its organic revenue forecast for the year and reported improved free cash flow.
• Adecco shares gain as much as 5.8%, the most in over nine months, after the Swiss staffing company’s revenue undershot forecasts but was seen to have surpassed the trend at peers.
• Zalando shares jump as much as 6.9%, after the online fashion retailer reported second-quarter gross merchandise volume that came ahead of estimates.
• Rational shares rise as much as 5.4% after the German catering appliances maker reported Ebit that beat estimates for the second quarter due to stronger sales.
• IHG shares rise as much as 4.2%, the most intraday since February, after the hotel operator reported first-half earnings that beat estimates.
• Bayer shares climb as much as 1.4% after the German conglomerate reported better-than-expected sales in the second quarter, helped by strong demand for new cancer and kidney drugs.
• YouGov shares jump as much as 23% after it said its full-year results should beat the guidance given back in June, as the company announced plans to cut costs and a new acquisition.
• Oerlikon shares gain as much as 11% after the Swiss chemicals company delivered results for the second quarter ahead of analyst expectations, boosted by a recovery in its Polymer Processing Solutions unit.
• Galenica drops as much as 5.7%, the most in more than two years after the Swiss health care retailer reported a weaker-than-expected 1H24.
• Domino’s Pizza shares drop as much as 7.7%, hitting the lowest intraday level since July 2023, after the UK pizza delivery store operator reported first-half results that Jefferies said pointed to a slow start to the year.
• Rightmove shares fall as much as 7.3% after the real estate portal said a contract with Openrent will terminate in September.
• Travis Perkins shares drop as much as 3.5% after the DIY and building trade supplier cut its profit guidance for the full year.

Earlier, Asian equities rose, helped by bargain hunting after concerns over a hard landing in the US drove a regional benchmark to its worst single-day drop since 2008. The MSCI Asia Pacific Index jumped as much as 4.2%, heading for its best day since November 2022, following a rout of more than 6% on Monday. Japan led the rebound as the yen eased following steep gains against the dollar that drove the nation’s stocks into a bear market. The Topix index closed with a 9.3% gain, the biggest single-day rally since 2008. Regional equities came under the kosh in the previous two sessions as investors fretted over a possible US recession in addition to overheating of the artificial intelligence rally. Meanwhile, the rapid surge in the yen triggered unwinding of carry trades across the globe, weighing on technology stocks.

“The market reaction was a bit extreme yesterday and hence we see this sharp rebound today,” said Rupal Agarwal, Asia quantitative strategist at Sanford C. Bernstein. “I would expect markets to remain volatile and hence would stick to looking for late-cycle defensive exposure through quality or dividend yielding names.”

In addition to Japan, stocks bounced back Tuesday in technology-heavy South Korea and Taiwan. Chinese stocks were mixed even as local brokerages talked up the prospects of the market in the face of a global selloff.

In FX, the yen dropped after rising to its highest level in seven months, taking a breather from the rally stoked by wagers on further Bank of Japan policy tightening. USD/JPY rose as much as 1.5%, after falling to as low as 141.70 on Monday, the lowest since Jan. 2. Leveraged clients who had previously sold spot higher up bought back, according to an Asia-based FX trader. Bloomberg Dollar Spot Index rose 0.3%. The BOJ’s monetary policy tightening last week has triggered a wave of criticism after it helped set off a historic plunge in Japanese stocks and contributed to global market turmoil — likely putting any plans for further interest-rate hikes on ice.

“Volatile financial market conditions, especially rapid JPY appreciation, are lowering the probability of an October-rate hike” by the BOJ, according to an ING note. “The short-term market volatility won’t change the course of the BOJ’s policy normalization, but the pace may be slower than we expect if it continues.”

In rates, US Treasuries fell as the strong demand for haven assets that marked the start of the week waned globally. Treasuries were cheaper by 3bp to 6bp across the curve in a bear-flattening move with intermediates leading the weakness on the day. The 10-year yield is around 3.86% about 7bp cheaper on the day, trailing bunds in the sector by 8bp, gilts by 4bp; belly-led losses flatten 5s30s spread by nearly 4bp while 2s10s is little changed at around -14bp following Monday’s brief disinversion. Investors pivot from haven demand to supply pressure, with first of this week’s three coupon auctions ahead at 1pm New York when the Treasury will hold a 3-Year, $58BN note auction to be followed by 10- and 30-year sales Wednesday and Thursday. WI 3-year yield ~3.81% is roughly 60bp richer than last month’s, which stopped through by 0.8bp.

