In today’s briefing:
- US Inflation: First Take!
- UK CPI Watch: No Path to 2% Unless Inflation Deflates on a Monthly Basis
- US CPI Reaction Nugget: Further Fuel for the Market Rally
- Great Game – 3 Reasons Why Trump Will Win – And 1 Reason He Won’t
- UK: Resilience Defies Doves
US Inflation: First Take!
- Disinflation Lives! US consumer prices were unchanged in October. As a result, headline inflation dropped to 3.2%. Core inflation declined to 4.0%, the lowest level in two years.
- However, like last month, the underlying data look less upbeat. The 3-month annualized Core Services excluding Housing CPI has risen for four(!) consecutive months and reached 4.9% in October.
- The disinflation narrative remains intact, opening the door for the Fed to proactively lower interest rates. But it remains doubtful whether Powell & Co. are truly inclined to do so.
UK CPI Watch: No Path to 2% Unless Inflation Deflates on a Monthly Basis
- Welcome to our short and chart-packed preview of UK inflation out tomorrow morning.
- Extreme base effects are at play in October due to energy price revisions in October 2022
- Housing and household services are about to turn negative year over year
US CPI Reaction Nugget: Further Fuel for the Market Rally
- We just had the October inflation data from the US, and our projections were spot on.
- 0% MoM and 3.23% YoY, is a sign of successful cooling but also that tailwinds from base-effects are long gone.
- As we rightly called, the energy component has collapsed, and while the category doesn’t contribute much (in its separate bracket) it does however feed into most of the other.
Great Game – 3 Reasons Why Trump Will Win – And 1 Reason He Won’t
- While the internet seems totally preoccupied with the San Francisco summit between Xi and Biden, I find other news and analysis much more interesting right now.
- This week saw the release of a major New York Times/Siena Poll of the 2024 Presidential Election – and some of the results were outright shocking.
- I’m now at a point where a Trump win next November looks very likely to me.
UK: Resilience Defies Doves
- The UK unemployment rate remained at 4.2% again, contrary to consensus expectations that may still be extrapolating the spurious earlier trend or revision-prone payrolls.
- Demand may be softening for new workers, but wages seem excessive because of structural issues more than cyclical ones, which means the problem can persist.
- We believe the BoE stopped hiking prematurely, but it is unlikely to hike again soon. Resilient activity and persistent excess inflation would discourage cuts instead.
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