A lot going on yesterday. First we had the FBI director testifying in front of Congress. By the way, I hate it when congress people use these opportunities to grandstand about other issues. He was more forthcoming than the Secret Service director, but at the end of the day we want to know two things, how did this happen, and was it a conspiracy. We still don’t have answers to either.

Then we had Netanyahu testifying in front of Congress. What side you are on in that debate will decide whether you thought it was a good speech or not. Most notable was Kamala and Vance not being in attendance.

The night cap was Biden explaining why he decided to drop out of the race.

I didn’t bother to watch as we know why, he was forced out. The Democrats knew he was mentally compromised, they forced him out when they realized he couldn’t win. Harris Saves Democrats From Certain Defeat-WSJ

Donald Trump has led the 2024 race for a long time. He has generally led in the RealClearPolitics national average since Sept. 12, 2023. As for Joe Biden, since his catastrophic debate performance on June 27, it has been clear that he was headed for a massive defeat.

But after Mr. Biden’s withdrawal Sunday, Democrats are now back in the game.

The Republican’s most fruitful area of attack against Harris is probably going to be the border. Real interesting yesterday to see the media deny that she was ever named “Border Czar”. This montage is pretty funny.

ESG

ESG flows paint grim picture for active managers-Financial Newswire

The challenges facing active managers have been underscored by the latest Morningstar analysis around global sustainable fund flows revealing that active strategies accounted for all the outflows from the sector over the past three months.

ESG flows from Jefferies….

Retail flows into ESG products improved Q/Q in 2Q24. US ESG funds posted -$2.9B of outflows (7th qtr of cons. outflows), while non-US ESG inflows equaled +$4.6B (vs prev 8 qtr avg of +$19.6B). US outflows more than halved vs 1Q24, while non-US saw inflows increase vs +$0.5B in 1Q24. Active ESG fund performance continues to lag non-ESG funds in terms of % of funds outperforming benchmarks. New ESG fund launches are down -82% y/y for US and -39% y/y for non-US.

DEI

Merit, Excellence and Intelligence: an Anti-DEI Approach Catches On-WSJ

“A hiring process based on merit will naturally yield a variety of backgrounds, perspectives, and ideas,” he wrote on his company’s website last month, adding that casting a wide recruiting net was important. “We will not pick winners and losers based on someone being the ‘right’ or ‘wrong’ race, gender, and so on.”

Harley-Davidson sparks boycott call for going ‘totally woke’ with DEI policies-NY Post

Robby Starbuck, who has more than half a million followers on X, accused the Wisconsin-based company of having “gone totally woke” by hosting an LGBTQ+ boot camp at its offices, sponsoring Pride events and subjecting white employees to DEI indoctrination.

Did DEI crash 8.5M computers? CrowdStrike probed for sidelining its white, male coders-Daily Mail

The cybersecurity firm behind the software update that crashed millions of computers globally has been hit with a complaint over sidelining its white, male employees under a diversity-hiring scheme.

A conservative legal action group alleges that CrowdStrike favors women and minorities for jobs and promotions in coding, programming and other areas through diversity, equity, and inclusion (DEI) policies.

Market

That was ugly. SPY is now sitting on it’s 50 day moving average, which will be important support.

QQQs broke below, which is bearish.

Watch the 10 day on IWM, which is holding up much better than the others.

Watch the 20 day EMA on the Dow.

Some interesting earnings yesterday. TSLA and GOOGL were the obvious ones, but there was also VRT which is a data center smack in the middle of the AI trade. It got crushed, most likely because of this line..

"we expect a sequential decline in orders from an extremely high second-quarter."

This, along with GOOGL contributed to an unwind in the AI trade. I do continue to believe you buy dips in AI but it’s not going up in a straight line.

Another interesting report was Lamb Weston, the potato producer. They stated…..

"The operating environment has changed rapidly over the past twelve months as global restaurant traffic and frozen potato demand softened due to menu price inflation continuing to negatively affect global restaurant traffic."

What’s going on at restaurants continues to point to issues with consumers.

Further fueling concern about the consumer was an Op Ed by former NY Fed President Dudley…

I Changed My Mind. The Fed Needs to Cut Rates Now.-Bloomberg

Now, the Fed’s efforts to cool the economy are having a visible effect. Granted, wealthy households are still consuming, thanks to buoyant asset prices and mortgages refinanced at historically low long-term rates. But the rest have generally depleted what they managed to save from the government’s huge fiscal transfers, and they’re feeling the impact of higher rates on their credit cards and auto loans. Housing construction has faltered, as elevated borrowing costs undermine the economics of building new apartment complexes. The momentum generated by Biden’s investment initiatives appears to be fading.

Today Mohamed El-Erian joins in….

The Fed May Be Two Meetings Away From a Policy Mistake A soft landing for the US economy could too easily slip away if unhelpful, noisy data delay an interest rate cut beyond September.-Bloomberg

Speaking of AI, I think the next area of interest is going to be nuclear power. I took profits in NEE yesterday in my short term counter trend model, but still have a long term holding in it. NextEra considers restarting Iowa nuclear plant amid rising demand for carbon-free energy-CNBC.com

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