a picture of us dollar notes, gold bitcoin coins and FTX and Binance iPhone apps representing the failed FTX acquisition deal

Weekly Digest: U.S. Inflation Slows, FTX-Binance Turmoil

4 minutes read
Nov 11, 2022

12/11/22: U.S. inflation cools by more than forecast, FTX-Binance turmoil spooks investors, gold could hit $1,900. And more.

💡Quote of the week

“The trend in inflation is a welcome development, so that’s great news in terms of the report…However, investors are still gullible, and they are still impatiently waiting for the Powell pivot [easing up on rate hikes], and I’m not sure it’s coming anytime soon.” Michael Arone, chief investment strategist at State Street Global Advisors

Investment news

⚠️Fresh U.S. inflation data is out. Labor Department data shows the consumer price index rose 7.7% from a year ago, the smallest annual gain, and down from 8.2% in September. (Bloomberg)

Excluding volatile food and energy costs, so-called core CPI rose 0.3% for the month and 6.3% on an annual basis, compared with respective estimates of 0.5% and 6.5%.

💡Has inflation really peaked? Here’s what you need to know.

Gold price up. Gold prices jumped 2% to a more than two-month high on Thursday as data showed U.S. inflation slowed in October, lifting hopes that the Fed will ease up on rate hikes.

“When we start to see inflationary data showing that inflation is coming down, there is an expectation that the Fed is going to begin to slow the pace of those interest rate hikes,” said David Meger, director of metals trading at High Ridge Futures.

Fine gold bars and coins on the black background representing rising gold prices

🎢 Gold at $1,900. The Swiss bank UBS sees the precious metal pushing to $1,900 an ounce by the end of 2023. (Kitco)

"We think gold should benefit and therefore holding a long gold position would offer an attractive risk-reward as the [Fed] tightening cycle ends," the bank's precious metals expert, Joni Teves, said in the report.

⬆️ Stocks up. Stocks rose Thursday after October’s reading of U.S. consumer prices raised hopes that inflation has peaked. (CNBC)

The Dow Jones Industrial Average jumped 1,200 points or 3.7%. The S&P 500 rose 5.54% in its biggest rally since April 2020, while the Nasdaq Composite increased more than 7.35%, its best since March 2020.

💡Check out our SPOTLIGHT to find out which is a better investment, stocks or physical gold, and why.

the symbol of bitcoin made of economic indicators representing falling bitcoin and crypto prices amid FTX-Binance scandal

😓 FTX-Binance turmoil spooks investors. The price of bitcoin fell to a 2-year low on Wednesday as crypto traders processed the news that Binance backed away from its plan to buy its struggling rival FTX. And just about every other digital coin was hit, too, including Polkadot and Avalanche, each falling more than 14%. (CoinDesk)

Bitcoin fell below $16,000, the lowest since November 2020, after Binance said that, after conducting due diligence on FTX, the deal was off.

💡If you're wondering if you should buy gold or bitcoin, here's the answer.

🇪🇺 A united front. EU member states are firmly opposed to President Joe Biden’s Inflation Reduction Act amid fears that it will harm their domestic economies and companies. (CNBC)

In a meeting on Tuesday, the 27 European Union finance ministers discussed sweeping U.S. climate and energy legislation approved by U.S. lawmakers in August.

This came after the European Commission said there are “serious concerns” with the package's financial incentives that might “threaten the European industry.”

💡Why is inflation so high in Europe? Read our SPOTLIGHT to find out.

No, thank you. Home buyers in the UK are pulling out of new-build homes at their fastest rate since Lehman Brothers collapsed in the second half of 2008. (Bloomberg)

For example, cancellation rates reported by Taylor Wimpey Plc, one of the U.K.'s largest construction companies, have reached 24% in the second half of the year, exceeding levels recorded at the peak of the Covid pandemic and following the U.K.’s Brexit vote in 2016, according to an earnings statement.

Tesla CEO Elon Musk speaking at a press conference

🚙 Musk sheds billions of Tesla shares. After closing his $44 billion acquisition of Twitter, Elon Musk sold $3.95 billion worth of Tesla stock. (CNBC)

Musk sold almost $22 billion worth of Tesla shares in 2021, a year when the stock soared over 50%. In April and August, he sold over $8 billion worth of Tesla stock.

📸Image of the week

a meme with small and big Ben Affleck picturing the official inflation rate and actual inflation rate.

Opinion

🎭The drama’s back in crypto. The future of digital currencies is looking bleak” amid the FTX-Binance incident. (Bloomberg Opinion)

“The [FTX-Binance] incident demonstrates the importance of enduring and trusted institutions to markets. Any asset class needs a few clear rules and some kind of referee who actually enforces them, or eventually, people will stay away,” Bloomberg’s John Authers writes.

What else is happening

🇺🇸 Up in the air. Control over the U.S. House and Senate is still unknown. It'll come down to a few close races to decide if Democrats hold on to their slim majority in the House and Senate, or if Republicans take over one or both chambers. (CNBC)

It may take weeks to determine the balance of power, especially in the Senate, where Georgia is facing a newly scheduled run-off on December 6.

The US senate building photographed amid midterm elections

🛑 You’re fired. Meta Platforms Inc. CEO Mark Zuckerberg said the company would lay off more than 11,000 employees for the first time in the social media giant’s history. (Bloomberg)

The reductions, which represent about 13% of the workforce, were disclosed on Wednesday. “I want to take accountability for these decisions and for how we got here. I know this is tough for everyone, and I'm especially sorry to those impacted,” Zuckerberg said in a statement.

And finally…

certain crop DNA can be used to ensure global food security in the future

🌾The magic DNA. The DNA of ancient crops could be the key to securing the world's food supply in the future. (Reuters)

It may be possible for farmers to cope with a harsher climate in the coming decades with the help of scientists creating a gene bank from the seeds of local wild crops that have survived for thousands of years since agriculture began.

 

See you next week!

 

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