In commodities, oil held near a seven-month low as a halt in production at Libya’s biggest field refocused attention on the Middle East. Gold steadied after being pulled into Monday’s global rout, when it slumped as some traders cut holdings to cover potential margin calls.

Looking at today’s market calendar, the US economic data slate includes June trade balance at 8:30am. No Fed speakers are scheduled

Market Snapshot

• S&P 500 futures up 0.8% to 5,261.50
• STOXX Europe 600 up 0.5% to 489.66
• MXAP up 3.3% to 171.48
• MXAPJ up 1.2% to 536.84
• Nikkei up 10.2% to 34,675.46
• Topix up 9.3% to 2,434.21
• Hang Seng Index down 0.3% to 16,647.34
• Shanghai Composite up 0.2% to 2,867.28
• Sensex little changed at 78,816.70
• Australia S&P/ASX 200 up 0.4% to 7,680.64
• Kospi up 3.3% to 2,522.15
• German 10Y yield little changed at 2.19%
• Euro down 0.2% to $1.0934
• Brent Futures up 0.2% to $76.49/bbl
• Gold spot down 0.0% to $2,409.98
• US Dollar Index up 0.25% to 102.95

Top Overnight News

• Japan’s government and central bank sought to show a united front and restore calm to financial markets, after the biggest stocks plunge in more than three decades triggered criticism of monetary policy tightening and cast a shadow over efforts to get households to invest their assets. With some pointing fingers at the central bank’s decision to hike rates last week as part of the trigger for the market turmoil seen in the last few days, the government appears to be trying to show it’s standing with the BOJ remains unchanged. BBG
• Japan cash earnings come in ahead of expectations at +4.5% headline (vs. the Street +2.4%) and +1.1% core (vs. the Street -0.9%), placing hawkish pressure on the BOJ (although household spending fell short). RTRS
• Australia’s RBA leaves rates unchanged (as expected) and rules out a near-term cut given ongoing inflation risks. RTRS
• Samsung’s HBM chips being stockpiled by Chinese firms as they worry having availability limited in the future by US restrictions. RTRS
• U.S. central bank policymakers pushed back on Monday against the notion that weaker-than-expected July jobs data means the economy is in recessionary freefall, but also warned that the Federal Reserve will need to cut rates to avoid such an outcome. Many of the latest job report’s details leave “a little more room for confidence that we’re slowing but not falling off a cliff,” San Francisco Fed President Mary Daly said at an event in Hawaii. RTRS
• Monday’s market rout increases both the risks of recession and a more harrowing financial-market accident. But for Federal Reserve officials who laid the groundwork last week to cut rates by a quarter-percentage point at their meeting next month, the outlook would likely need to deteriorate further in the coming weeks to compel a bigger response. WSJ
• A smaller share of US banks reported stricter credit standards in the second quarter, according to the Federal Reserve. The net share of US banks that tightened standards on commercial and industrial loans for mid-sized and large businesses fell to 7.9%, the lowest since 2022, data from a Fed survey of lending officers released Monday showed. That was down from 15.6% in the prior report. BBG
• Nvidia issued a statement regarding Blackwell production concerns and while it doesn’t address them directly, the company notes that Hopper demand is very strong while broad Blackwell sampling has commenced with production on track to ramp in the second half of the year. Marketwatch
• Execs at Boeing and Spirit AeroSystems face a grilling by the NTSB as it tries to uncover any remaining mysteries surrounding the 737 Max 9 that lost a large fuselage panel mid-air in January. BBG
• Fed’s Daly (voter) said risks to Fed mandates are getting in more balance and minds are open to cutting the rate in coming meetings, while she noted concern is that they will deteriorate from the current place of balance in the jobs report but added that they don’t see that right now. Daly said the July jobs report reflected a lot of temporary layoffs and hurricane effect although she noted that if they react to one data point, they would almost always be wrong. Furthermore, Daly said none of the labour market indicators she looks at are flashing red right now but she is monitoring them carefully and said the Fed is prepared to act as it gets more information.
• US Vice President Harris officially won the Democrat presidential nomination.
• Google will appeal a US District Court ruling that it illegally maintained an online search monopoly by paying companies like Apple to make its search engine the default, TechCrunch reports. The decision, a significant defeat for Google, could reshape its business and the internet’s structure.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks were mostly positive as the region rebounded from the recent market turmoil – Nikkei futures saw an upside circuit breaker triggered, while the Korea Exchange activated sidecars for the Kospi and Kosdaq after early surges. ASX 200 traded higher albeit within a confined range as participants awaited the latest RBA policy announcement, while the central bank provided no major surprises as it kept rates unchanged and maintained its hawkish tone. Nikkei 225 bounced back aggressively following its largest-ever daily point drop and reclaimed the 34,000 status. Hang Seng and Shanghai Comp. were somewhat lacklustre with the Hong Kong benchmark gave up initial gains, while the mainland lagged after a substantial daily net liquidity drain.

