US inflation came in above expectations – Commerzbank

US consumer prices rose by 0.2% in September from August, excluding energy and food by 0.3%. This is a tenth more than expected in each case. The data do not argue against further interest rate cuts by the Federal Reserve at its next meeting in November and beyond. But the big step of 50 basis points in September is likely to remain an exception, Commerzbank’s analysts Dr. Christoph Balz and Bernd Weidensteiner note.

Further decline in inflation appears to have stalled

“The better-than-expected labor market data for September have already removed the basis for speculation about a possible further big rate cut by the Fed. Now, the further decline in inflation also appears to have stalled. For the second month in a row, the consumer price index has surprised with a fairly strong rise in the core rate.”

“This is not reflected one-to-one in the personal consumption expenditure (PCE) deflator, the Fed’s preferred measure of inflation. Some prices have risen very sharply for which the PCE deflator uses a different data source or which are weighted significantly lower in the PCE deflator.”

“However, the optimism regarding a continuous easing of price pressure could be dampened somewhat. The data environment therefore also argues for a cautious approach by the Fed. It will therefore not deliver another jumbo rate cut of 50 basis points. And even a small move of 25 bp may now no longer a foregone conclusion in the eyes of market participants. However, we are sticking to our forecast of a 25 bp cut at the November meeting. After all, the easing in service prices has continued. These will also set the direction in the medium term.”

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Wall Street Hits New Record After Fed Minutes, CPI Eyed Next

Fed minutes show split over September cut but Wall Street rallies
Dollar eases from near 2-month high as focus turns to CPI report
Gold and oil steadier after recent losses

Fed Minutes Add Little Clarity

The minutes of the Federal Reserve’s September policy meeting published on Wednesday did little to end the uncertainty about the pace of rate reductions over the coming months. Policymakers were divided over whether 50 basis points was the appropriate size to begin the rate-cutting cycle and while a “substantial majority of participants” supported the move, it seems that some may have done so reluctantly.

Fed officials were also keen to stress that September’s outsized cut should not be interpreted as a signal for rapid policy easing.

Nevertheless, the somewhat less dovish-than-anticipated minutes did not spark much reaction in the markets, with expectations of a 25-bps rate cut in November falling only slightly.

Equity Markets Remain Upbeat

Shares on Wall Street briefly dipped after the minutes before recovering to finish the session higher. The closed at a new all-time high, suggesting investor confidence is high as traders enter the Q3 earnings season, which gets into full swing on Friday with the major bank earnings.

Nvidia (NASDAQ:) has been a key driver of the latest upswing on Wall Street amid strong demand for its new Blackwell AI chip. But its stock closed lower on Wednesday as the rally paused for breath. Google parent, Alphabet (NASDAQ:), also bucked the broader market trend as ongoing worries about the US government’s efforts to split the business continue to weigh on the stock.

Globally, the bullish sentiment has been bolstered lately by China’s latest stimulus policies. After the disappointment about the absence of any new measures in Tuesday’s press briefing, investors are hopeful there will be more details in the next scheduled announcement this Saturday. Specifically, markets want to see how Beijing will use fiscal policy to boost the economy, and in particular, the property sector.

Dollar Steady Ahead of CPI Report

In forex markets, the was trading flat near two-month highs against a basket of major currencies, as the climb in Treasury yields slowed. Against the , the greenback settled in the 149 region after reclaiming the handle yesterday.

Markets are likely to stay in consolidation mode until the release of the US CPI report at 12:30 GMT. The data is expected to show a drop in the headline figure to 2.3% but no change in core CPI at 3.2%. Any significant upside surprises that make a rate cut in November less likely could push the dollar even higher while putting an end to the rally in US equities.

Gold Halts Decline, Oil on Alert for Israel’s Next Move

Such a scenario would also be negative for , which has just managed to halt a week-long slide. The precious metal has been in a slow retreat as the dollar recovers from its late September lows. Heightened tensions in the Middle East have provided some support, but for oil, there’s been a sharp pullback this week as Israel weighs its response to the recent Iranian attack.

are slightly higher today, but a resumption of the pullback is likely unless Israel carries out its planned retaliatory strike in the coming days.

