INCHING CLOSER
According to the latest report released by the Commerce Department, the Personal Consumption Expenditures (PCE) price index in the U.S. showed a 0.2% increase in September. This uptick brought the overall 12-month inflation rate to 2.1%, inching closer to the Federal Reserve’s target of 2%. Meanwhile, core inflation, which excludes volatile food and energy prices, held steady at 2.7%, which suggests that although underlying price pressures have not decreased, they have remained stable. Overall, it is evident that inflation is progressing as anticipated, potentially leading to the Federal Reserve considering a rate cut at their upcoming meeting.
NOTABLE DECLINE
The most recent data on U.S. unemployment benefit applications has revealed a positive trend, as there was a significant decrease to the lowest level since May. For the week ending on October 26, initial claims fell to 216,000, surpassing economists’ expectations, while continuing claims also dropped to 1.86 million as reported by the Labor Department. This shows that there may be a reduction in layoffs and a stabilization in the job market. Nevertheless, it is worth remarking that the data has been volatile due to the aftermath of severe storms and a strike at Boeing Co. that may have affected the labor market trends. October saw a substantial number of job cuts, with Boeing announcing 17,000 layoffs, contributing to an overall increase in cuts announced compared to the previous year. Additionally, hiring plans for 2024 are at their lowest since 2016, highlighting potential challenges in the job market.
FROM BOOM TO BUST
Super Micro is currently grappling with the aftermath of a $50 billion stock collapse, a stark reminder of the potential pitfalls associated with the AI hype. Despite experiencing a remarkable growth surge, with its stock skyrocketing by a staggering 2,000% and securing a spot on the prestigious S&P 500 index, the company’s fortunes took a drastic turn for the worse. The abrupt resignation of its auditor, Ernst & Young, over concerns regarding financial statements, has sparked fears of delisting from the Nasdaq. Moreover, accusations of accounting manipulation from short seller Hindenburg Research have further exacerbated Super Micro’s predicament. These recent developments serve as a cautionary tale about the volatility of market sentiment and the risks posed by unchecked exuberance surrounding artificial intelligence technologies. As the company navigates through these turbulent waters, it underscores the need for prudence and scrutiny in the evaluation of AI-related investments.
PROFIT-TAKING
In the cryptocurrency market, Bitcoin has experienced some profit-taking after a strong week of gains, with the price dropping slightly before recovering. Other major tokens such as Solana’s SOL and BNB Chain’s BNB also saw losses, contributing to a 1.3% drop in the CoinDesk 20 (CD20) index. This shift follows two consecutive days of significant inflows into U.S. bitcoin exchange-traded funds (ETFs), totaling over $893 million as of yesterday, and bringing cumulative net inflows to $24 billion since their introduction in January. Moreover, the dominance of Bitcoin and growing institutional demand were highlighted by experts, with Bitcoin outperforming Ethereum by nearly 10% on a week-on-week basis. This positive skew in cryptocurrency and gold prices indicates an increasing preference for call options, showing investors’ bullish outlook on these assets’ prices.
INTERNATIONAL NEWS
The hope for a jumbo rate cut has been dwindling as Euro zone inflation spiked to a higher-than-expected 2% in October, as shown by preliminary figures from Eurostat released on Thursday. This increase, led by surges in prices of food, alcohol, and tobacco to 2.9% from 2.4%, has cast doubt on the possibility of significant interest rate adjustments. While core inflation held steady at 2.7% and services inflation remained at 3.9%, the Euro’s value rose against the U.S. dollar after the announcement, hitting a two-week high of $1.087. The European Central Bank, which has already made three rate cuts throughout the year, including quarter-point reductions bringing rates down from 4% to 3.25%, now faces uncertainties as markets had been predicting a 25-basis-point cut in December. The latest inflation data is crucial in influencing the ECB’s decision on whether to implement a jumbo half-percentage-point cut in interest rates at their upcoming December meeting.
