Weekly Digest: Fed Mistaken, China Hack Attack

Investment news

In his much-anticipated virtual speech to the Jackson Hole economic conference on Friday, Fed chairman Jerome Powell reiterated that inflation is transitory (surprise), stopping short of defining a clear taper timeline, except for the mention that it could happen “this year”.

“They’re not going to raise rates anytime soon and taper talk won’t come back into play until next week’s jobs report. That cleared the path for gold, and as it broke above $1,800, it’s eying the next resistance level at around $1,820,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.

Indeed, gold prices went up 1.4% to $1,817 after Powell’s speech. Silver, in turn, rose 2.2% to $24.05 an ounce, heading for its best week since May.

“You’d need next week’s jobs report to show a miss, a resurgence of the Delta variant or geopolitical risks with more news coming from Afghanistan for gold to break substantially higher,” Streible added.

Now investors are waiting for a non-farm payrolls data — a monthly report that shows how many people are employed in the U.S. in manufacturing, construction, and goods companies.

This report could be the key to the Fed’s stimulus-taper decision. Because, as Powell said, if job growth continues, the central bank could start cutting its asset purchases this year.

Meanwhile, the inflation beast is raging in Europe, which is rushing headlong towards the highest inflation reading in 10 years.

The news comes after Germany reported its highest consumer prices since 2008, with a headline inflation rate standing at 3.4% in August. France has also reported its highest inflation rate in nearly three years.

The ECB is due to meet on September 9 to discuss the handling of its asset purchase program as its governing council seems split over when to start relaxing stimulus measures.

Not enough women! Twice as many men as women invest in cryptocurrency — 16% of men vs. 7% of women, according to CNBC and Acorn’s Invest in You: Next Gen Investor survey.

More than that, the gender disparity in crypto matches or even exceeds the gender gaps in ownership of exchange-traded funds (14% of men vs. 7% of women), real estate (36% of men vs. 30% of women), and individual stocks (40% of men vs. 24% of women).

Opinion

Economist Mohamed El-Erian argues the Fed could be making a serious policy mistake by not promising to unroll its bond-buying program more quickly.

“I continue to believe there is just cause for concern about a monetary policy mistake that could undermine future economic wellbeing and financial stability, with adverse social, institutional and political spillovers. I am hoping that my worries are misplaced but unfortunately, both the numbers and the analysis suggest otherwise,” he wrote in an article.

What else is happening

Remember late Bernie Madoff, the mastermind behind the biggest Ponzi scheme in Wall Street history? Apparently, his victims now have another chance at recovering $343 million from Citigroup Inc., accused of failing to act on some red flags concerning Madoff.

The U.S. Court of Appeals in New York has reinstated a suit against Citi led by Irving Picard, the trustee acting on behalf of Madoff’s victims.

Picard is seeking to recover money he says Citi allegedly received from Rye Select Broad Market Prime Fund, a so-called “feeder fund” that redirected investor money into Madoff’s firm. Picard claims Citi uncovered but did nothing about the evidence that Madoff wasn’t making the investments he claimed, acting with “willful blindness” to possible fraud.

Bernie Madoff was arrested in 2008 and was subsequently sentenced to 150 years in prison after admitting he stole more than $19 billion as part of the Ponzi scheme. He died in a federal prison in April.

Don’t annoy China: Australia was hit by several waves of cyberattacks by Chinese bots a few days after Prime Minister Scott Morrison called for an independent international investigation into the origins of the Coronavirus.

Attack victims included the parliamentary email network, the Bureau of Meteorology, the departments of defense and health, as well as numerous Australian universities and businesses, according to people familiar with the situation.

Robert Potter, the chief executive officer of an Australian cybersecurity firm that works with the federal government, described the attack as “a door knock, like someone walking up and ringing your doorbell.”

A satellite phone’s on its way: Apple Inc. is working to bring satellite capabilities to the iPhone that will allow users trapped in emergency situations to send texts in areas without cellular coverage.

The company is developing at least two emergency features that will be based on satellite networks, with an aim to release them in future iPhones, according to a person familiar with the situation.

And finally…

How would our brain react if we suddenly grew an extra finger? Neuroscientist Aldo Faisal developed a robot thumb to find out.

"There's a dedicated area of your brain responsible for every single finger. So now comes the question, if I give you an eleventh finger, ... are you processing it the same way as you're processing a regular limb? " he said.

Apparently, yes. Within an hour of being fitted with an artificial thumb on their right hand, six volunteer piano players learned to use it on the keyboard.

What could be the next challenge?

See you next week!