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.