Inflation Slowing in Europe, Cryptocurrency Growth, Company News and Fundamental Reviews
Exchange and fundamental news
• German inflation was below forecasts in September at 1.8% year-on-year, the lowest since 2021. Inflation is also falling in France, Italy and Spain, and markets have moved into full pricing of an October rate cut after President Christine Lagarde said on Monday that the trend would be factored in at the next policy meeting on October 17. Traders have priced in another ECB rate cut for December and are selling dollars on the assumption that global inflation is under control and that U.S. rates have more to cut. The euro has failed to break $1.12 but is holding above $1.11, while the yen and yuan have been the main movers in currency markets.
• The yuan held steady at 7 per dollar in offshore trading as Chinese markets were closed and holidays in Hong Kong and South Korea further eased Asian trading. The yen steadied at 143.89 per dollar. Earlier in New York, U.S. bond yields jumped after Federal Reserve Chairman Jerome Powell said the policy committee was in no rush to cut rates, though that could change quickly if data on Tuesday and the rest of the week are weak.
• The ISM manufacturing PMI has been in recession territory for months, even though the economy is booming, but the focus will be on the employment index and job openings data for August. If there are signs of weakness, traders will again raise bets on the 50 basis point cut from the Fed in November. The market currently prices about a 36% chance of a 50 basis point cut, according to CME FedWatch, down from 53% before Powell's remarks.
• Japan's parliament prepared to elect Shigeru Ishiba as the next prime minister, while upbeat retail sales data in Australia gave the Australian dollar a small boost.
• Bitcoin ETFs are enjoying their best week since mid-July, recording $1.2 billion in inflows, up from $321 million the previous week. Recent interest rate cuts have reignited confidence in risk assets like Bitcoin. BlackRock’s Ethereum ETF has surpassed $1 billion in net asset value, two months after launch. Last week, U.S. spot Ethereum ETFs saw positive inflows for the first time since August, with Fidelity’s FETH fund seeing $42.5 million in inflows and BlackRock’s ETHA fund seeing $11.5 million in inflows.
• Sports nutrition company Applied Nutrition is preparing for an IPO on the London Stock Exchange.
• AI chip startup Cerebras (CBRS) has filed for an IPO. The company reported $78.7 million in sales in 2023, up from $24.6 million in 2022. In the first half of 2024, Cerebras reported $136.4 million in revenue. The company lost $127.2 million in 2023, up from $177.7 million in 2022. In the first half of 2024, Cerebras lost $66.6 million. The company warned that it got a “significant majority” — more than 80% — of its sales from a single customer, G42, an AI company in the UAE.
• Billionaire Peter Thiel is investing in developing nuclear fuel for advanced reactors. A startup with nuclear industry veterans and SpaceX engineers will develop a new method for producing low-enriched uranium.
• TikTok owner to develop AI model trained on Huawei chips ByteDance has pivoted to Chinese suppliers of chips used in AI and accelerated development of its own after the US began restricting exports of Nvidia's AI chips in 2022.
• European automakers shed $10 billion on weak forecasts from Stellantis, Volkswagen and Aston. Industry profits are forecast to fall nearly 14% in 2024, a reversal of the post-pandemic years when supply chain disruptions allowed automakers to raise prices. Traders are avoiding the dollar amid uncertainty over Fed policy and the upcoming election.
• Aluminium spreads jumped again as traders took notice of Trafigura's position. The squeeze in the aluminium market showed signs of intensifying, adding pressure on traders caught up in a buying spree by Trafigura Group and the warehouse company's controversial decision to raise a key fee.
• The US Federal Trade Commission clears Chevron to acquire Hess Corp for $53 billion. SoftBank invests $500 million in OpenAI, which raises $6.5 billion.
• Carnival Relies on Cruise Demand, Cost Cuts Raise Profit Outlook Carnival on Monday raised its full-year profit forecast for the third time, helped by rising demand for summer cruise vacations and lower operating expenses.