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South Korea’s Han Kang awarded Nobel Prize in Literature

South Korean author Han Kang won the 2024 Nobel Prize in Literature for “for her intense poetic prose that confronts historical traumas and exposes the fragility of human life,” the award-giving body said on Thursday.

The prize is awarded by the Swedish Academy and is worth 11 million Swedish crowns, the equivalent of $1.45 million Cdn.

The Nobel Prize was created by wealthy Swedish inventor Alfred Nobel, who in his will dictated that his estate should be used to fund “prizes to those who, during the preceding year, have conferred the greatest benefit to humankind.” The first awards were given out in 1901.

Past literature winners have included Rudyard Kipling, George Bernard Shaw, Herman Hesse, Ernest Hemingway, Pablo Neruda and Toni Morrison. Last year’s Nobel was awarded to Norwegian author and dramatist Jon Fosse.

Over the years, the literature prize has also picked winners well beyond the novelist tradition, including playwrights, historians, philosophers and poets, even breaking new ground with the award to singer-songwriter Bob Dylan in 2016.

The Nobel prizes are presented to the laureates on Dec. 10, the anniversary of Nobel’s death.

The Nobel Peace Prize will be announced by the chairman of the Norwegian Nobel committee in Oslo on Friday, with the Nobel committee announcing this year’s economic sciences award on Monday.

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Stellantis CEO plans major management changes, Bloomberg reports By Reuters

(Reuters) – Stellantis (NYSE:) CEO Carlos Tavares is planning a deep management reshuffle amid the automaker’s profit warning, Bloomberg News reported on Wednesday, citing people familiar with the matter.

© Reuters. FILE PHOTO: Stellantis CEO Carlos Tavares inaugurates the group's electrified dual-clutch transmission (eDCT) assembly facility in the Mirafiori complex in Turin, Italy, April 10,2024. REUTERS/Massimo Pinca/File Photo

Tavares may present his proposal at a board meeting scheduled to happen in the U.S. this week, the report said.

Stellantis did not immediately respond to a Reuters request for comment.

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US wholesale inventories revised lower in August By Reuters

WASHINGTON (Reuters) – U.S. wholesale inventories rose less than initially thought in August amid a sharp moderation in the pace of increase in motor vehicle stocks, a trend that if sustained could temper expectations for robust economic growth in the third quarter.

The Commerce Department’s Census Bureau said on Wednesday that wholesale inventories edged up 0.1%, revised down from the 0.2% gain estimated last month.

Stocks at wholesalers rose 0.2% in July. Economists polled by Reuters had expected that the rise in inventories, a key part of gross domestic product, would be unrevised at 0.2%.

Inventories climbed 0.6% on a year-on-year basis in August.

Private inventory investment contributed to the economy’s 3.0% annualized growth rate in the second quarter. Inventories and trade are the most volatile components of GDP.

The government reported on Tuesday that imports fell in August, helping to compress the trade deficit that month.

Trade is likely to be neutral on economic growth in the third quarter after being a drag for two straight quarters. Retail inventory data next week could shed more light on GDP growth estimates, currently converging around a 3.2% pace.

© Reuters. FILE PHOTO: Warehouse workers deal with inventory stacked up to the ceiling at an ABT Electronics Facility in Glenview, Illinois, U.S. December 4, 2018. Picture taken December 4, 2018 /Richa Naidu/File Photo

Wholesale motor vehicle inventories gained 0.1% after accelerating 1.4% in July. Excluding autos, wholesale inventories nudged up 0.1% in August. This component goes into the calculation of GDP.

Sales at wholesalers dipped 0.1% in August after surging 1.1% in July. At August’s sales pace it would take wholesalers 1.35 months to clear shelves, unchanged from July.

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Rising rents hit low-income groups hardest in Germany, study shows By Reuters

BERLIN (Reuters) – Poorer households in Germany, particularly single parents and people living alone, are suffering most from rising rental costs, a study showed on Wednesday, amid a looming recession and the country’s most severe property market crisis in a generation.

