1. The process of reducing inflation in the United States has slowed down, and there are differences of opinion on the Fed’s interest rate cut
The minutes of the Federal Reserve's September meeting released this week showed deeper differences over the extent of the rate cut. Although Powell's leadership led to almost unanimous votes in favor of a 50 basis point rate cut, not only one official, Board member Bowman, advocated a 25 basis point cut, but more officials believed that policy normalization should be gradual.
Data on Thursday showed that the U.S. CPI rose 2.4% year-on-year and 0.2% month-on-month in September; the core CPI rose 3.3% year-on-year and 0.3% month-on-month, both exceeding market expectations. From the perspective of the super core service inflation that Federal Reserve Chairman Powell is concerned about, the year-on-year and month-on-month growth rates in September were 0.02 percentage points lower and 0.06 percentage points higher than in August, respectively, and the month-on-month growth rate has increased for three consecutive months.
The data showed that the US anti-inflation process has begun to slow down, and the risk of a rebound in core inflation, which was previously worried about, has emerged, which may have a significant impact on the pace and extent of subsequent interest rate cuts. After the data was released, traders bet that the probability of the Federal Reserve cutting interest rates by 25 basis points in November is higher than 80%.
Three Fed officials, including New York Fed President Williams, downplayed the unexpectedly strong CPI in September, suggesting that interest rates could continue to be cut, but several officials expressed their willingness to cut interest rates gradually this week. Atlanta Fed President Bostic is even open to not cutting interest rates in November. He had previously said that he was still highly focused on the inflation target, but the mission of employment became prominent. If the number of new jobs per month fell below 100,000, he would doubt whether to consider a faster rate cut.
St. Louis Fed President Musalem also said that further rate cuts are likely, but his personal interest rate expectations are higher than the median shown in the dot plot. Boston Fed President Collins stressed that rate cuts should be cautious and based on data. Dallas Fed President Logan said that after the sharp rate cut in September, he tended to return to normal interest rates in a "more gradual path". The Fed needs to slow down the pace of rate cuts to deal with economic uncertainties. Minneapolis Fed President Kashkari believes that the neutral interest rate is close to 3%; San Francisco Fed President Daly may cut interest rates once or twice this year.
Ray Dalio, founder of Bridgewater Associates, predicts that the Fed will not cut interest rates again, as he believes that the US economy is currently in a relatively good state of balance. Renowned economist Nouriel Roubini warned that if Trump is elected president, the US will face stagflation. The chief investment officer of RBC BlueBay believes that the policies of both presidential candidates are likely to push up inflation, and the Fed may be forced to raise interest rates next year.
In addition, employment data showed that the number of initial jobless claims last week rose to the highest level in more than a year, affected by hurricanes and layoffs at auto companies. On the economic front, the Atlanta Fed GDPNow model expects the US Q3 GDP growth rate to be 3.2%, compared with the previous forecast of 2.5%.
2. NDRC’s important announcement: systematically implement a package of incremental policies to boost the capital market
On October 8, the State Council Information Office held a press conference, and the head of the National Development and Reform Commission introduced the relevant situation of "systematically implementing a package of incremental policies to solidly promote the upward economic structure and the continued improvement of the development trend."
Zheng Zhajie, director of the National Development and Reform Commission, and deputy directors Liu Sushe, Zhao Chenxin, Li Chunlin, and Zheng Bei appeared on the same stage. In response to new situations and new problems in the current economic operation, while effectively implementing the stock policy, Zheng Zhajie introduced that around the five aspects of increasing countercyclical adjustment of macroeconomic policies, expanding domestic effective demand, increasing support for enterprises, promoting the real estate market to stop falling and stabilize, and boosting the capital market, a package of incremental policies will be launched to promote the continued recovery of the economy.
3. my country's first monetary policy tool to support capital markets is implemented
The People's Bank of China announced on October 10 that it has decided to create a "Securities, Funds, and Insurance Companies Swap Facility". From now on, eligible securities, funds, and insurance companies will be supported to exchange high-grade liquid assets such as treasury bonds and central bank bills from the central bank with assets such as bonds, stock ETFs, and CSI 300 constituent stocks as collateral. The scale of the first phase of the operation is 500 billion yuan, and the scale of the operation can be further expanded depending on the situation. According to people close to the central bank, the swap facility period shall not exceed 1 year, and an extension can be applied after the expiration; the scope of collateral may be expanded in the future depending on the situation.