Top Asian News

• Japan’s Top Currency Diplomat Mimura says no comment on market moves; discussed big moves in financial, stock market with BoJ and FSA; government will work closely with BoJ. Share view that Japanese economy is making a moderate recovery. Discussed forex. Closely watching FX moves. Important for currencies to move in stable manner reflective fundamentals. Held meeting as there we big moves in the stock market. Communicating with authorities overseas on recent market moves.
• RBA kept the Cash Rate Target unchanged at 4.35%, as expected, while it reiterated that the Board remains resolute in its determination to return inflation to the target, is not ruling anything in or out, and inflation remains above target which is proving persistent. RBA added that returning inflation to the target is the priority and policy will need to be sufficiently restrictive until the board is confident that inflation is moving sustainably towards the target range. Furthermore, it upped forecasts for GDP, CPI and the Unemployment Rate with forecasts assuming the Cash Rate will be at 4.3% in December 2024, 3.6% in December 2025, and 3.3% in December 2026.
• RBA Governor Bullock says still risks inflation takes too long to return to target; progress on inflation has been slow for a year; need to stay on course with inflation; near-term cut in rates does not align with Board’s thinking. Board did consider a rate rise. Cut is not on the near-term agenda

Markets found some reprieve following yesterday’s hefty selling, Euro Stoxx 50 U/C; action which was led by a substantial rebound in APAC trade that saw the Nikkei 225 close with gains of over 10%, though not quite paring all of Monday’s record move lower. However, across the European session this strength has waned with European bourses now flat/lower; a paring which has occurred without a fresh fundamental driver. Sectors were primarily in the green, but are becoming increasingly mixed; Tech outperforms as it rebounds with Deutsche Bank also upgrading the European sector while Banks come in a close second place as they trim recent rate-driven downside. FTSE 100 -0.3% is the relative laggard, hit by pressure in defensive large-caps and as the housing sector slumps after  housebuilder updates, remains afloat overall due to its banking exposure. Stateside, futures in the green (ES +0.5%, NQ +0.6%) with the narrative the same as the above after the better-than-expected ISM Services began a rebound which looks set to continue. Numerous key earnings ahead incl. Caterpillar, Uber & more.

Top European News

• UK Chancellor Reeves said she wants to strengthen and deepen trade ties with the US and noted that the tax burden in the UK is too high, according to an interview with Bloomberg.
• UK Chancellor Reeves left the door open to higher borrowing to tackle the UK ‘fiscal hole’, according to FT.

FX

• DXY is managing to post modest intraday gains following yesterday’s choppy session, today’s range currently 102.69-103.09, which is well within yesterday’s 102.15-103.21 parameter.
• Upside which comes at the expense of GBP, EUR and mostly notable the JPY. Which are down to lows of 1.2700, 1.0908 respectively and USD/JPY as high as 146.36.
• Though, much of that initial JPY-pressure has pared after the morning’s meeting with MOF, FSA & BoJ officials did not include anything particularly pertinent in the readout.
• Antipodeans diverge; AUD leads after a hawkish RBA hold with the upside extending a touch as the Governor highlighted that a hike was considered.
• PBoC set USD/CNY mid-point at 7.1318 vs exp. 7.1454 (prev. 7.1345).

Fixed Income

• Core benchmarks under modest pressure with Bunds holding just under the 135.00 mark having spent much of the session sub-134.74 open. Briefly extended to a 135.12 peak, seemingly as crude slipped a touch before settling and then climbing once more post EZ Retail Sales & supply.
• A similar narrative for Gilts but with upside for the UK benchmark coming after a strong 2043 DMO tap, which came in better than the stellar prior; an auction which lifted the benchmark more convincingly back above the 100.00 handle.
• USTs holding just off 113-12 lows, which mark a new base for the week but markedly above Friday’s 112-21 base. As such, market pricing has shifted to no longer entirely price in a 50bp cut in September, with the odds of that back down to circa. 75%.
• US 3yr supply the afternoon highlight, and while USTs are at WTD lows it remains to be seen if this factors as concession after the moves on Friday/Monday
• UK sells GBP 2bln 4.75% 2043 Gilt: b/c 3.37x (prev. 3.29x), average yield 4.372% (prev. 4.519%) & tail 0.2bps (prev. 0.1bps)
• Germany sells EUR 3.284bln vs exp. EUR 4bln 2.50% 2029 Bobl: b/c 1.9x (prev. 2.0x), average yield 2.09% (prev. 2.39%) & retention 17.9% (prev. 18.4%)

