BQC Afternoon Comments Sept 3.24

Macroeconomics:

The August unemployment report will come out this Friday and any revisions that need to be made to last month’s July report along with it.  Last month we found out that the US Labor Department has been overestimating the labor market by between 600K and 1 million jobs year to date. Should we take this next report with a grain of salt as well? Jerome Powell is expected to cut rates on September 18th and he keeps a close eye on the jobs markets. Anything higher than a 0.25% cut may be bad news for equity markets. Equity markets in particular the big tech socks are taking the biggest hits as we enter September. Nvidia and others pulling back the larger tech sector, while Buffet and managed money builds cash reserves for the next pull back. AI is still new. The costs of introducing artificial intelligence into any business is still very high and the returns are foggy and hypothetical in the short term. It is great that the world is excited about this new technology, but is it coming at a time that most will struggle to afford it. This market needs continuous ‘good news’ every week for the rally to continue, and bad news travels much faster. Hoping this Friday’s job report offers the former.

Ag Fundamentals:

Spring wheat harvest is wrapping up in South Dakota with the USDA reporting today 93% harvested compared to 83% last week and 95% last year. North Dakota spring wheat also reporting a +18% jump from 43% harvested last Monday to 61% harvested today, slightly behind the 5-year average at this time of the year. Minnesota spring wheat jumped +21% from 54% harvested last week to 75% as of today. I am hearing spring wheat quality concern chatter about low test weights, low protein and high moisture specs coming into the elevators over the last week. Hopefully the recent break in rain has helped the Northern Plains crop health and farmers finish this spring wheat harvest strong.

Weather:

Since checking this morning, the National Weather Service has dropped it’s probability estimates from 40% to 30% regarding the likelihood that two noticeable system will develop into a hurricane in the next 7 days. This allows for less opportunity for gulf moisture to help the low water situation in the lower Mississippi river valley.