🐂 Landfall

Markets

Investors continue to operate in a unique scenario where negative economic developments are interpreted as positive news (and vice versa), largely due to the influence of the Federal Reserve. Consequently, stock prices experienced an increase yesterday as market participants processed information indicating a slowdown in the labor market and a decrease in available job positions. The enthusiastic anticipation surrounding Apple's forthcoming iPhone event propelled its stock to higher levels.

Summer Spending Surge Shows Consumers Driving Economic Growth

In July, consumers displayed a rapid increase in their spending habits, and there was moderate pressure on prices. These indicators highlight the ongoing strength of the U.S. economy, even as interest rates are on the rise.

With the most recent data, it appears that the Federal Reserve is on track to maintain current interest rates next month. This approach is in line with the central bank's efforts to curb inflation without causing unnecessary economic strain.

The Commerce Department reported on Thursday that household spending, a pivotal factor in driving economic expansion, saw a strong 0.8% uptick in July. This marked an improvement from an upwardly revised 0.6% growth in June and represented the most rapid pace since January. Americans allocated more of their funds toward groceries, recreational items, vehicles, and services like housing, dining, and insurance. When adjusted for inflation, consumer spending showed a 0.6% rise in July.

In terms of the Fed's preferred measurement for consumer prices, the personal-consumption expenditures price index increased by 0.2% in July compared to the previous month, mirroring the pace seen in June. Core prices, which exclude the more volatile food and energy sectors, also experienced the same rate of growth. Economists regard core inflation as a more accurate predictor of future inflation trends compared to overall inflation.

Environment

Hurricane Idala pummels florida

Yesterday, Hurricane Idalia hit Florida's Big Bend region as a Category 3 storm, later weakening as it moved into Georgia and the Carolinas.

Marked as the most potent storm to make landfall in the sparsely populated area southeast of Tallahassee in 125 years, Hurricane Idalia rapidly gained strength from the warm waters of the Gulf of Mexico. With its unprecedented storm surge and maximum sustained winds reaching nearly 125 mph, the hurricane led to extensive flooding and the toppling of power lines, leaving over 400,000 people in Florida and Georgia without electricity.

Tragically, two traffic fatalities in Florida have been attributed to the storm. Search-and-recovery teams have been dispatched to the affected area, although a significant number of residents had evacuated before the worst of the hurricane struck. Notably, the storm managed to topple a century-old oak tree outside the Florida governor's mansion while sparing the state capital from its most severe impacts.

President Biden reached out to the governors of Florida, Georgia, North Carolina, and South Carolina, ensuring federal assistance in their states' recovery efforts.

The aftermath of the storm could result in substantial and costly damages. Prior to Idalia's arrival in Florida, insurance broker BMS predicted that any major hurricane sweeping through the state and moving into the Southeast would trigger a multibillion-dollar event for the insurance industry.

Just last year, Hurricane Ian inflicted nearly $100 billion in damages to the region. With the increasing frequency of dangerous and expensive extreme weather events due to climate change, property insurance companies have begun reconsidering their involvement in states with high risks, such as Florida and California.

In July, Farmers Insurance ceased issuing new policies for homes, automobiles, and umbrella coverage in Florida. Similarly, Bankers Insurance and AIG subsidiary Lexington Insurance have withdrawn from providing new policies in the state. AAA also announced its decision not to renew certain policies in vulnerable areas.

Looking ahead, the limited availability of insurance options and the high costs associated with insuring properties in Florida may result in some homeowners opting to go without coverage. This could potentially lead to severe financial hardships when it comes to rebuilding after a storm.

Health

Health officials urge reclassification of marijuana as a lower-risk drug

Leaders at the Department of Health and Human Services urged the Drug Enforcement Administration to ease restrictions on marijuana in a letter viewed by Bloomberg. Weed is currently considered a Schedule I substance under the Controlled Substances Act, putting it in the same category as LSD and heroin, but the letter said it should be changed to a Schedule III substance, like pain medications and testosterone. This would not legalize the drug, as many states have done, but it would bring down some of the barriers the cannabis industry is facing, such as being barred from banks, so stocks in the industry rose on the news.

Politics

Mitch McConnell freezes again

In a press conference held yesterday, Mitch McConnell, the Senate Minority Leader and a Republican representing Kentucky, experienced an abrupt pause in his speech and seemed unable to respond to reporters' inquiries for approximately 30 seconds. This marks the second such incident within a month for the 81-year-old political figure. These occurrences have prompted discussions about his health and his capacity to effectively guide his party throughout his ongoing term, which concludes in 2027.

However, concerns regarding the age and endurance of American leaders transcend party lines. A recent survey conducted by the Associated Press revealed that 77% of U.S. adults believe that President Biden, who is 80 years old, is too advanced in age to pursue a second term in office.

Tech

Amazon and google call a smart speaker truce

Tired of yelling at Alexa when you mean to yell at Google? Big Tech has found a solution.

This week, audio company Harman announced its new line of JBL Authentics: first-of-their-kind smart speakers that will simultaneously deploy both Amazon’s Alexa and Google Assistant.

How it works: The speakers, in addition to looking sick on your credenza, are unlike other assistant-agnostic speakers. You don’t have to manually switch between Alexa and Google or pick one during setup. Asked Google to play a song? You can tell Alexa to pause it.

Historically, Amazon and Google have not been interested in functioning seamlessly together. But this move toward interoperability comes as the Big Tech competitors face a flagging market for smart home devices and fierce competition for both assistants from rapidly advancing AI systems.

There’s a lot to overcome: Smart speaker shipments saw their sixth consecutive quarterly drop in the first quarter of this year, plunging by 30%, according to research firm Canalys. Amazon’s Alexa division was reportedly on track to lose $10 billion last year and was targeted in the company’s layoffs. Google has similarly struggled to generate buzz or significant revenue from its Assistant

Medicine

Drugstores will start selling OTC Narcan

For the first time, individuals all over the United States will have the opportunity to purchase an overdose-reversal medication that is as simple to use as Flonase, without needing a prescription.

Starting next week, major nationwide pharmacy chains such as Walgreens, CVS, Walmart, and Rite Aid will make available two-dose packages of Narcan, a nasal spray containing naloxone that effectively counteracts opioid overdoses. This product will be accessible both in physical stores and through online platforms.

The accessibility of naloxone has been a longstanding objective for public health experts, mainly due to the danger posed by Fentanyl-laced drugs, which can lead to fatalities before emergency responders can arrive. Nonetheless, concerns have arisen regarding the $45 retail price of over-the-counter Narcan, potentially making it unaffordable for those who need it most.

An interesting avenue comes from insurance:

Medicaid and Medicare already cover prescription naloxone, and several state Medicaid programs including those of Missouri, California, Massachusetts, Washington, Rhode Island, and Oregon have announced their intention to cover over-the-counter Narcan as well. Although private health plans often have limitations on coverage for non-prescription drugs, Blue Cross Blue Shield of Massachusetts has committed to fully covering nonprescription Narcan. However, this doesn't offer assistance to the 20% of people with opioid use disorder who lack insurance. Certain government and harm reduction initiatives provide Narcan for free, and these organizations can now place bulk orders for discounted two-dose boxes at a rate of $41 per box, facilitated by the manufacturer, Emergent BioSolutions.

There are other alternatives, including a generic version of prescription-only naloxone by Teva Pharmaceuticals, widely available for less than $10 out of pocket. Additionally, an over-the-counter alternative called RiVive is set to arrive in stores early next year and is expected to have a lower cost compared to Narcan.