Commodities

• Crude benchmarks have an underlying positive bias, but are off best levels. A bias which was driven by the overall recovery in sentiment and after bullish remarks from the Aramco CEO re. oil demand.
• Precious metals diverge a touch, XAU firmer but contained at its 21-DMA of USD 2412/oz while XAG slips.
• Base metals are mixed with specifics light and the bounce from yesterday’s downside being somewhat offset for the metals by the creeping USD strength.
• Venezuela’s Attorney General is to open a criminal investigation against opposition leaders Machado and Gonzalez.
• “Aramco President to Arabian Business: Strong demand returns to market fundamentals coinciding with the entry of the driving season…We expect oil demand to increase in the coming months”, via Al Arabiya. Adds, “Strong oil demand from China may continue during the second half of 2024”. Expects global oil demand of 104.7mln BPD in 2024 (vs 104.5mln in OPEC July MOMR), seeing more plans to replenish strategic inventories which will aid healthy demand. In July and early August, saw growth in jet-fuel demand and significant growth in China.
• “Iran, Saudi Arabia discuss expansion of bilateral ties”, according to IRNA.

Geopolitics

• US President Biden and VP Harris were told by the national security team it is unclear when Iran and Hezbollah are likely to launch an attack against Israel and the specifics of such an attack, according to a US official.
• “Chairman of Iran’s National Security and Foreign Policy Committee Describes Haniyeh’s Assassination in Tehran as a Declaration of War”, according to Sky News Arabia.
• US officials said US President Biden was informed of the expectation of a scenario for two waves of attacks, one of which is from Iran and another from Hezbollah. However, it is unclear to US intelligence who will attack first or the nature of the attack, while intelligence indicates that Iran and Hezbollah have not yet decided what exactly they want to do, according to Axios.
• US Secretary of State Blinken said the Middle East is at a critical moment and all parties must refrain from escalation, while it is critical that they break this cycle by reaching a Gaza ceasefire and parties should not look for a reason to delay or say no.
• US Secretary of State Blinken spoke to his Egyptian counterpart and Qatar’s PM on Middle East tensions, while Blinken delivered a consistent message to refrain from escalation and calm tensions in the Middle East. Furthermore, Egypt’s Foreign Minister called on his Blinken to pressure Israel to seriously engage in ceasefire talks in the Gaza Strip.
• Palestinian President Abbas said the killing of Hamas leader Haniyeh intended to prolong the conflict in Gaza, while it was also reported that Abbas is to visit Russia on August 12th-14th, according to RIA.
• Russia has started delivering advanced radars and air-defence equipment to Iran as the country prepares for a possible war with Israel, according to two Iranian officials familiar with the planning cited by NYT.
• Several US personnel were injured in a rocket attack on a base housing US troops in Iraq, according to three officials cited by Reuters. It was later reported that US Defence Secretary Austin spoke with Israeli Defence Minister Gallant on Monday and they agreed that the Iran-aligned militia attack on US forces stationed in Iraq marked a dangerous escalation.
• Explosions were heard in the Ukrainian capital of Kyiv after air raid sirens sounded, according to Reuters.

US Event Calendar

• 08:30: June Trade Balance, est. -$72.5b, prior -$75.1b

Authored by Lawrence Wilson, Jacob Burg, and Janice Hisle via The Epoch Times,

The Democratic Party officially nominated Vice President Kamala Harris for president late on Aug. 5 when delegates finished virtual voting.

Harris and former President Donald Trump are now deadlocked in a race that has taken presidential politics into territory uncharted in the modern era.

Within three days in late July, Trump survived an assassination attempt on the campaign trail, was formally nominated by his party, and named Sen. JD Vance of Ohio as his running mate.

Less than a week later, President Joe Biden withdrew from the race and endorsed Harris. She became the Democratic nominee on Aug. 5 without winning a single primary election, something that hasn’t happened since 1968.

“[It’s] like a giant jigsaw puzzle, with the pieces changing practically every day, or at least a couple times a week,” Susan MacManus, a political scientist from Florida, told The Epoch Times.

Ken Kollman, a political science professor at the University of Michigan, made a similar comment.

“Things have gotten really scrambled,” Kollman told The Epoch Times.

Despite these unusual circumstances, the old rules of politics still apply, according to political experts. The winner will likely be the candidate who can do three things well: maintain their core constituents, present an issues-based appeal to independent voters, and turn out the vote on Election Day.

