🐂Sailing away

Markets

August has proven to be a challenging month for the S&P 500, and the situation didn't improve recently. US bank stocks experienced declines as multiple regional lenders faced credit downgrades. Concurrently, retailers, as you'll learn more about shortly, are grappling with an excess of products that are struggling to find buyers. Reflecting these consumer concerns, Nike's shares have entered their lengthiest period of consecutive losses, having fallen for nine consecutive days.

Investors Are Finally Making Money on Bonds and CDs. Be Prepared to Pay Taxes

Americans are capitalizing on increased yields from Treasury bills and other fixed-income investments, yet their enthusiasm could be tempered upon receiving their tax assessments. In the past five weeks, data from Refinitiv Lipper indicates that investors have injected a net total of $91.1 billion into money-market funds. This trend extends to various fixed-income assets like U.S. government bonds, high-yield bonds, bond funds, and even I bonds, which were so sought after last year that the Treasury Department's website crashed.

The impetus driving this shift back to fixed income is the enhanced returns these assets now offer. After yielding meager profits for over a decade, many of these investments are now generating annual returns of 4% or more.

However, this boosted return doesn't come without a caveat. The very investments that previously incurred minimal tax obligations a couple of years ago could now result in substantial tax liabilities during tax season. Notably, almost none of these investments have tax withheld, potentially leading to unexpected tax bills for many taxpayers in the upcoming spring.

Environment

Japan to send treated radioactive water into the ocean

Starting tomorrow, Japan will initiate a multi-decade process of releasing treated wastewater from the Fukushima nuclear plant into the Pacific Ocean.

Japanese authorities assert that this step is essential for decommissioning the plant, which was severely damaged in the 2011 earthquake and tsunami, leading to a nuclear catastrophe. Over the past 12 years, about 1.34 million metric tons of contaminated water from the nuclear facility have been stored in underground tanks. Ocean disposal is deemed the most viable solution.

However, this move has triggered a significant regional controversy. In July, the International Atomic Energy Agency (IAEA), the UN's nuclear watchdog, approved Japan's ocean discharge plan. Yet, neighboring nations, environmental advocates, and the seafood industry are pressuring Japan to explore alternative options.

Within Japan, a country that exported $2 billion worth of fish in 2022, concerns are mounting among seafood workers who fear reputational damage and potential loss of livelihoods. South Korea and China, primary importers of Japanese seafood, have already prohibited fish imports from Fukushima.

At the core of the issue lies tritium, an element that cannot be fully removed through filtration and can only be diluted. This has become a central point of contention surrounding the plan. Critics emphasize the potential risks of releasing tritium, which emits radiation. On the other hand, proponents argue that disposing of nuclear wastewater containing trace amounts of tritium has been executed in Japan and other countries before.

The treated water will contain 190 becquerels of tritium per liter, significantly below the World Health Organization's safety limit of 10,000 becquerels per liter for drinking water, as reported by the Tokyo Electric Power Company. In comparison, certain UK plants release 400 to 2,000 terabecquerels of tritium into the ocean annually. It's worth noting that Japanese plants also discharged terabecquerels of tritium prior to the Fukushima incident.

Nonetheless, critics, including the US National Association of Marine Laboratories, contend that critical questions remain unanswered, and there's insufficient evidence concerning the water's safety.

Retail

Dick’s had its worst day ever

The sporting goods retailer saw a nearly 25% decrease in its stock value following a cautionary announcement. This warning indicated that a rise in theft and sluggish sales of outdoor equipment would lead to lower-than-anticipated profits for the remaining part of the year. It appears that Dick's Sporting Goods is now pinning hopes on the popularity of pickleball to improve the situation.

In a parallel development, Macy's also shared disappointing results for the quarter. Their report revealed declining sales across various categories, with particularly significant drops in activewear and casual apparel. The CEO of Macy's mentioned that consumer spending habits are shifting towards experiences over goods this summer, potentially influenced by successful phenomena like Barbie's box office earnings surpassing $1 billion.

Education

Biden’s student loan repayment plan went live

The Biden administration has opened enrollment for its Saving on a Valuable Education (SAVE) program, aimed at student loans. This initiative has the potential to reduce monthly payments by up to 50% for certain borrowers and completely alleviate obligations for others. According to statements from both the White House and the Department of Education, the average borrower could realize annual savings of $1,000 through this new plan. It's worth noting that certain benefits might not take effect until the following summer. After his debt forgiveness plan was halted by the Supreme Court in June, President Biden is actively seeking ways to offer relief to student loan borrowers.

Tech

A wind-powered cargo ship has set sail

In a reminiscent nod to "Master and Commander," a maritime technique is making a comeback in 2023, offering an innovative solution to reduce the carbon footprint of commercial shipping.

A cargo vessel, specially outfitted with solid wing sails, recently embarked on a trial voyage, chartered by the food conglomerate Cargill. This journey from China to Brazil serves as a demonstration of fuel-efficient transport. The WindWings technology responsible for this innovation was developed by BAR Technologies, a UK-based company founded by experts in yacht racing.

Here's how it operates:

The cargo ship, named Pyxis Ocean, is equipped with two foldable sails made from a material similar to that used in wind turbines. These sails tower 123 feet above the deck when raised. These sails enable the ship to capture the power of sea winds for propulsion, resulting in a potential reduction of fossil fuel consumption by up to 20%. This concept could revolutionize the shipping industry, which heavily relies on oil-powered vessels and contributes around 3% of global carbon emissions. The adaptability of existing ships to incorporate wind propulsion presents a promising avenue for making older, fuel-intensive ships more environmentally friendly.

However, the technology faces challenges. The viability of WindWings on a commercial scale remains uncertain, possibly delaying its widespread adoption until a time when cruises become a favored vacation choice for the elderly. Cargill anticipates that it could take a minimum of seven to ten years for the accumulated fuel savings to outweigh the initial costs of installing the sails on the Pyxis Ocean.