Jackson Hole: Fed Chair Jerome Powell made it clear that fighting inflation is the Fed’s top priority and that even if some “pain” is needed, the central bank would continue hiking interest rates and shrinking its balance sheet “for some time.”
“The message from the global central bank economic symposium last week at Jackson Hole, Wyoming, was that stubborn inflation will require a continued aggressive policy in most countries. The Fed’s message for the U.S. was especially clear on this point,” Paul Christopher, head of global market strategy at Wells Fargo, wrote in a research note as quoted by the media.
The gold price has fallen to a six-week low this week due to the rising U.S. dollar and fears of aggressive interest rate hikes by the Federal Reserve. Silver hits its lowest level since June 2020.
“Direction of least resistance looks lower just now for precious metals with the strong dollar continuing to weigh on the market,” said independent analyst Ross Norman.
Switzerland's energy-saving campaign: Swiss authorities launched a voluntary campaign this week to encourage consumers and businesses to save energy ahead of this winter's gas and power shortages. The campaign through posters, websites, and social media is scheduled to last until April. (Reuters)
Because Switzerland gets its gas from EU neighbors, disruptions there would also affect the Alpine nation. At the same time, the country's gas demand is relatively low, accounting for only 15% of total energy consumption.
Eurozone inflation hit a new record high in August of 9.1%, according to flash figures from Europe’s statistics office Eurostat, with high energy prices the main driving force. (CNBC)
Reuters' poll of economists predicted a 9% rate, but it came out above expectations. This is the ninth consecutive rise in consumer prices in the region since November 2021.
Swiss inflation has hit the highest level in 30 years: Inflation in Switzerland accelerated to 3.5% in August mostly because of surging energy costs caused by Russia’s continued war with Ukraine. (Bloomberg)
Last week, Swiss National Bank President Thomas Jordan said higher inflation may stay for years to come. The central bank will consider another increase in interest rates at its September 22 policy meeting.
Russia's gas giant Gazprom said it would halt gas deliveries to France’s Engie from Thursday in a dispute over contracts, further raising concerns about Europe's winter energy supply. (Reuters)
Emmanuelle Wargon, head of France's energy regulatory commission, says the agency isn't worried about the supply squeeze since French gas reserves are 91% full and should be fully filled by September or early October.
Famous investor Jeremy Grantham says the “super bubble” in stocks he previously warned about has yet to burst, in spite of the US stock market turmoil this year. Overvalued stock and housing markets, a commodity shock, and Fed hawkishness are all contributing to more trouble ahead, he says. (Bloomberg)
“My bet is that we're going to have a fairly tough time of it economically and financially before this is washed through the system. What I don't know is: Does that get out of hand like it did in the ‘30s, is it pretty well contained as it was in 2000, or is it somewhere in the middle?” Grantham said.
Crypto fans might be in for an unforgiving September after a cruel summer. “September is probably going to be another pretty volatile month,” Shawn Cruz, head trading strategist at TD Ameritrade, said. (Bloomberg)
September has historically been the worst month for bitcoin, falling each year since 2017. “The risk is to the downside,” Cruz said, adding that “you probably see a little bit more of a downside sort of a bias in terms of where I think things can land.”
What else is happening
Shelling erupted as a UN team headed to the Russian-occupied Zaporizhzhia nuclear power plant in Ukraine, prompting the emergency shutdown of the reactor. (CNBC)
U.N.'s nuclear watchdog's visit to Europe's largest nuclear facility was always expected to cause fighting, with both sides saying the other was planning “provocations” around the time of the inspection.
Taiwan said it would exercise its right to self-defense and "counter-attack" if the Chinese army entered its territory as Beijing increased military activities near the island. (Bloomberg)
In response to Pelosi’s visit to Taipei earlier this month, Beijing launched unprecedented military drills in the Taiwan Strait.
Mikhail Gorbachev, the last Soviet leader as well as a towering statesman who helped to end the Cold War, died at the age of 91 in a Moscow hospital after 2 years of serious illness.
Gorbachev won the 1990 Nobel Peace Prize for his role in ending the Cold War, but he was vilified at home despite receiving wide acclaim abroad. In Russia, he has been widely blamed for the 1991 implosion of the Soviet Union and its decline as a superpower.
🐲The University of Lisbon says it has unearthed what could be Europe's largest dinosaur remains found in a Portuguese backyard. (Reuters)
A property owner in Pombal in central Portugal discovered fossilized fragments from the dinosaur while doing construction work in 2017.
See you next week!