According to 21st Century Business Herald, CITIC Securities has already won the first order, with a scale of about 10 billion yuan. Leading securities firms such as China International Capital Corporation are also actively applying.
4. Soliciting opinions on the draft law on promoting private economy
On October 10, the Ministry of Justice and the National Development and Reform Commission announced the "Law of the People's Republic of China on Promoting the Private Economy (Draft for Comments)" and solicited public opinions. A relevant person in charge of the Private Economy Development Bureau said that as my country's first basic law specifically on the development of the private economy, the draft clearly defines the overall requirements for promoting the development of the private economy, and makes provisions in terms of fair competition, investment and financing, scientific and technological innovation, standardized operations, service guarantees, rights and interests protection, and legal responsibilities, so as to better play the role of the rule of law in consolidating the foundation, stabilizing expectations, and benefiting the long-term, stabilize market expectations, boost development confidence, and create a legal environment and social atmosphere conducive to the common development of various ownership economies, including the private economy.
5. Many banks will reduce existing mortgage loans to LPR-30BP in Beijing, Shanghai, Shenzhen and other places
This week, the five state-owned banks, including ICBC, ABC, BOC, BOC, CCB, and CCB, as well as several banks, including CMB, SPDB, Zheshang Bank, and Industrial Bank, released FAQs on the adjustment of existing mortgage rates, clarifying that except for second mortgages in Beijing, Shanghai, and Shenzhen, mortgage rates higher than LPR-30BP will be uniformly adjusted to LPR-30BP. Among them, ICBC has decided to make the uniform adjustment on October 25, and other banks will complete the adjustment before October 31.
6. The joint working group of the central bank and the Ministry of Finance held its first formal meeting
On October 9, the People's Bank of China and the Ministry of Finance established a joint working group and held the first formal meeting of the working group recently. They fully affirmed the close cooperation between the two sides in the central bank's treasury bond trading in the early stage, established the working group's operating mechanism, and exchanged views on issues such as the operation of the bond market. Both sides agreed that the central bank's treasury bond trading is an important means to enrich the monetary policy toolbox and strengthen liquidity management. In the next step, we must coordinate development and security, continue to strengthen policy coordination, continuously optimize relevant institutional arrangements, maintain the stable development of the bond market in the norms, and provide a suitable market environment for the central bank's treasury bond trading operations.
7. The futures market welcomes a major comprehensive document
The General Office of the State Council forwarded the opinions of the China Securities Regulatory Commission and other departments (on strengthening supervision, preventing risks and promoting high-quality development of the futures market), and deployed 17 key measures in eight areas, including strictly supervising futures trading activities, cracking down on illegal and irregular activities in the futures market, strengthening the full-process supervision of futures companies, strengthening risk prevention in the futures market, improving the quality and efficiency of commodity futures markets in serving the real economy, steadily and prudently developing financial futures and derivatives markets, steadily promoting the opening up of the futures market, and deepening futures market regulatory cooperation.
The document mentioned that it is necessary to study the inclusion of stock index futures and treasury bond futures in specific varieties for opening up to the outside world, allow overseas futures exchanges to launch more financial products linked to domestic futures prices, and strengthen the construction of regulatory capabilities in an open environment; strictly prevent companies from using credit funds in violation of regulations to engage in speculative trading in commodity futures; strengthen supervision of the entire process of high-frequency trading, and cancel the reduction of handling fees for high-frequency trading; enrich trading varieties, expand market coverage, improve trading convenience, strengthen the coordination and linkage between the futures and spot markets, and help enhance the inherent stability of the stock market, etc.
8. Iran prepares for Israeli retaliation, Hezbollah supports ceasefire in Lebanon
On the first anniversary of the Gaza War, the Israeli army continued to launch air strikes and ground offensives in Gaza and carried out ground operations in southern Lebanon. The Speaker of the Israeli Parliament said that the highest level is still discussing the plan of retaliation against Iran, and there will definitely be one, and it will definitely be significant. Israeli Defense Minister Galant said that the attack on Iran will be deadly, precise, and most importantly, unexpected.
Biden spoke with Netanyahu and stressed the need to minimize harm to civilians. He also tried to dissuade Israel from attacking Iranian oil fields. The Group of Seven countries considered imposing sanctions on Iran's oil industry.