• CCL shares fell 0.3% after the report. Alphabet Inc. said Monday it will invest $1 billion in Thailand to build a data center and cloud region.
• CVS is reportedly considering options, including a possible split. CVS shares rose 2.4% yesterday and are up another 3% in premarket trading.
• AAPL shares rose 2% yesterday as JP Morgan gave an upbeat forecast for iPhone availability, with the improvement driven primarily by the base 16 models.
• The third quarter is off to a quiet start. SMCI will begin trading today after a 10-for-1 split. Atlanta Fed President Raphael Bostic will moderate a meeting with Fed Chair Lisa Cook ahead of the “Technology Disruptions: The Impact of Artificial Intelligence, Big Data, and Remote Work” conference hosted by the Atlanta, Boston, and Richmond Federal Reserve Banks. Nike (NKE) will report after the market closes.
Key events that could impact markets on Tuesday:
- Eurozone inflation
- US jobs, ISM survey
• The Israeli army officially announced the start of a limited ground operation against Hezbollah in the border areas of southern Lebanon. Iran has refused to help Hezbollah. Iran's foreign minister said they do not plan to send troops to help because "Lebanon has proven that it can stand up for itself."
Israeli troops have begun preparing a bridgehead for a large-scale invasion of Lebanon - media.
• US government arms orders to Ukraine are saving the economies of small American towns, - WP. The Pentagon allocates significant funds for the purchase of weapons from companies located in small towns as part of its arms orders. Although a small portion of the allocated funds was transferred to Ukraine, the bulk of the package remained in the United States.
• Trump is preparing a series of allegations of dishonesty to invalidate the US election if he loses, - Axios.
• US Congress calls for review of strategy towards Russia: what are the consequences for Ukraine. “The bipartisan committee responsible for supporting democracy and human rights in post-Soviet countries insists that the US abandon the post-Cold War status quo in its relations with Russia and call Moscow a permanent threat to global security.”
• Marine Le Pen to face trial in trial; conviction could ruin her presidential ambitions - Politico. Le Pen and her National Rally party are accused of embezzling funds from the European Parliament through what prosecutors called a "system" of awarding contracts for parliamentary assistants to individuals who focused on party operations rather than EU affairs, in defiance of EU rules. The alleged scheme took place between 2004 and 2016.
• Hungarian Prime Minister Viktor Orban held "intensive talks" with China and Brazil last week in New York
in an attempt to initiate a "peace summit" between Putin and Zelensky - Die Weltwoche.
• Investment banks BlackRock and Goldman Sachs predict that the European economy will suffer a sharp decline. They expect a debt crisis and a decline in production due to rising energy costs.
Consumer price inflation (CPI) data in Germany for September 2024: +1.6% y/y (+1.9% previous).
• The German government does not expect economic growth this year. According to Bloomberg, the authorities do not expect even weak GDP growth for the year; at best, stagnation is expected. At the same time, leading German economic institutions said they expect a slight decline of 0.1%. In Germany, Sahra Wagenknecht's party will promote Putin's demands as a condition for joining a coalition with it. Journalists call the pro-Russian SSN the Kremlin's fifth column.
• The British have completely abandoned coal in electricity production. By 2035, the UK wants to design its electricity generation mix so that production produces almost no CO2.
• Serbia lithium project under attack by Russian disinformation Russia appears to be playing a major role in fanning protests against Rio Tinto's lithium project in Serbia, seeking to block development of what could be a key source of lithium for European carmakers.
• Beijing eases home purchase rules to boost demand. Beijing eased home purchase restrictions on Monday, following similar moves by Shanghai and Shenzhen, in a bid to boost demand and support the property market.
• China's overseas investment has risen to a record $71 billion as its companies seek to build more factories abroad, potentially helping to quell criticism of Beijing's export policies.
• Oil product supplies from India reached the highest level since March 2022. It smells like Russian oil. The head of JP Morgan believes that India will have a 30-year economic boom.