Fuel and Food Prices to Keep Inflation Front and Center for Consumers; Big Companies Split on Soft Landing By James Christie

Good day. The U.S. consumer-price index rose 0.2% in July, the same as in June, and continued moderate monthly readings would put inflation on a path toward the Federal Reserve's 2% target by late 2023 or early 2024. Unfortunately, prices at the gasoline pump are on the upswing. Producer prices for food may be poised to rise as well. On their own, costlier food and gasoline are unlikely to result in higher interest rates, since the Fed pays more attention to core inflation that excludes both. Still, gas and food prices pose a particular concern for the Fed and the prospects of avoiding a recession, because they disproportionately shape consumers' expectations of inflation. That in theory can stoke inflationary pressures as consumers press for higher wages to compensate. As for a potential economic downturn in the U.S., the feeling in some C-suites is that it is already here. In others, the mood is upbeat, underscoring a split among big companies over whether the Fed will be able to tame inflation without tipping the economy into a full-blown recession.

Now on to today's news and analysis.

Top News After Pulling Inflation Down, Gas and Food Threaten to Nudge It Up

While inflation continued on a downward glide path in July, economists say to brace for some turbulence in coming months as rising energy and food prices disrupt that process.

Gasoline is headed higher again. While its price rose just 0.2% in July, bigger gains are in store. Regular gasoline on Friday was up 30 cents a gallon from a month earlier at $3.84 Friday according to OPIS, an energy-data and analytics provider.

Meanwhile, producer prices for foods gained 0.5% in July from June, the most since November. The United Nations' index of food prices-which includes cereals, vegetable oils, sugar, meat and dairy products-climbed 1.3% in July from June, the second increase in four months after falling steadily from the 50-year high reached in March 2022.

What Top Executives Are Saying About a Soft Landing

Restaurant companies are upbeat while some advertising, media and tech companies say they have been mired in a recession for months, and real-estate firms are feeling the sting of high rates and low supply as home sales decline.

CFOs Are More Optimistic on Side-Stepping a Recession

What Wall Street's Top Recession Gauge Is Saying Now

Wall Street is growing confident the U.S. can avoid a recession. But one key market indicator is still sending seemingly bleak signals. Right now, yields on longer-term U.S. Treasurys remain far below those of shorter-term bonds, an anomaly known as an inverted yield curve that has earned fame as a harbinger of downturns. That has left many investors questioning what the inversion means now. Here is a look at the possible answers .

U.S. Economy Oil Firms Face Some Tough Decisions After Year of Big Spending

Oil prices are still considerably below last summer's highs, dragging down producer revenues. That is going to mean hard choices for businesses such as international major oil companies and independent drillers.

Women Own This Summer. The Economy Proves It.

A $1 billion-plus box office haul for "Barbie." A run on bracelet beads ahead of Taylor Swift shows. Fringed cowboy hats for Beyoncé concerts. Women splashed out big this summer, and it is only the start of the spending .

Can San Francisco Save Itself From the Doom Loop?

Local leaders are trying anything they can to keep San Francisco's struggling downtown core afloat, including paying retired, unarmed police like Mike Browne, who spent 30 years as a San Francisco cop, to keep an eye out for trouble.

The $900,000 AI Job Is Here

Companies are in the midst of an AI recruiting frenzy , and some are willing to pay salaries approaching seven figures for top talent. Firms are wooing machine-learning specialists, data strategists and other skilled practitioners.

What a $5 Million Retirement Looks Like in America

A $5 million retirement nest egg puts you in the top 0.1% of American households, and to find out what that buys in retirement , we spoke to retirees around the country with savings in that ballpark.

More From the "The Way We Retire Now" Series Tackling Retirement's Tricky Tax Questions Key Developments Around the World The Economic Losers in the New World Order

New tax credits for manufacturing green technology are drawing a flood of capital to the U.S. The European Union is trying to respond with its own green-energy support package. Some smaller players are getting left behind .

China's Worsening Economy Is Hurting Corporate America

China's deepening economic slump is damaging the fortunes of big American companies deeply rooted there, with some growing increasingly pessimistic that the country's long-awaited postpandemic boom will materialize..

China's Options for Retaliation Are Few After U.S. Investment Ban

China is unlikely to hit back at the U.S. blow for blow over the Biden administration's new investment ban on certain Chinese tech companies because Beijing is limited both in its ability and desire to fire a big salvo, analysts say.

