💡Quote of the week
“The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists,” Ernest Hemingway
Investment news
⭐ Gold down. The gold price fell to a three-week low on Wednesday, pressured by rallying U.S. dollar and Treasury yields, and as investors fretted over prospects of aggressive rate hikes from the Fed.
“The market continues to be quite worried about aggressive Federal Reserve monetary tightening,” said Bart Melek, head of commodity strategy at TD Securities, as quoted by CNBC.
🎢 The stock market is on a "rollercoaster to nowhere.” The Nasdaq Composite fell 0.85% to close at 10,680.51 on Wednesday. The S&P 500 slipped 0.67% to 3,695.16. The Dow Jones Industrial Average slipped 0.33%, to finish the day at 30,423.81. Despite the losses, all three averages are still up for the week. (CNBC)
"I think we're going to be on this rollercoaster to nowhere, where periodically we're going to get these bear market rallies. As I said, this is a very impatient market, investors seemingly have no tolerance for pain, and so any sign that the wind may begin to blow their way, that gets a two- to three-day rally going," Morgan Stanley Wealth Management's chief investment officer, Lisa Shalett, said.
💡Worried about your stock investments? Here are a few tips for navigating stock market volatility.
📈 Here we go… Again. U.K. inflation moves back up to a 40-year high: the country’s Consumer Price Index hit 10.1% in September after briefly falling to 9.9% in August. A tough winter is on the horizon as the country's cost-of-living crisis continues to hammer households and businesses. (CNBC)
Increasing food, transport, and energy prices were the biggest contributors to inflation, the Office of National Statistics said.
Food went up 14.6% year-on-year, transport was up 10.9% compared to last year, and the price of furniture and household goods increased by 10.8%.
🤔 U.S. stock market uncertainty: Wall Street's top strategists have divergent views on the stock market's future. While Morgan Stanley’s Mike Wilson says U.S. stocks should see a short-term rally, JPMorgan Chase & Co.’s Marko Kolanovic is more cautious for the coming months, citing growing risks from central bank policies and geopolitics. (Bloomberg)
Despite their changed short-term outlooks, Wilson still sees stocks as negatively positioned for the long run, while Kolanovic sees them as strongly rising.
💡Investing in uncertain times can be tricky, so we've put together this simple guide for you.
🇺🇸 The wise man can change his mind, the stubborn one, never. Wall Street economists are still betting the U.S. inflation will slow over the next year, even though they’ve been forced to raise their predictions for coming months. (Bloomberg)
“I think everyone’s working backwards and saying, let’s take the Fed at their word that they’re resolved to bring inflation down,” said Andrew Hollenhorst, chief U.S. economist at Citigroup Inc.
💡If you (politely) disagree with Wall Street economists, here’s a cheat sheet for fighting rising inflation and protecting your savings.
❄️ Crypto winter intensifies? Bitcoin could break below its $18,000 support level, potentially tumbling to as low as $6,000, some analysts say. (Kitco)
"At some point, I expect that this $18K support level will break, and then we could actually lose quickly another 30, 40, or 50 percent. It would be the worst case that we go down to $6K,” Florian Grummes, Managing Director at Midas Touch Consulting, said.
🏠 No mortgage, please. As interest rates continued to rise, U.S. mortgage demand, which has seen four straight months of declines, fell last week to its lowest level since 1997. (CNBC)
According to the Mortgage Bankers Association, homebuyers' mortgage demand fell 4% for the week and was 38% lower than one year earlier.
💡Read our SPOTLIGHT to learn what interest rate hikes could mean for you.
📸 Image of the week
Opinion
🇮🇹 Italy’s Giorgia Meloni channels her inner Liz Truss with market bet. “Possible tax cuts, a fractious coalition, and feuds with friends and neighbors are an open invitation for bond vigilantes to take on Rome’s far-right government.” (Bloomberg Opinion)
“Coached by Draghi, Meloni has pledged to be pro-Europe and pro-Ukraine, to uphold the values of her predecessor. There’s not a lot of margin for error — either by her new coalition or for investors — as the political and economic firestorms in Britain suggest,” Rachel Sanderson writes.
What else is happening
🇬🇧 It’s over so soon. After just six weeks as prime minister, Liz Truss has announced her resignation. There will be a leadership election within a week, she said. (Independent)
The resignation comes after Truss was forced to scrap almost all of her flagship fiscal policies, including the controversial tax cut plan, even though she said she had “acted in the national interest to make sure that we have economic stability.”
She backed off her program of tax cuts, originally announced on September 23, after it triggered massive volatility in financial markets, resulting in a collapse of the pound against the dollar and a rapid sell-off of government bonds that threatened to bring down pension funds.
🦠 Covid is still out there. Beijing has stepped up measures against Covid, strengthening public checks and locking down some residential compounds after cases quadruped. (The Guardian)
The Chinese capital on Thursday reported 18 new locally transmitted cases, bringing its 10-day total to 197.
💡Read our SPOTLIGHT for an overview of what Covid has done to the economy.
And finally…
✨‘Cause you're a sky full of stars’. The James Webb Space Telescope has captured a breathtaking and highly detailed landscape of the iconic Pillars of Creation in new pictures series released by NASA. (NASA)
Known as the Pillars of Creation, these hydrogen structures of gas and dust are nestled within the Eagle Nebula, in the Serpens constellation, some 6,500 light-years from Earth.
See you next week!
