US Retail Sales: a strong August
US retail sales rose more than expected in August, marking the third consecutive monthly gain and highlighting the resilience of consumer spending despite tariffs, weaker sentiment, and a softening labor market.
Strength was broad-based, particularly in online shopping, clothing and sporting goods, supported by back-to-school demand and the wealth effect from equity markets.
- Retail sales +0.6% MoM vs. +0.2% est. (ex-autos +0.7%)
- Broad advance: 9 of 13 categories posted gains
- Consumer spending remains key support for US GDP
China vs Nvidia on Antitrust Law
China’s State Administration for Market Regulation has announced that a preliminary probe found Nvidia in violation of China’s antimonopoly laws. The issue centers on the conditions tied to Nvidia’s 2020 acquisition of Mellanox Technologies — which included guarantees to China about chip supply and non-discriminatory treatment — and whether those conditions have been met in light of subsequent U.S. export controls.
- The probe alleges Nvidia breached its commitments made during the 2020 Mellanox acquisition
- U.S. export controls since 2022 have restricted Nvidia’s ability to export advanced chips to China
- Beijing has also raised cybersecurity concerns over Nvidia’s H20 chip
Musk Buys $1 Billion of Tesla Stock
Elon Musk has made a major move in Tesla shares, purchasing about $1 billion worth of stock last week—his largest ever such transaction. The purchase has been interpreted by the market as a show of confidence in Tesla and some recovery in sentiment about the company’s future.
- Musk acquired 2.57 million Tesla shares at prices between $296–$371, marking his largest personal buy ever (~$1B)
- Before this, Musk’s last meaningful stock purchase was ~200,000 shares (~$10M) in February 2020, so this is a notable escalation
- He held ~13% of Tesla prior to the purchase; the move may also be tied to the upcoming shareholder vote on a proposed compensation package possibly worth $975 billion if targets are met
Source: Bloomberg, Goldman Sachs research
Increase in Capital Requirement
UBS Group AG is facing a $26 billion increase in capital requirements from the Swiss government, prompting the bank to consider various options to meet the new rules.
- Options on the table range from the dramatic — a merger or acquisition deal with a non-Swiss bank — to the more mundane, such as a range of technical tweaks that can put just enough capital away over the coming years
- The clash stems from measures unveiled after UBS’s government-brokered rescue of Credit Suisse in 2023. The firm’s enlarged size has prompted worries that Switzerland won’t be able to bail it out in any future crisis
- To increase capitalization, the bank can limit investor payouts or ask investors for more cash; It can also change the mix of the business units in the bank over time, in order to reduce assets
- UBS CFO has declared that the bank is looking at every option available, including the costs and trade-offs of each
The End of the Road for the ECB?
As widely expected the European Central Bank kept interest rates unchanged at 2.00% amidst contained inflationary pressures and risks on economic growth that have become more balanced.
- Policymakers gave no guidance concerning future moves signaling that data dependency will remain central
- President Lagarde expressed satisfaction saying inflation is where the ECB wants it to be, even if the outlook for prices remains “more uncertain than usual” due to volatile environment
- Traders reacted by reducing bets on additional easing – the market now doesn’t expect any further cuts during this cycle
- Updated quarterly projections released by the central bank show inflation will rise 1.7% next year and by 1.9% in 2027. GDP is seen rising 1.2% this year and 1% in 2026
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