Here’s the status of the race to date, and what each side is doing to gain an advantage.

Neck and Neck

Polling shows that the race is essentially tied at this point. Harris and Trump are each polling within the margin of error in national polls.

An Aug. 5 polling average compiled by FiveThirtyEight has the vice president up 1.7 percent nationally. A TIPP Insights poll, also released Aug. 5, shows Harris up 1 point.

The candidates are running close to each other in most of the battleground states of Pennsylvania, Michigan, Georgia, Wisconsin, Arizona, Nevada, and North Carolina, which could determine the Electoral College vote.

Recent polls have shown Harris with a slight lead in Pennsylvania and Wisconsin, and Trump leading in Arizona, Nevada, and North Carolina. Other polling shows a dead heat in Michigan and Georgia.

Harris’ entry into the race significantly changed the picture, as Trump had been leading Biden by several percentage points. However, the bump in polling could be a honeymoon effect based on her entry into the race, according to TIPP Insights.

Analysts agree that the race is still very much up for grabs. To negate Harris’ momentum, Trump will have to settle on new messaging, experts told The Epoch Times.

Trump Reboot

The Trump campaign appears to be searching for new messaging now that Biden has left the race, according to Aaron Dusso, a professor of political science at Indiana University, Indianapolis.

“I think they were surprised, like most of us, that Biden chose to step aside,” Dusso said. “They weren’t really prepared for that.”

To regain traction, experts say the Trump campaign must move beyond personal attacks and general promises to mount an issues-based campaign.

Personality-based campaigning will benefit neither side, according to MacManus, adding that both candidates would be wise to address “how they are going to solve a problem, and how their opponent is not.”

American political history professor Jeff Bloodworth said the Trump campaign should focus on this question: “Are you—or the world—better off” under the Biden–Harris administration than you were during the Trump administration?

“That was the subtext of the Trump–Biden campaign. That should be the text of the Trump–Harris contest,” said Bloodworth, who teaches at Gannon University in Erie, Pennsylvania.

“It’s the economy,” said Edwin Benton, a political science professor at the University of South Florida. “Always, what’s on the mind of the public is their pocketbook, economic issues.”

There is evidence that the Trump campaign is shifting its message in that direction. A political action committee supporting the campaign has aired a series of ads tying Harris to high grocery prices, rising crime rates, and the surge of illegal immigrants.

Harris Momentum

Harris has gained momentum in part because she is new to the race. Multiple experts said her greatest advantage may be her youth. At age 59, she entered a race in which age had been a significant handicap for her predecessor. She now appears as the fresh face running against Trump, who is 78.

In campaign speeches, Harris has presented herself as the candidate for a new generation.

“This campaign is about two very different visions for our nation: one focused on the future, the other focused on the past,” she told rallygoers in Atlanta on July 30.

The obvious line of attack for the Trump campaign is to identify Harris with her predecessor, experts said.

“Her biggest liability is her link to the Biden administration, a pretty unpopular president,” Kollman said.

“[Biden’s] weaknesses are her weaknesses,” Dusso said. “Continue to tie those together.”

In an email to The Epoch Times, Karoline Leavitt, national press secretary for the Trump campaign, said Harris must defend her support for the Biden record, including inflation, immigration, and foreign wars.

The Epoch Times requested comments from the Harris campaign but did not receive a reply by the time of publication.

Winning, Losing Issues

Both candidates have issues they can win with, and both would do well to present their core issues in a problem-solution formula, pundits said.

Harris’ strongest issue is abortion access, which has become a winner for Democrats following the overturning of Roe v. Wade.

“That, I think, has really been a major change in American politics,” Kollman said. He noted that abortion access is now the single most important for Democrats—and many Republicans—in the way the pro-life cause was for decades.

Trump holds a number of strong cards, experts said. Immigration continues to be a winning issue for Republicans, despite Harris’ attempt to nullify it by pointing out that Trump opposed a bipartisan border security bill earlier this year, which went on to fail in the Senate twice.

International affairs remain a strong point for Republicans also. According to Benton, the Biden administration’s position on Ukraine and Israel has been confusing. On the one hand, the administration has advocated military aid to Ukraine and Israel. But it has attempted to moderate the effect by prescribing how the weapons should be used.

“Joe Biden and Harris tried to play at both ends, and you can’t do that,” Benton said.

The winning formula in politics remains the same, according to Dusso: “Point to a problem, and say, ‘I have a solution.’”

Ground Game

Both campaigns have mounted efforts to rally voters in swing states. The Harris campaign has stated that it now has a network of staffed field offices in most swing states, and more than 500,000 volunteers focused on mobilizing voters, according to the campaign’s battleground director, Dan Kanninen.