A report by the German Institute for Economic Research (DIW) showed that low-income groups allocate a larger share of their income to rent than wealthier households, with the gap steadily widening.

From 2010 to 2022, asking rents surged by 50% nationally and by up to 70% in large cities, while existing rents grew by 20%. The 20% of households with the lowest incomes spent over a third of their income on rent in 2021, compared to just a fifth for the wealthiest.

Single parents and individuals living alone are particularly vulnerable, spending on average 30% of their income on rent, compared to around 20% for families with children.

The percentage of overburdened households — those spending over 40% of their income on rent — has increased from 5% to 14% over the past 30 years, while social housing stock has declined.

The rise in rents adds to Germans’ cost of living crisis which has not eased despite a drop in property demand after a rise in interest rates and building costs.

To address the social housing shortage, the German government in 2021 set a target of building 400,000 apartments annually, but only 294,400 apartments were built last year.

In Berlin, where rents rose by over 40% in 2023 compared to seven years earlier, the city government tried to impose a cap on rent in 2020 which was later overturned by Germany’s top court as unconstitutional.

DIW study authors cautioned against broad rent control measures, saying they do not specifically aid low-income groups, instead calling for targeted support for low-income renters and an expansion of social housing.

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Former British diplomat Tom Fletcher named U.N. aid chief By Reuters

UNITED NATIONS (Reuters) – United Nations Secretary-General Antonio Guterres on Wednesday appointed former British diplomat Tom Fletcher as the new aid chief for the world body amid worsening humanitarian crises in the Gaza Strip, Sudan and elsewhere, largely driven by conflict.

Fletcher replaces Martin Griffiths, who stepped down at the end of June for health reasons.

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Is Polymarket Trump biased? By Investing.com

Investing.com — Analysts at Bernstein believe that a Donald Trump win at the upcoming election “would be incrementally positive for and crypto market.” They note that broader support for crypto assets across both candidates addresses any existential risks, however, there could still be “a wide range of Bitcoin price outcomes in the near term.”

In a Wednesday note to clients, Bernstein analysts discussed the recent divergence in odds at Polymarket – the largest election prediction market, with over $1.5 billion in betting volume on the U.S. presidential race – and assessed the Bitcoin price impact.

1) ‘The Polymarket Odds:’ The betting dynamics on Polymarket have shifted notably in Trump’s favor following his rally with Elon Musk in Butler.

Trump’s odds spiked by 6% in 24 hours, surpassing Harris, who had led the market for weeks. This shift contrasts with national polls, where Harris still holds a slight advantage, highlighting a major divergence between betting markets and polling data.

2) ‘What Do the Polls Say?:’ Despite Polymarket’s movements, traditional polls tell a different story. The race remains “neck to neck,” with Harris leading by 3% on average.

“Nate Silver’s Bayesian model which takes recent polls as inputs to determine a trend, is now giving a 3% lead to Harris, but in his commentary continues to suggest a ‘close race’,” Bernstein notes.

3) ‘Swing State Markets:’ Trump has a clear lead in key swing states on Polymarket, including Arizona, Georgia, and North Carolina, with gaps exceeding 20%. In Pennsylvania, Trump’s lead surged to 9% after the Butler rally. Harris still holds a narrow lead in Michigan and Wisconsin, though these margins have tightened.

4) ‘Polls vs. Polymarket:’ Bernstein also points out a historical underestimation of Trump by polls, as seen in 2016 and 2020. This raises the question of whether the polling lead for Harris should be wider for a more decisive victory.

Polymarket had reflected Harris’ polling advantage until the recent Trump surge, marking the first significant divergence since the Harris nomination.

5) ‘Is Polymarket Trump Biased?:’ In the note, Bernstein analysts also discussed the possibility of a pro-Trump bias, considering Polymarket’s blockchain infrastructure and Trump’s pro-crypto stance.

However, the firm argues that the liquidity and volume of bets make it unlikely that the market is skewed purely by bias.

“The liquidity is fairly robust now for it to indicate any biases or attempts to manipulate the market. This was evident in Harris’s odds being ahead of Trump all this while except the recent Trump divergence,” analysts said.

