Weekly Digest: U.S. Inflation Slows, Long Covid

Investment news

Fresh U.S. economic data is out: consumer prices showed smaller-than-expected increase in August, which could be a sign that inflation is starting to slow down.

The consumer price index, which includes food and energy prices, increased 5.3% from previous year and 0.3% from July, while economists initially expected a 5.4% annual rise and 0.4% on the month.

Stripping out volatile food and energy prices, the CPI increased just 0.1% for the month vs. the expectation of 0.3%, and 4% on the yearly basis against the 4.2% estimate. That is the smallest gain since February.

Now, slower-than-expected rise in U.S. inflation cast doubts over the Fed’s tapering timeline, making a September taper announcement less likely, analysts say.

Tamer-than-expected rise in U.S. inflation turned out to be good news for gold: the precious metal breached the barrier of $1,800 an ounce on Wednesday amid uncertainty on when the Fed would start tapering its asset purchases.

Spot gold was steady at $1,802.21 per ounce, after hitting a one-week peak of $1,808.50 on Tuesday.

“I see gold holding above $1,800, as critical risks relating to COVID-19 and underlying economic activity incentivise central banks to keep the taps flowing, the key short-term driver of gold prices,” said Michael Langford, director at corporate advisory AirGuide.

Among other precious metals, silver dropped 0.5% to $23.71 per ounce, platinum is down 1.2% to $928.24, and palladium dipped 1% to $1,959.61.

Inflation might have slowed down a bit in the U.S., but not elsewhere: the U.K. consumer prices index surged by 3.2% in the 12 months to August, posting the largest-ever monthly increase since January 1997.

The Office for National Statistics, which released the data, said the surge was “likely to be a temporary change.”

The latest data shows a slowdown across major economies, from the U.S. to China and Germany, as they’re dealing with the new Delta variant.

“We are not at panic stations—the data is pointing to a softer recovery, not a reversal. Still, the latest nowcast readings are a reminder that the virus remains a significant, negative, and hard to predict variable impacting the outlook,” said Bloomberg Economists Bjorn van Roye and Tom Orlik.

Opinion

Sweden's central bank governor says bitcoin is like trading in stamps and warns of a potential crypto collapse.

"Private money usually collapses sooner or later. And sure, you can get rich by trading in bitcoin, but it's comparable to trading in stamps,” Sweden's Riksbank Governor Stefan Ingves said at a Swedish banking conference.

Ingves joins other central bank governors who have criticized cryptocurrencies. One of them is Bank of England governor Andrew Bailey, who said the following:

“They [cryptocurrencies] have no intrinsic value. I'm sorry, I'm going to say this very bluntly again: buy them only if you're prepared to lose all your money."

What else is happening

Over the weekend, the world marked the 20th anniversary of 9/11 attacks, which left 2,977 people dead in 2001. The attacks, as well as the War on Terror that followed, changed a lot of things, but its economic impact turned out to be temporary.

Ten charts, summarizing the economic data of the time, showed that the economic impact from 9/11 attacks was much smaller than from the Covid-19 pandemic.

The Litecoin Foundation — a cryptocurrency and open-source software project — “screwed up” after one of its employees retweeted what turned out to be a fake announcement about a partnership with Walmart Inc.

“We try our best to not tweet fake news and this time we really screwed up. I deny that it has anything to do with us and we’ll try our best to figure out who did it -- and we will stop fake news from spreading,” Charlie Lee, creator of Litecoin and managing director of the foundation, said.

Walmart Inc. and GlobeNewswire, a press-release distributor, are now investigating the announcement that was quickly determined to be false. But not before it caused a brief surge in Litecoin and other digital currencies.

Sorry, but it seems that Covid is not going anywhere: the resilience of the Delta variant remains one of the biggest challenges.

The UK will start offering booster shots to people aged 50, Russian President Vladimir Putin goes into self-isolation after a few people in his closest entourage fell sick, while China locked down a coastal city of 4.5 million people following the Covid outbreak.

And finally…

NASA granted $500,000 to a research team from the University of Arizona to develop a swarm of robots able to mine, excavate and even build simple structures on the surface of the Moon. Mining works could start in 2025.

In swarm robotics, multiple robots are interconnected, forming a swarm of robots. Every single robot in the swarm has processing, communication, and sensing capabilities which makes them capable to interact with each other and react to the environment autonomously.

See you next week!