Et tu, Microsoft? Company announces 1,000 job cuts
On Monday, October 17, Microsoft (MSFT) confirmed that it had laid off nearly 1,000 employees across multiple divisions, including Xbox division staff this week.
Morning Briefing
China delays release of all its economic data
Chinese officials at the National Bureau of Statistics announced without explanation on Monday that it was delaying indefinitely the release of economic data that had been scheduled for Tuesday morning. Couldn’t have anything to do with the meeting of the national congress of the Communist Party this week, could it? That meeting is expected to rub-stamp President Xi Jinping for a third term, an action which had required amending those parts of China’s constitution aimed at curtailing extended one-person rule.
Even as stocks rallied on Thursday, October 13, odds of faster Fed interest rate increases rose
After Thursday’s surprising and disappointing higher-than-expected CPI inflation number stocks rallied–but bond prices sank and bond yields rose on expectations that higher inflation means faster interest rate increases from the Federal Reserve. How much higher?
Stocks soar, bonds fall on worse than expected CPI inflation news
Headline Consumer Price Index inflation rose at an 8.2% annual rate in September, the Bureau of Labor Statistics reported this morning. Month-to-month inflation rose by 0.4% on a seasonally adjusted basis. The month-to-month increase was just 0.1% in August. Core inflation, which strips out volatile food and energy prices, rose 0.6% from August and ran at a 6.6% annual rate in September. All these numbers indicate that inflation remains elevated and is proving stubbornly resistant to increases in interest rates from the Federal Reserve intended to bring inflation back toward the central bank’s target of a 2% annual inflation rate. But After initially tumbling on the news–the NASDAQ Composite, for example, was down 3% at the open–stocks have staged a strong rally with the Standard & Poor’s 500 up 2.26% as of 1:30 New York time and the NASDAQ Composite ahead 1.86%. Bond prices, on the other hand, are down and bond yields are up.
Wholesale prices rise more than expected in September
Somehow stocks seem to be turning this into good inflation news this morning ahead of tomorrow’s big CPI inflation report–The Standard & Poor’s 500 is up 0.19% as of 12:30 p.m. New York time and even the NASDAQ Composite is slightly ahead with a gain of 0.06%–but, frankly, I don’t see how. The September producer price index (PPI), a measure of prices at the wholesale level, rose 0.4% in September after falling 0.2% during August. Economists had expected a 0.2% increase,
Global economic forecasts continue to slip–now it’s the IMF’s turn
In its newest global economic forecast, the International Monetary Fund has cut its estimates of global growth for 2023 to 2.7%. That’s down from the 2.9% forecast in July for 2023 and the 3.8% prediction in January. The fund also said that it sees a 25% chance that growth will slow to less than 2% in 2023.
Just when you thought the Ukraine war couldn’t get worse–it does with huge negative implications for oil prices
On Monday Russia launched “a massive strike (the words of Russian President Vladimir Putin) on civilian infrastructure, including crowded train stations, in Ukraine in retaliation for the explosions Saturday that destroyed a crucial ridge linking Russian-occupied Crimea to Russia. Russia has blamed Ukraine for the destruction of the bridge. The Ukrainian government has, so far, not claimed responsibility for the action, but U.S. sources are telling the Washington Post and the New York Times that the destruction was the work of Ukrainian special forces. The Russian attacks were horrifically indiscriminate. According to the Washington Post, the attack caused electricity outages and disrupted water supplies in cities across Ukraine. For a third night in the past week, a residential apartment building in the southeastern city of Zaporizhzhia was hit. In Kyiv, the missiles caused heavy explosions around 8:15 a.m., leaving vehicles in flames near Taras Shevchenko Park — on a road often jammed with rush-hour traffic. Besides a general increase in fear and uncertainty–the VIX “fear index claimed 5.99% to 33.24 as of noon in New York on Monday, October 10–in the financial markets, I think investors should focus on the implications for the oil market and oil prices.
Job market was uncomfortably strong in September and stocks fall
The U.S. economy added 263,000 jobs in September (after seasonal adjustments), the Labor Department reported this morning. The total was down from 315,000 in August but it was enough to bring the unemployment rate down to 3.5% from 3.7% in August. This good news for workers and families, is, of course, bad news for the financial markets, which keep looking for signs that the economy is slowing enough to slow the Federal Reserve’s aggressive round of interest rate increases.
Initial claims for unemployment rise ahead of Friday’s September jobs report
First-time claims for unemployment rose to 219,999 for the week ended October 1, Labor Department reported this morning. Economists had projected a rise to 203,000. The prior week showed a revised 193,000 initial claims. Financial markets aren’t sure how much this means for tomorrow’s report on September employment. It could be the harbinger of a drop in the rate of job creation and an uptick in unemployment. On the other hand, the ADP job survey came in hotter than expected.
OPEC+ carries through on yesterday’s leaks and cuts oil production; oil and oil stocks continue rally
Today, Wednesday, October 5, OPEC and its allies, including Russia, approved a two million barrel-a-day cut in oil production. This is the largest cut in production since the onset of the pandemic. Here’s the key paragraph in the OPEC+ statement: “Adjust downward the overall production by 2 mb/d, from the August 2022 required production levels, starting November 2022 for OPEC and Non-OPEC Participating Countries as per the attached table.” On the news, oil and oil stocks extended the rally that began on news leaks yesterday.
OPEC meets Wednesday with production cuts on the agenda
Should be an interesting day in the oil markets tomorrow, Wednesday, October 5. After a rally in oil stocks and oil prices themselves on Monday on an informed rumor that OPEC+ was considering a cut in production of 1 million barrels a day at its Wednesday meeting, today the rally kept going as speculation extended to the possibility of a cut in production of as much as 2 million barrels a day. U.S. benchmark West Texas Intermediate ended up 3.46% to $86.52 a barrel. International benchmark Brent rose 3.18% to $91.69 a barrel.
OPEC+ “considers” cutting oil production and oil and oil stocks surge today
All it takes is a report that OPEC+, the group of oil-producing countries that includes Saudi Arabia and Russia, is considering a big cut in production at its meeting this week to send oil and oil stocks off to the races. As of noon New York time on Monday, U.S. benchmark West Texas Intermediate is up 4.21%, and international benchmark Brent crude is higher by 3.75%.
