Weekly Digest: U.S. Inflation Stays High, ETH Merge Goes Live


4 minutes read

Sep 16, 2022

a cartoon man floating on a red balloon with the dollar sign

17/09/22: U.S. inflation rises more than expected in August, stocks plunge the most since 2020, Ethereum’s massive software upgrade goes live. And more.

Investment news

High inflation alert! U.S. consumer prices unexpectedly rose 8.3% in August, accelerating underlying inflation amid rising rents and healthcare costs, giving the Fed a stimulus to raise interest rates next week by 75 basis points. (Reuters)

“The Fed is all but sure to hike rates aggressively next week, likely by 75 basis points while pushing back strongly against talk of a near-term pause in the tightening cycle,” said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto.

💡Quote of the week

“Two and a half years after the first [Covid] lockdowns, the economy remains weird: It can take more than a year to a get a dishwasher, many months to get a passport, businesses are short-staffed, stores routinely run out of basic staples like pain reliever and, of course, there is high inflation,” writes Bloomberg’s Allison Schrager.

stocks indicators in red, blue, and yellow goes down after the worst stocks selloff since 2020

💥It’s a crash: A broad-based selloff sent stocks to their worst day since 2020 after hotter-than-expected inflation data fueled investor bets on a jumbo rate hike by the Fed next week. Treasury yields rose, and the U.S. dollar strengthened. (Bloomberg)

Across the board, the S&P 500 fell more than 4%, while the tech-heavy Nasdaq 100 lost more than 5% as yield-sensitive stocks fell the most. Both benchmarks have suffered their worst one-day losses since 2020.

🤓Gold, bitcoin, or stocks? What is the best investment today? Read our SPOTLIGHT to find out.

A blue arrow going down over a pile of fine gold bars

The gold price dropped to a near 2-month low earlier this week, below the $1,700 mark, amid more aggressive Fed rate hike prospects.

“The gold market has clearly priced in a more aggressive U.S. Federal Reserve ahead of next week’s meeting, reflecting the central bank’s determination to fight inflation,” said Carsten Menke, the head of next-generation research at Julius Baer.

A woman holds a gold coin with a bitcoin sign, and a silver coin with an Ethereum sign, in front of computer screens with stock indicators.

The leading cryptocurrencies, Bitcoin and Ethereum, dropped around 5% following the release of the latest Consumer Price Index data. (Decrypt)

Shortly after the CPI numbers were released, Bitcoin shed gains earned over the week. Last week, Bitcoin rallied, breaking out of the narrowest trading range in about two years as the dollar dropped, boosting demand for risky assets.

🤓Should you buy gold or Bitcoin? Read our SPOTLIGHT to find out.

Ethereum has completed one of the biggest software upgrades in crypto history with its revamped blockchain network. The so-called Merge is designed to cut the cryptocurrency’s energy consumption by more than 99%. (Bloomberg)

The upgrade replaced power-hungry computers that were used to order transactions on the network with more energy-efficient ones using the network’s native token, Ether, placed in special, so-called staking wallets.

The upgrade was completed on Thursday, said Ethereum co-founder Vitalik Buterin in a Twitter post.

Gold dollar coins floating above a black oil barrel as crude oil prices are set to rise by the end of 2022

Crude oil prices will rise to the $100 range by the end of the year due to increased demand for jet fuel and gasoline as we approach the holidays season, Stephen Schork, president of The Schork Group, says. (Bloomberg)

"As we transition into the holidays, jet fuel demand will pick up, gasoline and diesel demand will pick up. That is the next potential catalyst that gets us back and revisits oil at that $100 range,” Schork said.

Picture of the week

The story of a guy who tries to time the market, buy high and sell low, but ends up hurting himself


Your Guide to the Permanent Pandemic Economy: There is no going back to normal; there are issues that aren’t going away easily. Can you guess what they are? Here's a hint: one of them begins with an I and ends with an N. (Bloomberg Opinion)

Inflation uncertainty means more volatility in asset markets. Once the supply chain and labor market heal, inflation will ease somewhat and stabilize, and that will help stabilize asset markets. But it will be a very long time before inflation falls back to 2% or lower again,” writes Bloomberg’s Allison Schrager.

What else is happening

Roger Federer, the famous Swiss tennis player, photographed at a tennis court

The 41-year-old Federer announced his retirement from professional tennis after undergoing a series of knee operations. Federer won 20 Grand Slam titles during his career and helped create a golden era of men's tennis together with rivals Rafael Nadal and Novak Djokovic. (Bloomberg)

Roger Federer will play his last ATP event next week in London, at the Laver Cup, he announced via Twitter.

The British royal family, including late Queen Elizabeth and Prince Phillip, photographed on the balcony during an official event

Queen Elizabeth’s death potentially means an £18 billion shift in the royal family’s finances. The vast estates that underpin the British monarchy's wealth are changing hands. (Bloomberg)

“It’s a whole business concept. They have all these tangible assets and operating costs,” David Haigh, chief executive officer of consultancy Brand Finance.

And finally…

Queen Elizabeth II's 70-year reign will be remembered for many historical events. Fans of video game marginalia will also remember a marketing stunt from a now-defunct publisher that sent Her Majesty a gold-plated Wii. (Ars Technica)

One-of-a-kind, gold-plated 2009 marketing stunt is now worth around $36,000.


See you next week!


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