Moreover, given that crypto investors are already long crypto, they are more likely to support Harris as a hedge.

“Thus, we would rather expect more Harris demand from crypto investors. Further, Polymarket would have bettors beyond crypto investors for the kind of volume being traded,” Bernstein added.

6) ‘What Should One Do with Bitcoin and Other Crypto Assets?:’ Bernstein maintains that Bitcoin stands to benefit regardless of the election outcome, driven by low interest rates and U.S. fiscal deficits.

Still, it believes a Trump win could push Bitcoin to new highs between $80,000 and $90,000, while a Harris victory could see it drop to the $40,000 range. The market is likely to remain reactive to election odds until greater clarity emerges.

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U.S. Justice Department demands concessions from Google, hints at a break up

Oct. 9 (UPI) — The U.S. Justice Department unveiled a raft of proposed changes to Google on Wednesday as part of an anti-trust suit that alleges the way the U.S.-tech giant promotes and distributes its key Google Search product harms competition and reduces consumer choice.

The filing in the U.S. District Court in Washington hinted that the justice department was looking at breaking up the company as one option to “prevent and restrain” Google’s monopolistic grip on the U.S. markets for general search services and general search text.

The filing argues that any remedy should free markets from Google’s exclusionary conduct; remove barriers to competition; deny Google the fruits of its illegal activities and block future monopolization of these and related markets after the company was found to have twice violated monopoly maintenance law.

“Plaintiffs have a duty to seek — and the Court has the authority to impose — an order that not only addresses the harms that already exist as a result of Google’s illegal conduct, but also prevents and restrains recurrence of the same offense of illegal monopoly maintenance going forward,” the filing states.

The Justice Department and eight states prosecuting the case said fixes for the key areas of concern — search and revenue sharing, generation and display of search results, advertising scale, and monetization and collection — could include “contract requirements and prohibitions; non-discrimination product requirements; data and interoperability requirements; and structural requirements.”

The plaintiffs said they were also looking at “behavioral and structural” changes to prevent Google from using Chrome, Play, and Android to “advantage” Google search and Google search-related products and features.

They emphasized that mitigating Google’s built-in advantage over its competitors or new entrants to the market extended to emerging search access points and features, including artificial intelligence.

Revenue-sharing deals with Apple and Samsung for which Google pays billions of dollars to make its search engine the default on their devices were also in the firing line with the Justice Department floating the idea of a mandatory “choice screen,” on which users could select from a range of search engines.

The Department of Justice further wants Google to provide competitors its data from its search index and models, including its AI-assisted search features and its ad ranking data, and ban it from retaining or using data itself that it claims it cannot share with others due to privacy concerns.

“Fully remedying these harms requires not only ending Google’s control of distribution today, but also ensuring Google cannot control the distribution of tomorrow,” the agency said.

Wednesday’s filing follows an August ruling after a four-year investigation that Google had an illegal monopoly in the general search market.

The judge in the case has promised a ruling on the remedies by August but with Google’s vow to appeal the original monopoly ruling the likelihood is that would push back any final resolution by years.

The Mountain View, Calif., company rebuked what it said were “radical and sweeping” proposals by the Justice Department that risked “hurting consumers businesses and developers” and expressed fears it was trying to impose broader changes unrelated to the case.

“This case is about a set of search distribution contracts. Rather than focus on that, the government seems to be pursuing a sweeping agenda that will impact numerous industries and products, with significant unintended consequences for consumers, businesses, and American competitiveness,” Regulatory Affairs VP Lee-Anne Mulholland wrote in a blog post.

She claimed the proposed changes threatened Google users’ privacy and security, would hold back advances in AI, and that splitting off from Google of Chrome and Android, which are free, “would break them – -and many other things.”

Experts told CNBC they did not believe the government would go as far as breaking up Google and that the legal battle would probably end with Google agreeing to end some exclusivity deals like the one it has with Apple and making rivals’ search engines easier to access.

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United States Wholesale Inventories registered at 0.1%, below expectations (0.2%) in August

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