The Trump campaign’s battleground initiative, Trump Force 47, has engaged tens of thousands of volunteers, Leavitt told The Epoch Times by email.

“We have paid staffers and volunteer-powered field programs in every battleground state, and they are expanding daily,” she said.

Both campaigns have impressive fundraising totals. As of May 24, the Harris campaign had about $96 million on hand. The Trump campaign had a balance of $128 million.

The Harris campaign said it has raised $310 million in July. The Trump campaign reported $137 million raised in July.

Voter Turnout

In the end, the race may come down to which candidate can rally his or her core voters on Election Day. For Harris, that means rallying younger people, who are historically the least likely to vote.

For Trump, that means turning out rural voters, especially men, who are also infrequent voters, according to Kollman.

Latino voters have been a historic demographic for Democrats but have been trending toward the Republican Party. Experts had mixed opinions on whether the Latino vote would shift decisively toward Trump or move back toward the Democrats.

Trump has also made inroads among black voters, but the experts are uncertain whether that will produce enough movement, especially in swing states, to affect the election.

Biden won a number of votes from disgruntled Republicans in the last election, according to Kollman. Harris has launched a campaign to round up those voters, but it’s uncertain whether she’ll inherit those who defected for Biden in 2020.

Despite the relatively brief window remaining in this campaign, it will take time for the dust to settle after Harris’ entry into the race.

“Everything’s brand new,” Dusso said, adding that it will take a couple of weeks to figure out where the polling will land after voters get used to Harris as a candidate.

The candidates now have less than three months to settle on the best issues and messaging to present to the voters. The general election is Nov. 5.

Elon Musk responded to X user Wall Street Silver’s post, citing a New York Times report that revealed Musk’s social media company would shift its San Francisco office outside the highly taxed, crime-ridden metro area controlled by left-wing progressives.

Musk said X had “no choice” but to close its Market Street office in downtown San Francisco. He said, “It is impossible to operate in San Francisco if you’re processing payments,” adding, “That’s why Stripe, Block (CashApp) & others had to move.” 

No choice. It is impossible to operate in San Francisco if you’re processing payments.

That’s why Stripe, Block (CashApp) & others had to move.

— Elon Musk (@elonmusk) August 5, 2024

NYTimes’ report cited an email from X’s chief executive, Linda Yaccarino, to employees on Monday explaining that workers from the downtown office will be shifted to existing offices in San Jose. X will also open an engineering-focused office in Palo Alto for X employees that will be shared with Musk’s artificial intelligence company, ‘xAI.’ 

“This is an important decision that impacts many of you, but it is the right one for our company in the long term,” Yaccarino wrote to employees.

Last month, Musk said he was moving SpaceX from Hawthorne, California, to the company’s rocket launch site in Texas. He also said X would move from San Fran to Austin, Texas. 

This move stems not just from high taxes and the crime-ridden metro area. All brought to you by progressive politicians who are not rooted in reality but also a recently signed law by California Gov. Gavin Newsom that bars school districts from requiring staff to inform parents of their child’s gender identification change.

This gender bill was the “last straw” for Musk. 

This is the final straw.

Because of this law and the many others that preceded it, attacking both families and companies, SpaceX will now move its HQ from Hawthorne, California, to Starbase, Texas. https://t.co/cpWUDgBWFe

— Elon Musk (@elonmusk) July 16, 2024

“I did make it clear to Governor Newsom about a year ago that laws of this nature would force families and companies to leave California to protect their children,” Musk wrote on X in mid-July. 

I did make it clear to Governor Newsom about a year ago that laws of this nature would force families and companies to leave California to protect their children

— Elon Musk (@elonmusk) July 16, 2024

In a conversation with Jordan Peterson last month, Musk revealed his son, Vivian Jenna Wilson, received gender-affirming care, explaining, “I was essentially tricked into signing documents for one of my older boys … This was really before I had any understanding of what was going on, and we had Covid going on, so there was a lot of confusion and I was told (Musk’s child) might commit suicide.” 

“I was tricked into doing this,” Musk said, adding, “I lost my son, essentially. They call it ‘deadnaming’ for a reason. The reason they call it ‘deadnaming’ is because your son is dead.”

Meanwhile, according to the latest data from CBRE, San Francisco’s office vacancy rate is the highest of any US metro area, exceeding 36%. Any recovery in the metro area will take years.

A spokesperson for San Francisco Mayor London Breed told Bloomberg, “Our focus remains on working with and supporting the many businesses that call SF home, from global headquarters to leading AI companies and thousands of small businesses.”

