Normalization Continues, a (Mini) Taper Tantrum, and Commodities Lose Momentum

Manufacturing growth continues to cool per the Philly Fed, which saw activity fall below expectations (23.1) at 19.4 in August as the sector moderates from its pandemic-era extremes. Normalization seems to be the watchword these days as economic surprises also slow and the red-hot housing market finally starts to release some air. But will demand start to climb once again as renters get hit with sticker shock? Stocks sold off this week in reaction to the Fed minutes and talk of tapering, though it’s possible a downtick was overdue. Recent reports do have us wondering how many of those sales were made while under the influence… Meanwhile, junk bond yields are climbing and copper prices look to be coming back toward earth, breaking below support and moving toward normalization along with iron ore. Finally, soaring shipping costs are plaguing global supply lines and new regulations—including one of the world’s strictest data-privacy laws—are weighing on China’s markets. What effects could these changes have on Big Tech worldwide?

1. Another Regional Fed survey shows normalization and a return to the old “slow growth”.

Source: The Daily Shot, from 8/20/21

2. Economic surprises have also normalized…or is the economy not as healthy as once thought?

Source: The Daily Shot, from 8/19/21

3. More normalization, this time in housing permits:

Source: The Daily Shot, from 8/19/21

4. A sad reality: Covid has caused, immigration aside, our population growth to stagnate:

Source: The Daily Shot, from 8/19/21

5. The Fed tapering talk has caused a mini (so far) taper tantrum. However, ’tis the season of corrections and it has been a while:

Source: BofA Global Research, from 1/1/71 to 8/16/21

6. Getting stock tips at a bar? Maybe phone brokerage apps should have a breathalyzer…

Source: The Daily Shot, from 8/20/21

7. U.S. high yield bonds are seeing yield increases. Has the canary stopped singing?

Source: Bloomberg, from 8/20/21

8. Dr. Copper broke support; is this the beginning of price normalization?

Source: The Daily Shot, from 8/19/21

9. Iron ore prices are normalizing, setting up steel to follow lumber:

Source: The Daily Shot, from 8/20/21

10. This Covid-driven anomaly is puzzling. Chips are difficult to make and get used in products. Shipping containers get re-used and are easy to make:

Source: The Daily Shot, from 8/20/21

11. New Chinese central government rules/regulations/mandates are hitting their stock market again:

Source: The Daily Shot, from 8/20/21

12. Most of this regulation is focused on tech:

Source: The Daily Shot, from 8/20/21