Inflation may have peaked (in the US)

11 November 2022

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Happy Singles Friday! Careful with that credit card

US large-cap S&P 500 closed 5.54% UP ▲Tech-heavy NASDAQ closed 7.35% UP ▲Pan European STOXX Europe 600 closed 2.83% UP ▲HK’s Hang Seng Index closed 1.7% DOWN 🔻Japan’s Nikkei 225 closed 0.98% DOWN 🔻


WeWork co-working, co-closing
“FTX.US users are fine” Or not.


Inflation may have peaked (in the US)

📖   MoneyFitt EXPLAINS

🎓 Soft Landing


And the hottest news of the day has nothing to do with any crypto-shenanigans and narrowly-avoided Lehman Moments. Red waves, tides or tsunamis don’t come into the picture, either, and it certainly doesn’t rhyme with “Belon Busk.”

We’re back to regular programming for 2022 (or perhaps 1981) and focusing on inflation. October inflation was quite a lot lower than expected, sending stock and Treasury (US government) bond prices ABSOLUTELY THROUGH THE ROOF!

WeWork co-working, co-closing

Flexible shared workspace and office co-working company WeWork announced a third-quarter loss of 66 cents a share, which was a lot worse than the 44 cent loss that Wall Street’s highly-paid analysts were expecting. It also provided a disappointing forecast for fourth-quarter revenue.

More interestingly, WeWork will be closing down about 40 underperforming locations in the US (about 5% of its deskspace) to cut costs in preparation for the recession to come. WeWork is particularly exposed because SMEs (small and medium-sized enterprises) are likely to cut costs, possibly with more WFH (work-from-home.)

WeWork was a high-profile IPO that after a 2-year struggle involving a public row and then a massive payoff to its charismatic co-founder Adam Neumann (and the apparent lack of a business model with any plan to ever earn a profit) got its NYSE listing through a merger with a SPAC (a blank cheque company.) In January 2019, the company was supposed to IPO at a valuation of US$47bn, but by the time it actually listed in October 2021 it was down to US$9bn at a price of US$10.38 per share. It’s currently trading at about 1/4 of the IPO price and the market cap (number of shares times share price) is under US$2bn.

“FTX.US users are fine” Or not.

In the fast-moving train wreck that is crypto exchange FTX International and its sister trading firm Alameda Research, third sibling FTX.US was supposed to have been safe as it was set up as an independent entity that met with US domestic regulations. While apologising for the chaos and crisis in the former two, FTX boss Sam Bankman-Fried (SBF) has been repeatedly saying that all FTX.US users “are fine”.

But now on the FTX.US website: “Trading may be halted on FTX.US in a few days. Please close down any positions you want to close down.”

FTX will need to file for bankruptcy unless it can secure a cash injection to fill huge shortfall, with SBF reportedly looking everywhere to raise US$6-8 billion. After 1) Arch-rival Binance backed out of the deal to buy FTX after doing due diligence and 2) top-tier venture capital investor Sequoia very publicly considered its US$213 million in in and FTX US worthless, it is sounding like more of a long shot. One issue several authorities are looking into is whether customer funds were misused by FTX to prop up Alameda after it lost money on the Voyager Digital bankruptcy in July.


Inflation may have peaked (in the US)

Specifically, the US consumer price index (CPI) for October came in lower than armies of highly-paid economists on Wall Street were expecting. Compared to the month before, prices were 0.4% higher, while consensus was expecting 0.6% higher. 

Prices in October were 7.7% higher than in the same month last year, a lower increase than both the 8% economists were forecasting as well as September’s 8.2%. This is still very high, considering the target is just 2%, but it is also a lot lower than the 9.1% peak in June, the highest since November 1981. 

More important is the “core CPI” which strips out food and energy prices, which tend to be more volatile. October’s Core CPI came in at 0.3% up on the month, compared to 0.6% forecast and 0.6% in September. That may not sound like a huge difference, but 12 months in a row of 0.3% a month gives you annual inflation of 3.7%, versus 7.4% with a year of 0.6% monthly increases.

It’s just one month, but it’s a sign that perhaps, just perhaps, the Fed’s slow-to-start but aggressive interest rate hikes are starting to bite, but not so much that a recession is a done deal. Chances are still slim, but there’s a chance of a soft landing 🎓, with US labour markets still in quite good shape.

(The Fed has a “dual mandate” meaning that it is responsible for keeping inflation at 2% as well as ensuring “maximum employment”, which isn’t the same as no unemployment.)


Inflation is basically a general increase in prices in an economy over a period of time. 

When this happens, the value, or purchasing power, of money goes down.Inflation is usually caused by too much demand for something relative to how much is available, or by the cost of producing (or importing) something going up. Both can lead to a vicious cycle of rising prices, usually when higher prices become expected.

The Consumer Price Index is a way of measuring inflation in an economy based on the increase in the overall price of a “basket” of items that an average individual would spend on.

Thank you for spending a few minutes of your time with us. Remember to take time for yourself and be thankful for what you have.

📖 MoneyFitt EXPLAINS:

🎓 Soft Landing

This is where after a period of very strong growth, an economy slows down to catch its breath without passing out and needing life support. 

In other words, slowing down enough to reduce demand for goods and services enough that inflation and the overall cost of living is no longer a problem, but without going into a recession.

It is normal in an economic cycle for economies to speed up and slow down, with inflation and employment levels usually driving the official and unofficial decision making by central bankers. It takes skill, luck and a lot of guts even when a central bank is independent of the government it reports to.

A “soft landing” is known as the Goldilocks scenario… 🥣not too hot, not too cold. It can sometimes also feel as unattainable as a fairy tale ending.

Please do your own research – we create educational and entertaining content so you can start the day understanding the financial and business worlds a little better. However, this is NOT financial advice.

MoneyFitt (Spendolater Pte Ltd) is not responsible for any errors or omissions, or for the results obtained from the use of this information. All information is provided “as is”, with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information. The information contained is not intended to be a source of advice or credit analysis with respect to the material presented. Any ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial, tax or legal professional and independently researching and verifying information. Content is intended to be used and must be used for informational purposes only.

MoneyFit Morning Archive (to 07-Nov-22)

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