In California, it’s one policy mistake after another.

Whether it’s on crime, social issues, or the economy, progressive politicians are proving to be extremely poor managers, disconnected from the realities of how a functioning society should operate. And perhaps that’s intentional as they install the ‘woke’ religion into all facets of government. Business owners and residents who see this are running for the hills.  

In March, Nvidia Corp. disclosed that CEO Jensen Huang’s Rule 10b5-1 trading plan included selling 600,000 shares (or about 6 million shares accounting for the 10-for-1 stock split) by March 31, 2025. He has already sold millions of shares, effectively top-ticking the market. This news should have served as a clear warning sign to investors that the AI bubble was approaching a peak.

Data from Bloomberg shows Huang’s daily sale of 120,000 shares began on June 13. The selling was indiscriminate. Most of it was sold between $135 and $109 from June through July. The selling continued into the downward draft in recent days. 

Since the beginning of June, Huang dumped millions of shares.  

“While the June and July sales were executed under a 10b5-1 trading plan adopted in March, the timing proved fortunate,” Bloomberg noted, adding, “Huang has personally sold about $1.4 billion in shares since the start of 2020, including this summer’s sales.” 

Meanwhile, The Information recently reported that Nvidia has informed Microsoft and other cloud providers that its most advanced AI chip models in the Blackwell series (B200 AI chip) face three months of delays following the discovery of a design flaw “unusually late in the production process.”

This is troubling news for Nvidia and the AI bubble, especially after Goldman’s head of research admitted just weeks ago that AI is indeed a bubble. Compound this all with global stock market turmoil – and the AI bubble faced more unwinds today. 

Another stock market omen of insider dumping was billionaire investor Warren Buffett’s Berkshire Hathaway, disposing of 90 million Bank of America shares in recent weeks.

We called Buffett’s selling a ‘dump-a-thon’ last week. It was a warning sign that the billionaire saw trouble ahead.

Furthermore, Buffett quietly dumped half of Berkshire’s Apple shares in the second quarter while increasing the company’s cash pile by a record $88 billion to an all-time high of $277 billion at the end of last quarter. 

The big takeaway is that insiders know best when to sell and when to buy.

Authored by John Haughey via The Epoch Times (emphasis ours),

The nation’s utilities generated 5 percent more electricity during the first six months of 2024 than the first half of 2023 because of a hotter-than-normal start to summer and increasing power demands from the commercial sector, the Energy Information Administration (EIA) reported in its July Short-Term Energy Outlook.

Some fear intermittent renewable energy from the sun, the wind, water pressure, or geothermal steam cannot reliably keep pace with rapidly growing energy demands without redundant fossil fuel generation unless, or until, battery storage and transmission technologies advance.

Renewable energy sources—solar, wind, geothermal, biomass, hydro—constitute nearly 95 percent of that added capacity and now generate more than 21 percent of the nation’s electricity, eclipsing coal as a source last year, the EIA said.

The EIA projects that global electricity demand could increase between 30 percent to more than 75 percent of current capacity by 2050, with as much as two-thirds of electricity to come from nuclear and renewables.

The agency projects U.S. power plants will produce 2 percent more electricity during the second half of 2024 than in 2023, with solar power adding 36 billion kilowatt-hours, a 42-percent increase over the new solar power added in all of 2023.

With the additions, the sun now generates nearly 4 percent of utility-scale electricity and powers 7 percent of the nation’s homes, the EIA said, citing solar energy as the nation’s “fastest-growing U.S. source” for electricity generation.

The Washington-based Solar Energy Industries Association (SEIA), which did not return requests for comment from The Epoch Times, maintains that renewable energies are poised to dramatically accelerate, especially solar power.

SEIA in May announced there are 5 million solar installations now generating electricity nationwide, a 400-percent increase in less than a decade.

“This milestone comes just eight years after the U.S. reached 1 million installations in 2016,” SEIA said in a press release, noting it took more than 40 years to get to 1 million installations after the first one came online in 1973.

SEIA, which represents 1,200 companies engaged in the $60 billion solar energy industry, maintains that solar power plants in the United States will double to 10 million by 2030 and triple to 15 million by 2034.

Its major solar projects list includes more than 7,050 proposed projects with the capacity to generate 250 gigawatts (GW)—1 GW equals 1 billion watts. According to SEIA, 97 percent is used in homes with 36 GW installed through 2023.

The Federal Energy Regulatory Commission’s (FERC) May Energy Infrastructure Update, posted on July 15, shows 50 “units” of solar totaling 2,517 megawatts (MW)—1 megawatt equals 1 million watts—went into service in May.