Iran's semi-official news agency quoted military insiders as saying that at least 10 "tough response" plans have been prepared for possible Israeli attacks. Tehran warned that any retaliation would be met with a strong counterattack. Iranian official media reported that if Israel attacks anywhere in Iran, Iran will launch hundreds of missiles at Israel and target security, military and economic centers. Iran also announced that it is considering withdrawing from the (Non-Proliferation Treaty).
On October 8, Israeli Prime Minister Benjamin Netanyahu issued a video statement saying that Israel "has killed the successor of former Lebanese Hezbollah leader Nasrallah, as well as the successor of his successor". This week, Hezbollah publicly supported a ceasefire in Lebanon for the first time, without the condition of stopping the conflict in Gaza. Iran said it would support a conditional ceasefire between its allies Hezbollah and Hamas, but also warned that it would strike Israel again if necessary.
9. Tesla's "We, Robot" press conference: Cybercab unveiled, Robovan released
Tesla held a press conference, where Musk launched the driverless Cybercab, Robovan and upgraded Optimus robot. Here are the key highlights:
1. Robotaxi: Tesla released the Cybercab, a two-door, two-seater taxi with no steering wheel or pedals. It uses inductive charging and has no charging port. It also released the Robovan, a 20-passenger, self-driving bus that can accommodate 20 people and can also be used for cargo transportation.
2. Production time: Cybercab is expected to start production in 2026 and be produced at a very high volume before 2027. Users can experience driverless taxis on other Tesla models in advance.
3. Cost: Over time, it is expected that the Cybercab operating cost will be about $0.2 per mile, and the price including tax may be $0.3 or $0.4 per mile. It is expected that the Cybercab cost will be less than $30,000. The travel cost of Robovan is 5 to 10 cents per mile.
4. Autonomous driving: Tesla is expected to launch unsupervised fully autonomous driving (FSD) features for Model 3 and Model Y in Texas and California, USA next year.
5. Optimus Robot: Great progress has been made on the Optimus project, which will cost $20,000 to $30,000 when mass-produced. The Optimus robots performed a group dance at the launch event to demonstrate their flexibility, and also served drinks to visitors at a tour event after the launch event.
10. Multiple Nobel Prizes announced!
The 2024 Nobel Prize in the field of natural sciences has been announced. Artificial intelligence technology and its applications have "swept" the Nobel Prizes, becoming the biggest highlight of this year.
The 2024 Nobel Prize in Physiology or Medicine was awarded to scientists Victor Ambros and Gary Ruvkun for their discovery of microRNAs and their role in post-transcriptional gene regulation.
The 2024 Nobel Prize in Physics was awarded to British-Canadian Geoffrey Hinton and American John Hopfield for "fundamental discoveries and inventions for machine learning using artificial neural networks."
The 2024 Nobel Prize in Chemistry was awarded to David Baker for his contributions to computational protein design; the other half was jointly awarded to Demis Hassabis and John M. Jumper of DeepMind, an artificial intelligence company under Google in London, UK, for their contributions to protein structure prediction.
The 2024 Nobel Prize in Literature was awarded to Korean writer Han Kang for "her powerful poetic prose that confronts historical trauma and exposes the fragility of human life." She became the first Korean writer to win the Nobel Prize in Literature.
11. ECB meeting minutes: retaining the "two-way option"
The minutes of the European Central Bank's September meeting released on Thursday showed that eurozone inflation will rise again in the second half of this year and gradually fall back to the target in the second half of next year. In addition, the eurozone economic outlook is more worrying, but officials generally believe that the possibility of a recession is still small.
The minutes showed that policymakers were indeed concerned about cutting rates too quickly, noting that "the risks of a delay in the achievement of the ECB's objectives were seen as requiring caution to avoid a premature withdrawal of policy constraints" and that a "gradual and cautious approach" seemed appropriate for now because it was not yet entirely certain that inflation concerns had been addressed.
However, they also expressed growing confidence in the ECB's forecast that inflation will return to target by 2025 and supported "keeping full options open in the period ahead to react freely to all incoming data".
12. OpenAI expects its losses to reach $14 billion by 2026
OpenAI reportedly burned through $340 million in the first half of 2024 and may not be profitable until 2029, when its revenue will reach $100 billion. An analysis of data contained in OpenAI's financial documents shows that losses could reach as high as $14 billion by 2026, with total losses expected to reach $44 billion from 2023 to 2028. This estimate does not include stock compensation, which is one of OpenAI's largest expenses, although it is not paid in cash.
