Thursday's Final Takeaways: Diesel Prices Near Records Highs, OpenAI Data Breach

Marley Kayden (0:01)

Welcome back to Market On Close. I'm Marley Kayden here in Chicago, alongside Sam Vadas at the New York Stock Exchange. Some final thoughts on this session today. Diesel remains in focus as US prices sit near record highs with the national average up above $6.50 a gallon. That's up more than 75% from a year ago. The Trump administration is reportedly exploring a diesel export ban, but the US Chamber of Commerce, the Business Roundtable, and many other industry groups are warning that restricting exports could actually backfire because American refineries are already running near full capacity and produce more diesel than the country consumes. Jake Hanley of Tucrim broke this down for us earlier on Trading 360, saying that refiners could be forced to cut their overall production if they can't export that excess diesel, potentially pushing up prices for gasoline and jet fuel as well. Morgan Stanley then issuing a note echoing that same sentiment saying, quote, a diesel export ban could have the counterintuitive effect of an increase in gasoline prices if US refiners cut runs. There was also a company specific story that I thought was particularly interesting. We haven't discussed it yet, so let's talk about Lowe's. Lowe's is taking home improvement delivery to the skies. They're launching a drone delivery pilot with DoorDash and Alphabet's Wing in North Carolina. Customers can make orders of more than 100 select products through DoorDash, and then have those items delivered in as little as 20 minutes with wings, drones carrying roughly two and a half pounds per flight. Now, the service is aimed at a very specific pain point, getting that forgotten tool or screw or small amount of paint or another essential item to a customer in the middle of a project without having to take another trip to the store. Lowe's says the pilot program could expand to other locations if it's successful, putting the retailer alongside Walmart and Amazon as major players who are testing this drone delivery at scale. I did think that one was interesting, Sam, but what stuck out to you on the session today?

Sam Vadas (1:51)

Yeah, another interesting story. Australia saying an OpenAI agent broke into a government health data portal in one of the highest profile breaches of systems outside of the US. Prime Minister Anthony Albanese said the AI agent gained access to Medicare, which is Australia's universal health insurance program. The incident happened back in June, but Australia was only notified this month, to which Albanese said he was deeply disappointed. OpenAI said it found no evidence of patient records being accessed. That's the good news. Australia is now investigating the incident, including why the government system did not detect it in the first place.

Now switching gears back to home, a surprisingly strong read for the housing market to wrap up the summer buying season. The bar was low for new home sales in August, given all the other data we've been getting, but they grew 6.4 percent last month to 684,000, which is the highest level since December. July's data was also revised higher, so that is a bright spot for a market which has seen a lot of doom and gloom lately, with mortgage rates jumping north of 7 percent now. We also got strong initial jobless claims that came out this morning. New claims falling to 197,000 compared to the 201,000 expected, bringing them to levels not seen since the late 60s, pointing to some stabilization in the labor market after struggling over the summer and struggling with my words today it seems as well, Marley. But heading into tomorrow, what are you going to be looking out for?

Marley Kayden (3:20)

You can have two homes, Sam, don't worry about it. I still identify as a New Yorker even though I've been here for more than a decade in Chicago. But as far as tomorrow's concerned, I'm keeping a close eye on yields and oil prices of course, but we are getting the final consumer sentiment reading from the University of Michigan at about 10 a.m. Eastern. The preliminary reading was the second lowest on record since 1952, as consumers continue to worry about inflation and higher prices. The prelim headline index came in at 47.8, that was down more than 13 percent from a year ago. So we'll be curious to see what sentiment looks like. But how about you? What are you watching for?

Sam Vadas (3:54)

Well, we've got more Fed speak. So we're going to be hearing from John Williams and Beth Hammack. They're both on the docket tomorrow. It's been really interesting because the Fed speakers have all been quite hawkish, I would say. I would say that Fed's Anna Polson, obviously calling for additional rates increases, saying they may be needed to ensure inflation returns back to the 2% goal was fairly hawkish. Tom Barkin as well. Obviously, John Williams to Beth Hammack are going to be up. And they have previously said that there is more work to do very much on inflation expectations. And the outlook remains highly uncertain. So let's see what they have to say tomorrow, particularly as yields are on the rise already.