Good Evening. Monday’s decline in U.S. stocks extended a sell-off that started last week following hawkish remarks made by Fed Chair Jerome Powell at the central bank’s meeting in Jackson Hole.
The Dow Jones was down 0.57%, while the S&P 500 sank by 0.67%. The Nasdaq once more took the lead in declines, falling 1.02% more.
TESLA IS IN TROUBLE AGAIN
The United Automobile Workers (UAW) union and Tesla Inc.(TSLA) had a dispute in 2017 over whether employees could wear shirts with union symbols. On Monday, the National Labor Relations Board (NLRB) made a decision that the ban was illegal.
In accordance with Supreme Court precedent, the ruling emphasizes that “any attempt to restrict the wearing of union clothing or insignia is presumptively unlawful and – consistent with Supreme Court precedent – an employer has a heightened burden to justify attempts to limit this important right.” NLRB Chair Lauren McFerran said.
How did it play out? The NLRB stated in a 3-2 decision that employers “has the burden to establish special circumstances” when interfering with employees’ rights to exhibit union symbols, and the majority “found that Tesla failed to establish special circumstances in this case.“
SHRINKING THE PORTFOLIO
This week, the Federal Reserve’s balance-sheet unwind is expected to pick up speed, which means the institution will start selling the Treasury bills it has been hoarding for nearly three years.
The Fed will increase its monthly limits for the number of Treasuries and mortgage-backed securities it will let mature to $60 billion and $35 billion, respectively, as part of its overall strategy to reduce its $9 trillion portfolio. The Fed will also use its $326 billion stockpile of T-bills as filler when coupons fall below the monthly level. Since coupons will be less than the new cap set by the monetary authority in September, bills will be redeemed for the first time in that month.
In September, $43.6 billion in Treasury coupons held by the Fed will mature, necessitating the release of $16.4 billion in bills as well. In October, it will also have to allow another $13.6 billion to mature. Up until September 2023, these will be the biggest drops for the bill portfolio.
Due to the fact that the Federal Reserve didn’t own any of the securities the previous time it engaged in so-called “quantitative tightening,” there has been intense interest in the Fed’s holdings of bills. Additionally, it’s crucial for money-market traders who have had trouble locating assets to invest in. They have primarily chosen to deposit surplus funds at the RPA facility, and a full listing of the Fed’s Treasury bills would have jolted the supply for investors.
THE WEEK AHEAD
The end of earnings… finally: The earnings reporting season has largely ended, but there are still a few potentially market-moving reports to come. Best Buy (BBY), HP (HPQ), Big Lots (BIG), Chewy (CHWY), Lululemon Athletica (LULU), and Broadcom (AVGO) are a few of the major companies that will provide traders with figures.
Jobs Report: On Friday, the August jobs data is released. The labor market has been unexpectedly resilient despite increasing interest rates and a faltering economy. This year, the economy has added 418,000 jobs on average per month.