US September core consumer prices rose 0.6% on a monthly basis, which is higher than the 0.4% expected in a consensus. Consumer prices rose by 0.4% overall, against 0.2% forecast.

The annual pace stands at 8.2 percent compared to a year ago, the Bureau of Labor Statistics said, which is only slightly below peak levels seen during the summer. This means that rate hikes are not having much effect so far and that curbing inflation will be harder than originally thought.

Wall Street indexes plunged after the release of the figures, with the Nasdaq 100 dropping to -3% in a few seconds.

As I wrote yesterday, there are now two camps within investors, those who believe that rate hikes are ineffective and even harmful, and so believe that the Fed will be forced to ease its monetary policy. And there are those who think that many more aggressive rate hikes are necessary to curb inflation, and that more pain is coming.

Looking at the minutes from the latest Federal Reserve meeting, it seems clear that officials believe that high interest rates are here to stay until prices come down. In essence, it said that the risk of too much action against inflation is less costly than too little action.

It's not looking good on financial markets right now. The accumulating disturbances are pushing investors to turn once again to central banks. But they are turning a deaf ear, too busy trying to control the mess that they probably contributed to reinforce by their passivity.

Yesterday, the S&P500, Dow Jones and Nasdaq 100 spent much of the session up, but took a nose dive at the end, after the release of the minutes of the last Fed meeting.

In other news, the financial community is still watching with some trepidation the United Kingdom, where the government and the central bank are openly arguing, which does little to restore calm to Gilts, the British government bonds, and obviously to the rest of the economy. There is a glimmer of hope, since Bloomberg reported that UK officials are discussing how to back down from Prime Minister Liz Truss’s disastrous minibudget.

In the oil market, prices have calmed a little since OPEC+ revised its global demand forecast downwards. But the United States is concerned that the cartel's recent pumping cuts will derail efforts to cap the price of Russian oil. This episode has in any case worsened relations between Washington and Riyadh.

 

Economic highlights of the day:

German consumer price inflation for September, US inflation for September and US weekly jobless claims are today's main indicators. All the macro agenda is here. 

The dollar is up against the euro to EUR 1.0353 and down against the pound to GBP 0.8882. Gold is losing ground to USD 1651. Oil continued its decline, with North Sea Brent crude at USD 91.40 per barrel and US WTI light crude at USD 85.85. The yield on 10-year US debt remains near 3.92%. Bitcoin is hovering around USD 19,000 per unit.

 

In corporate news:

* Applied Materials announced Wednesday that new U.S. export restrictions on China would result in a $250 million to $550 million impact in the quarter ended Oct. 30 and a similar impact in the following three months. The stock is down 1.15% in pre-market trading.

* Delta Air Lines - The U.S. airline reported a lower-than-expected quarterly profit on Thursday but said it expects solid travel demand despite increased risks of an economic recession. The stock jumps 4% in pre-market trading.

* Blackrock - The world's No. 1 asset manager reported a decline in third-quarter profit Thursday as volatile global markets weighed on fee income. The stock was virtually flat in pre-market trading.

* Walgreens Boots Alliance gained 6.4% in premarket trading on the back of better-than-expected quarterly results.

* Chevron - The U.S. oil giant said Wednesday it sees growth opportunities in liquefied natural gas (LNG) in Europe due to strong demand.

* Conx, an investment firm backed by DISH NETWORK Chairman Charles Ergen, announced Wednesday that it is in preliminary discussions to acquire Dish's cell phone division, Boost Mobile.

* Digital World Acquisition jumped 10% in after-hours trading after a report from Axios that Alphabet subsidiary Google has agreed to distribute Donald Trump's Truth Social app, which was born of the merger between Digital World Acquisition and Trump Media & Technology Group.

* Victoria's Secret gained 3% in pre-market trading as the company announced that it expects third-quarter earnings per share to be at the high end of its previously reported range.

 

Analyst recommendations:

  • Air Products: Goldman Sachs reinstated coverage with a recommendation of buy. PT up 29% from last price to $295.
  • Axalta: Goldman Sachs reinstated coverage with a recommendation of buy. PT up 36% to $29.
  • Biogen: Stifel raised its recommendation to buy from hold. PT up 18% to $299.
  • Colgate-Palmolive: J.P. Morgan upgrades to overweight from neutral. PT up 14% to $79.
  • Comcast: Citi analyst upgrades to buy from neutral. PT up 25% to $36.
  • DS Smith: Morgan Stanley moves from Overweight to Equal-Weight with a GBp 340 target.
  • Eastman Chemical: Goldman Sachs reinstated coverage with a recommendation of neutral. PT set to $78.
  • Glencore: Goldman Sachs remains Buy with a price target raised from GBp 610 to GBp 700.
  • Huntsman: Goldman Sachs reinstated coverage with a recommendation of sell. PT up 1.5% to $26.
  • Informa: Goldman Sachs resumes coverage to buy targeting GBp 775.
  • Kronos: Goldman Sachs initiated coverage with a recommendation of sell. PT up 1.5% to $9.
  • Mondi: Morgan Stanley moves from Equal-Weight to Overweight targeting GBp 1800.
  • Owens & Minor: Citi downgrades to neutral from buy. PT up 19% to $18.
  • Sage: HSBC starts tracking as buy, targeting GBp 845.
  • Simon Property: Morgan Stanley reinstated coverage with a recommendation of overweight. PT up 40% to $131.
  • Staar Surgical: Mizuho Securities initiated coverage with a recommendation of buy. PT up 21% to $85.
  • Smurfit Kappa: Morgan Stanley moves from Equal-Weight to Overweight, targeting GBp 3,200.
  • Willis Towers: Piper Sandler upgrades to overweight from neutral. PT up 24% to $250.