How the U.S. and China Are Breaking Up, in Charts

Chinese Property Giant Country Garden Sends Distress Signal

China's largest surviving property developer said it expects to post its worst loss since going public 16 years ago, and estimated the red ink could be as much as the equivalent of $7.6 billion for the first half of 2023.

China's Deepening Housing Problems Spook Investors China's Home Buyers Are Waiting Out the Property Slump U.S. Office Woes and China's Slowdown Rattle Singapore's REIT Market Financial Regulation Roundup Can Big Banks Ever Fail Without Causing a Panic?

Global regulators spent more than a decade trying to ensure that a large bank could fail without any government support. This year's bank failures, such as that of Credit Suisse, show they are still working on it .

Private Markets Firms See Big Buying Opportunities in Bank Distress

Private markets firms are increasingly setting their investment sights on banks as traditional lenders retreat and the recent regional banking crisis weighs on balance sheets. But they are positioning themselves as friend rather than foe .

Some Wealthy People Want In on Green Tax-Credit Market

President Biden's climate law gives corporations a lucrative opportunity : Spend $910,000 to buy clean-energy tax credits and shave $1 million off your tax bill. Individuals should get the same deal, some tax advisers say.

A Crypto Mystery: Who Controls This Fast-Growing Stablecoin?

TrueUSD is one of the fastest-growing stablecoin. Its market value has more than doubled to about $3 billion since March, making it the fifth-largest stablecoin. No one is sure who controls it .

SEC's Whistleblower Chief Manages Growing Pains Amid Gains

In one of her first media interviews, Nicole Creola Kelly defended the Securities and Exchange Commission's whistleblower award program and said it treats every tipster equally , whether or not they have counsel.

Forward Guidance Monday (all times ET)

10:30 a.m.: Bank of Canada senior loan officer survey

11 a.m.: New York Fed's consumer expectations survey

Tuesday

2 a.m.: U.K. unemployment for July

8:30 a.m.: U.S. import and export price indexes for July; U.S. advance retail sales for July; New York Fed's Empire State manufacturing survey; Canada consumer-price index for July; U.S. business inventories for June

10 a.m.: NAHB/Wells Fargo Housing Market Index for August

10 p.m.: Reserve Bank of New Zealand interest rate decision

Research U.K. Recession Likely Despite Second-Quarter Growth

The U.K. is avoiding a recession for now but a contraction may lie ahead, Ruth Gregory, deputy chief economist at Capital Economics, writes in a note. The country's gross domestic product rose 0.2% in the second quarter, including a 0.5% exit rate in June, slightly ahead of the stagnation expected by economists for the period. But a relatively high number of working days boosted June's growth, and with interest-rate increases yet to take most of their toll, the U.K. is still probably heading for a mild recession later this year, starting with declining GDP in the current quarter, Gregory writes.

-Joshua Kirby

Commentary The Scary Math Behind the World's Safest Assets

"Bizarre" was how Biden administration officials described the timing of Fitch's downgrade of America's credit rating, but we might look back at 2023 as a pivotal year and the agency's move as a wake-up call , Spencer Jakab writes.

Is Germany's Economic Model Truly Kaputt?

More than two decades after Germany was famously called "the sick man of the euro" by The Economist magazine, investors must wonder if the country's industrial heart is once again critically weak, Jon Sindreu writes.

Basis Points The U.S. producer-price index rose 0.3% in July after flatlining in June, a slightly faster clip than analysts expected and a bit above consumer inflation. U.S. consumer sentiment fell slightly in August, as the preliminary reading of the University of Michigan's sentiment index declined to 71.2 from 71.6 in July. Economists surveyed by The Wall Street Journal had forecast a 71.7 reading. (Dow Jones Newswires) Mexican industrial production posted a third straight month of gains in June, led by an increase in construction activity, the National Statistics Institute said Friday. Output rose 0.6% seasonally adjusted from May and 3.7% unadjusted from a year earlier, bringing growth for the first six months of the year to 2.6%. (DJN) The International Energy Agency raised its forecast for global oil supplies next year while moderating its demand expectations, pointing to a more balanced oil market that could cap oil prices. In its monthly market report, the IEA said it expects supplies to rise by 1.5 million barrels a day next year, 300,000 barrels a day more than it was expecting last month. (DJN) Feedback Loop

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08-14-23 0715ET