Elon Musk's Influence and Behavior:
- Ronan Farrow's article reveals that Elon Musk has significant influence in government agencies such as the Defense Department, NASA, and the military.
- SpaceX powers internet data in Eastern Europe for government use, making the US government reliant on Musk's technology.
- Current and former officials treat Musk like an unelected official due to his influence.
- The article suggests that Musk is unhappy and potentially miserable, with associates connecting his erratic behavior to self-medication through substances like Ambien and ketamine.
Retail Shrinkage:
- Retailers are experiencing a rise in shrinkage, which refers to theft or shoplifting.
- Companies like Walmart and Target have reported increased profit pressure from higher shrinkage rates since 2019.
- Some retailers blame lack of prosecution for thefts in certain areas, leading to more theft incidents.
- The issue of retail theft may lead to store closures if not addressed.
Federal Reserve Outlook:
- Federal Reserve Chair Jerome Powell will speak at Jackson Hole and is not expected to move the goalposts regarding interest rate targets.
- There is speculation about whether he will hint at being closer to ending rate hikes or express satisfaction with current policy effectiveness.
- Market participants expect a pause in rate hikes in September, followed by uncertainty about further rate increases in November.
Inverse Relationship Between Stocks and Interest Rates:
- Since January 2021, there has been a negative correlation between stocks (S&P 500) and interest rates (10-year Treasury yield).
- When interest rates were higher over a 30-day period, the S&P 500 had an average return of -0.15%, while lower interest rates resulted in an average return of almost 3% after one year.
Investment Opportunity: Utilities Sector:
- The utility sector has underperformed the S&P 500 by approximately 20 percentage points over the past year but tends to trade within this range historically.
- Utilities are considered bond proxies due to their sensitivity to interest rates and are seen as a way to express the view that interest rates may have peaked or will reverse.
- Technical analysis shows support levels for utilities, making it an attractive investment option.
Apple's Earnings Performance:
- Apple consistently beats earnings expectations, leading to price spikes and volume spikes after each earnings report.
- The stock experiences a low volatility pullback before the next quarter's earnings release, creating a stair-step pattern in its uptrend.