🐂 Winners and losers

Markets

Stocks declined on a day characterized by a mix of positive and negative developments for Wall Street. On the positive side, US retail sales surpassed expectations for the previous month, further validating the robust state of the economy. However, this impressive retail sales data prompted apprehensions about the possibility of prolonged higher interest rates. Additionally, Fitch Ratings issued a cautionary statement, indicating the potential need to lower credit ratings for numerous banks, among them JPMorgan.

Investors Need to Worry About the Bond Market’s Return to Normality

The bond market's behavior brings to mind Trillian, the character from Douglas Adams's "Hitchhiker's Guide to the Galaxy," stating, "We have achieved normality. I reiterate, we have achieved normality. Any challenges that still prove difficult for you are therefore your own responsibility."

On Tuesday, the bond market's most educated estimate of the genuine, post-inflation cost of capital—the yield on 10-year Treasury inflation-protected securities, also known as TIPS—reached 1.89%. This is the highest level since 2009 and comfortably back within the range that was once considered typical for the economy. The United States appears to have left the era of low interest rates in the past. But can it manage this transition?

The concern arises from the fact that over the span of a decade or more following the financial crisis of 2008-2009, during which interest rates remained nearly stagnant, often falling below inflation levels, the economy grew accustomed to easily accessible funds. Venture capitalists funded risky ventures in emerging technologies, businesses and investment funds accrued significant debt, and the government borrowed extensively, even during periods when the economy appeared to be on the upswing.

Economy

The inflation reduction act turns 1 year old

President Biden's ambitious clean energy initiative has progressed from its initial stages to a more mature phase, marking the one-year anniversary of the enactment of the Inflation Reduction Act (IRA).

Despite its name implying a focus on curbing inflation, the IRA primarily aims to inject an unprecedented amount of federal funds into accelerating the adoption of clean technology. This significant legislation opens the door to $394 billion in government funding and $367 billion in loans for various environmental projects, including:

• Subsidies directed towards companies engaged in the production of electric vehicle (EV) batteries, solar panels, wind energy equipment, and energy storage technology.

• Tax rebates of up to $7,500 for individuals opting to replace their gas-powered vehicles with EVs.

• Incentives for homeowners enhancing the energy efficiency of their residences, along with benefits for businesses and nonprofits doing the same for their premises.

• Additional measures designed to address a government budget deficit, such as reducing the prices that Medicare pays for prescription drugs and implementing stricter corporate tax regulations.

Impacts on Winners and Losers

The Biden administration positions the IRA as a triumph for the environment, American labor force, and domestic clean tech enterprises. Notably, the legislation has already encouraged prominent renewable energy manufacturers to invest a staggering $271 billion into projects across the nation, leading to the creation of 29,780 jobs within the past year, according to data from the American Clean Power Association.

Furthermore, the United States is witnessing the emergence of a hub for EV battery production, with car manufacturers announcing plans to establish new factories in Michigan, South Carolina, and New York.

However, in line with any comprehensive policy overhaul, certain parties are facing disadvantages. The "Made-in-America" stipulations for specific products to qualify for IRA incentives have raised concerns among European Union governments, who worry that clean technology produced within Europe may now appear less appealing to American buyers.

In addition, a labor union representing approximately 400,000 auto workers has expressed dissatisfaction, asserting that EV companies seeking to benefit from IRA funding may offer subpar employment opportunities for their members.

Future Prospects

While the IRA has already ignited significant activity within the realm of clean technology, the true impact of the law in ushering forth a renewable energy revolution will only become evident as more candles are added to its birthday cake in the years ahead.

Environment

Biden trip to Maui

President Biden has expressed his intention to promptly visit Hawaii in order to assess the extensive damage caused by the recent wildfires in Maui, which tragically claimed the lives of over 100 individuals. Unfortunately, this casualty count is projected to rise in the coming days. The origin of the fire, which has been the subject of various conspiracy theories circulating on social media, is currently being investigated, with researchers honing in on a potential malfunction within Hawaiian Electric's power grid. Video evidence, coupled with corresponding data, indicates that the power lines operated by the utility were responsible for igniting a separate fire in East Maui during the previous week. The stock value of Hawaiian Electric experienced another sharp decline recently, following a downgrade of its credit rating to "junk" status by S&P Global.

Health

Alcohol deaths in young women are rising

The gender disparity in alcohol-related fatalities between men and women is gradually narrowing. Recent research featured in The Journal of the American Medical Association has raised concerns among public health experts due to the notable trend of alcohol-related death rates increasing at a faster pace among US women compared to men.

The study, which delved into two decades of CDC data, revealed a significant development: between 2018 and 2020, the mortality rates associated with alcohol among women surged by nearly 15%, whereas men experienced an uptick of just under 13%. Despite this shift, men remain approximately three times more likely to succumb to alcohol-related deaths.

Various factors contribute to the rise in alcohol consumption among women. Tailored marketing campaigns and the prevalence of catchy "wine o'clock" merchandise, such as those found on Etsy, may significantly influence women who seek to project an image of success, prompting them to indulge in alcohol. This echoes a historical pattern, reminiscent of tobacco companies capitalizing on the women's liberation movement in the 1960s to promote cigarette usage. Notably, Professor of Epidemiology at Columbia University, Katherine Keyes, highlighted that middle-aged, well-off, and educated women are more prone to binge drinking.

Ironically, women are finding themselves juggling diverse achievements, including the potential risks of cirrhosis and liver disease. Medical professionals posit that women's relatively higher body fat percentage, hormonal fluctuations, and other physiological attributes render their organs more vulnerable to the detrimental health effects of alcohol consumption.

Tech

A streaming bundle costs more than a cable bundle

How much of a price surge would convince you to relinquish your ad-free access to every episode of Suits?

This is the question that major streaming platforms are grappling with as they implement a substantial 25% average increase in subscription fees, as reported by the Wall Street Journal. The combined cost of a selection of streaming services is set to reach $87 per month this autumn, marking a rise from $73 just a year ago, as stated by the Financial Times. To put it in perspective, the average cable package currently stands at $83.

The notion of affordable binge-watching seems to be undergoing a transformation. Most streaming platforms, excluding Netflix, have been incurring losses, investing tens of billions of dollars to generate an endless stream of content. However, the escalation of interest rates and pressure from shareholders have compelled these streaming services to confront their debts, effectively ending a phase where subscriber expansion took precedence over profitability.

Nevertheless, streaming platforms are gambling on the assumption that you'd rather enjoy uninterrupted viewing of the latest season of House of the Dragon, devoid of Swiffer commercials. Their wager might just be on target. In March, a remarkable 94% of Disney+ subscribers opted to absorb a $3 monthly increase rather than switching to a plan supported by advertisements.

Stepping back: Analysts caution that the combination of higher subscription costs and a potential dearth of new shows, given the ongoing Hollywood strike, could lead to a loss of subscribers. However, media companies remain optimistic about the future of streaming. July marked the first time cable television accounted for less than 50% of total TV consumption, with streaming claiming a record-breaking 39%, according to Nielsen data.

Interesting Chronicles

Homelessness is surging in America

Homelessness is witnessing a sharp surge across the United States. The count of individuals grappling with homelessness in the country has risen by 11% in comparison to the previous year of 2022. This increment stands out significantly, representing the largest leap since comparable government records commenced in 2007, as analyzed by the Wall Street Journal. To provide context, the next most substantial increase was 2.7% in 2019, excluding the tumultuous data from the pandemic period. Nonprofit organizations and government entities point to two primary factors contributing to this distressing escalation: the scarcity of affordable housing and available rental units, along with the ongoing opioid crisis.