With wind and hydro, the three sources accounted for 94.23 percent of new capacity added to the grid in May with natural gas kicking in less than 6 percent. At least 10 solar projects received preliminary nods during FERC’s July 25 meeting.

Sunny Prospects

Among the proposed solar projects being permitted is the largest ever planned in North America.

The Department of Interior announced on July 25 that the Bureau of Land Management (BLM) had advanced nine solar projects on federal public lands in Nevada and Arizona with the potential to generate enough electricity to power 2 million homes.

Eight of the nine solar projects are in Nevada, and seven of these are part of the Esmeralda 7 Solar Project, located on 118 BLM-managed acres, 30 miles west of Tonopah, about halfway between Las Vegas and Reno.

BLM is accepting comments through Oct. 24 on the Draft Programmatic Environmental Impact Statement for the 185-square-mile project in Esmeralda County.

If approved, the seven projects would generate up to 6.2 GW, enough to power 1.6 million homes, making it the largest single-site solar generator in North America. The contiguous installations will each have battery electric storage systems of at least 500 megawatts (MW).

BLM on July 25 published the final Environmental Impact Statement for the proposed 5,100-acre Libra Solar Project in Nevada’s Mineral and Lyon counties that would generate 700 MW and have a 700 MW battery electric storage systems capacity.

The bureau also opened a 30-day public comment period on a draft Environmental Impact Statement for the proposed 1,400-acre Elisabeth Solar Project 65 miles east of Yuma, Arizona, within the Agua Caliente Solar Energy Zone. The project would produce up to 270 MW of electricity and 300 MW battery electric storage systems.  A virtual public meeting on the project will be held on Aug. 14.

The Department of Interior notes there are an additional 70 utility-scale renewable energy projects in BLM’s permitting pipeline on public lands that could generate another 32 GW. The bureau is also initiating preliminary reviews of 166 solar and wind development projects, as well as more than 40 applications for site testing, it said.

Renewable energies are emphasized in the Department of Energy’s proposed $51.4 billion fiscal year 2025 budget with little accommodation for fossil fuels.

The proposed spending plan earmarks $10.6 billion for clean energy programs, including $502 million for vehicle technologies, $318 million for solar, $280 million for bioenergy, $199 million for wind, and $179 million for hydrogen.

The annual outlays don’t include $77 billion in renewable energy incentives in 2021’s Bipartisan Infrastructure Law. There are also, potentially, billions available in tax credits for renewable energy through 2021’s CHIPS & Science Act and 2022’s Inflation Reduction Act.

Storm Clouds on Horizon

While there are a growing number of proposals and a quickening pace of approvals, solar power—and renewables, overall—cannot keep pace with America’s mushrooming demand for more electricity, especially if fossil fuel-powered plants are removed before being replaced, utility and transmission system operators have said in House and Senate hearings.

Utilities and operators fear a disconnect between projected demand and the federal government’s power plant rules, liquid natural gas (LNG) export pause, public lands leasing policies, and near-total budgetary exclusion of fossil fuels, which generate 60 percent of the nation’s electricity.

The new EPA rules require coal plants to reduce greenhouse gas emissions by 90 percent by 2039 or close. There are about 200 coal-burning power plants that generate about 16 percent of the nation’s electricity that could be retired under the rule.

Twenty-five state attorneys general filed a May lawsuit challenging the EPA’s power plant rules. West Virginia Attorney General Patrick Morrisey, a Republican favored to win November’s gubernatorial race, said the rules could close the state’s nine coal-fired plants before the power they consistently generate can be replaced by reliable alternatives.

During a May 21 Senate Natural Resources Committee hearing, Chair Sen. Joe Manchin (I-W.Va.) said the renewable proposals and approvals won’t keep the lights on if the grid is not upgraded fast enough to transmit the new power.

The retiring two-term senator noted U.S. utilities have removed more than 100 GW of coal-fired electric power since 2021, while 2.6 million MW is “waiting an average of five years to connect” to the grid.

FERC Commissioner Mark Christie warned the House Energy, Climate, and Grid Security Subcommittee during a July 24 hearing that “the United States is heading for potentially catastrophic consequences in terms of the reliability of our electric power system” because, without fossil fuels, there will be costly and time-consuming gaps when there is no solar power being supplied to the grid.

“The core threat is two-fold,” he said, noting sky-rocketing demand is not being matched “on the power supply side“ where ”the supply problem is not the addition of intermittent resources such as wind and solar, but the far too rapid subtraction of dispatchable resources, especially coal and gas.”