* Russia will not resume gas flows to Europe until “collective West” lifts sanctions
* OPEC+ announces small cut in oil production
* Liz Truss is UK’s new prime minister, replacing Boris Johnson
* Russia sees risk of dire economic outlook via private internal report to gov’t
* Eurozone economic activity falls for second month due to weaker demand
* China announces another cut in forex reserve ratio to support the yuan
* CVS Health will buy in-home health-care company Signify Health for $8 billion
* Japanese yen falls to 24-year low vs. US dollar:

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The summer’s over and it looks like the summer rally is history, too.

US trading resumes tomorrow (Tues., Sep 6) after a long Labor Day weekend, with the backdrop of risk-off sentiment dominating recent activity in the major asset classes. Indeed, red ink splashed across markets near and far in August, based on a set of ETFs.

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Nomad Century: How Climate Migration Will Reshape Our World
Gaia Vince
Review via Datebook
In “Nomad Century: How Climate Migration Will Reshape Our World,” science writer Gaia Vince (“Transcendence” and “Adventures in the Anthropocene”) addresses how the climate chaos of the coming century will influence where and how we live. The essence of her thesis is simple: “People will have to move to survive.”
The complexity arises in the details: Vince suggests that of the roughly 8 billion people on the planet today, around 3.5 billion will be forced to move north within the next 50 years because “hotter temperatures combined with more intense humidity” will have made their environment unlivable. Which brings us to the thorniest question in this scenario: How? The sheer complexity of such a move is staggering.

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The Avoidable Costs of Index Rebalancing
Robert D. Arnott (Research Affiliates), et al.
May 2022
Traditional capitalization-weighted indices generally add stocks with high valuation multiples after persistent outperformance and sell stocks at low valuation multiples after persistent underperformance. For the S&P 500 Index, in the year after a change in the index, additions lose relative to discretionary deletions by about 22%. Simple rules, such as trading ahead of index funds or delaying reconstitution trades by 3 to 12 months, can add up to 23 basis points (bps). This benefit doubles when we cap-weight a portfolio not selected on market value, but based on the fundamental size of a business or its multi-year average market cap.

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* Russia’s energy influence over Europe is “over,” predicts analyst
* Global bonds market in first bear market in a generation
* US mortgage rates up more than 50 basis points over past two weeks
* Global manufacturing output fell back into contraction in August via survey data
* US ISM Manufacturing Index steady in August, reflecting moderate growth
* Amazon’s efforts to block unionizing efforts appear to fail
* Big tech is looking to shift a portion of production out of China
* US jobless claims fell last week, easing to lowest level in two months:

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Newton famously stated that for every action in nature there is an equal and opposite reaction. The same can be said for the stock market, which is forever discounting the future, albeit imperfectly and sometimes with hefty and long-running doses of noise. Hold that thought as we update the numbers on the assumption that higher (lower) prices/valuations align with lower (higher) expected returns.

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* Shelling delays UN inspection of Ukraine’s Zaporizhzhia nuclear plant
* China locks down Chengdu metro area of 21 million people
* Hopes for Fed pivot fades, taking a toll on stocks
* Cleveland Fed President expects benchmark rate to rise above 4%
* China’s factory activity contracted in August, private survey finds
* Eurozone manufacturing contracts again in Aug via PMI survey data
* US imposes tighter restricts on computer chip sales to China
* Gold at six-week low amid stronger dollar and firmer outlook for rate hikes
* Risk of gold falling below $1,700 is limited, predicts Standard Chartered
* Hiring at US companies slows in August to smallest gain since January 2021:

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