According to Goldman Sachs, credit card companies are facing their highest losses since the 2008 financial crisis. The losses have risen rapidly since the first quarter of 2022, currently standing at 3.63%, up 1.5% from their lowest point in September 2021. Analysts predict they may rise further to 4.93%, at a time when Americans owe over $1 trillion on their credit cards, a record high. Analysts suggest the situation may resemble past cycles in the late 1990s and from 2015 to 2019, where losses increased after a period of strong loan growth. Studies show that losses typically peak six to eight quarters after loan growth peaks, implying that the credit normalization cycle is only halfway through. 

The return-to-office mandates by many employers are raising concerns about setbacks in workplace participation gains made by caregivers and working mothers. Work-from-home flexibility made it easier for caregivers to maintain their jobs, and in 2022, a record percentage of working women worked full-time. Economists are speculating that this could come to an end as the high cost of childcare makes returning to in-office jobs less economically justifiable. Childcare staffing shortages and the end of pandemic funding are also making childcare less accessible and affordable, which could force mothers out of the workforce. Some studies indicate that companies allowing remote work are more likely to retain female employees, and workers with caregiving responsibilities are more likely to leave their jobs when required to return to the office.   

The Vancouver Fraser Port Authority reports a 14% decline in container shipment volume at the Port of Vancouver during the first half of the year, compared to the same period in 2022. The decline is attributed to a weakening economy, which contracted slightly in the second quarter. While some sectors like grain exports saw a significant boost, other areas such as construction materials and auto parts experienced a decline. Additionally, a two-week strike by B.C. port workers in July had a negative impact on operations.  

Hedge fund managers are increasingly shorting ESG stocks to uncover misleading green claims and overvalued stocks due to record stimulus measures. They believe that overpriced ESG investments can be found across various segments of the market, especially as capital flows into ESG assets have far outpaced the number of compelling investment opportunities. The rise of short positions in ESG stocks reflects some investor skepticism about ESG claims while increasing efforts by regulators to prevent greenwashing has been a slow and drawn-out process. This trend is expected to continue as investors seek to identify companies with weak ESG foundations and inflated valuations. 

AI may not be able to solve all the market’s problems. The promise of AI has overshadowed a significant threat in the current era of Fed hawkishness in recent months, but that may be changing. While the equity market has thrived on optimism that AI and emerging technologies will boost growth, higher real yields mean a higher cost of capital, potentially pressuring tech companies. The prospect of higher rates has affected various assets, leading to concerns about defaults and delinquent payments. Real-world borrowing costs have continued to increase, spooking investors in recent days and leading to a selloff in equities. With real yields currently at decade highs, investors are once again becoming more cautious.   

Talk about a head rush. Passengers on Canada's Wonderland's Lumberjack ride had an unsettling experience over the weekend when the ride became inverted, leaving them hanging upside down for nearly 30 minutes. The park's maintenance team successfully brought the ride down, ensuring the safety of the guests. Two individuals reported chest pain and were attended to by the park's health center but didn't require further medical attention. Let’s hope the riders were rewarded with free funnel cake after that experience. 

Copper prices in London have experienced the widest contango (the current price of a commodity is lower than its future price) since at least 1994. This reflects concerns about rising inventories and a slowdown in global manufacturing. The cash contract for copper was trading at a $70.10 per ton discount to three-month futures on the London Metal Exchange, indicating ample immediate supplies. Copper prices peaked in January but have been under pressure due to China's slowing economic recovery and global monetary tightening. Increased copper inventories held at LME warehouses are contributing to this contango. With a Ph.D. in economics is Dr. Copper trying to tell us something? 

Wavering. Moody’s Investors Service is the only remaining major credit grader to assign the U.S a top rating of AAA. But....is now signalling that its confidence is wavering. Moody’s wrote yesterday, “while government debt service payments would not be impacted and a short-lived shutdown would be unlikely to disrupt the economy, it would underscore the weakness of U.S. institutional and governance strength relative to other Aaa-rated sovereigns that we have highlighted in recent years.” Markets have been on edging and watching for another downgrade after Fitch Ratings lowered the US rating earlier this year, citing concerns about political wrangling over the debt ceiling that took the nation to the brink of a default. Moody’s latest report, which leaves its rating of the US unchanged, is showing that U.S. debt sustainability and the politics around it will continue to be a theme through the remainder of the year. The report comes as Congress struggles to pass a short-term spending bill required to stop a government shutdown when the new US fiscal year begins in October.