September 14, 2023

US Inflation Accelerated in August as Gasoline Prices Jumped

📰 News Organizations

  • U.S. Inflation Accelerated in August as Gasoline Prices Jumped. The consumer-price index rose 0.6% in August from the prior month, the fastest pace in more than a year. The index for gasoline was the largest contributor to the monthly all items increase, along with shelter.

  • G20 Announces Plan to Impose Digital Currencies and IDs Worldwide. The Group of 20 leaders have agreed to a plan to eventually impose digital currencies and digital IDs on their respective populations. Analysts fear that this will eventually lead to CBDCs.

  • Amazon Unveils $40 Million Fund for Homeownership in New Push. The National Housing Trust, a nonprofit, will use Amazon’s cash to acquire or build affordable homes in partnership with local organizations. The program will back projects near the company’s two headquarters sites.

  • Citi Plans Job Cuts as It Revamps Top Management Structure. The company will now operate five main businesses and eliminate the three regional chiefs who oversee operations in about 160 countries around the world. At least four of Fraser’s senior deputies got new roles in the shakeup.

  • Google Is Cutting Hundreds Of Jobs In Its Recruiting Organization. The company is cutting hundreds of jobs as part of a broader pullback in hiring over the next several quarters. Employees involved in the recruiting group reductions will receive emails starting on Wednesday.

  • Arm Prices IPO at $51 a Share. Masayoshi Son’s SoftBank will own about 90% of the company after the offering. The chip designer is valued at $54.5 billion in IPO at top of range. Arm shares are set to begin trading Thursday on Nasdaq.

🐦 Twitter

  • Home builders in the Southwest and N. California noting monster August YOY sales per community growth at +81% and +72%, respectively. Low bar on year ago comps. However, even after factoring that in, underlying pace of sales looks solid. Source.

  • You can look at any measure of consumer confidence and it bottomed around June 2022 and began increasing as gas prices fell. For better or worse it’s been inflation and gas prices driving sentiment, not the expiration of fiscal support. Source.

  • If earnings are bottoming out, per estimates, it is perfectly rational for the valuation side of the market to lead the way. But that valuation phase is now behind us, which means that actual earnings growth will need to carry the market forward. Source.

  • Among publicly-listed U.S. companies, 25 worst stocks have lost shareholders collective $1.2 trillion since 1926; put another way, just 0.1% of all stocks have led to 14% of all cumulative losses in shareholder wealth. Source.

  • Invesco's Waldner said the muted response to today's CPI print sends a message that "the market has not fully bought into this disinflationary-trend idea. And it tells you that the market is more worried about inflation than maybe it needs to be.” Source.

  • 82% of outstanding mortgages in the US have an interest rate below 5%. This is the #1 factor driving the limited housing supply as many of these homeowners can't afford to move. Source.

When money is centrally controlled, the primary method to try to slow down price inflation is to tighten lending opportunities in order to increase unemployment and put downward pressure on wages.

Lyn Alden

📓 Online Publications

  • Mortgage Applications Decreased in Weekly Survey. Mortgage applications decreased for the seventh time in eight weeks, reaching the lowest level since 1996. Last week’s decline was driven by a 5% drop in refinance applications to the weakest reading since January 2023.

  • Foreclosures Tick Up. There were nearly 34,000 properties with foreclosure filings in August. Nevada, one of the states hardest hit in the late-2000s housing crash, had the highest foreclosure rate in the nation. One in every 2,224 homes had a foreclosure filing in the state in August.

  • 3M Warned Of Weakness At An Investor Conference. The company warned of weakness in the consumer and electronics segments. CFO Monish Patolawala said that revenue would be slightly lower than expected this quarter.

  • Bond Market Investors Convinced Fed Won't Hike Rates Next Week. Demand for purchase loans picks up slightly, and mortgage rates continue to remain below 2023 peaks, as latest inflation data doesn't ruffle investors who fund most mortgages.

🎧 Podcasts

  • BP Chief Bernard Looney Resigns Over Past Relationships. The statement said that Looney left because he wasn’t fully transparent about past personal relationships with colleagues. BP also said the investigation into these relationships is ongoing. Source(0:41)

  • German Economic Woes Mount. Germany has Europe’s largest economy, but it’s now projected to shrink this year. In fact, of all the world’s leading economies, Germany is expected to perform the worst in 2023. That’s according to forecasts from the OECD and IMF. Source(1:23)

  • iPhone Charging Gets a Makeover. The iPhone 15 will have a USC-C charge port and its line of products promise a longer battery life. The change comes in advance of the EU mandating that most consumer electronics be USB-C compatible by 2024. Source(1:25)

  • Cold Medicines May Be Ineffective, FDA Says. Recent studies suggest that the drug with phenylephrine doesn't improve sinus conditions more than a placebo. This may lead to the FDA reconsidering its over-the-counter status and pushing for reformulations by pharmaceutical companies. Source(9:39)

  • Chinese Policy Embraces Lower Growth for a Sustainable Economy. Chinese policymakers have explicitly stated their readiness to accept lower growth rates. Their primary focus is on transitioning to a more sustainable and healthier economy while mitigating excessive debt accumulation. Source(6:56)