Wednesday's Markets Update (October 11, 2023)

12 Oct 2023 by rate3

On Wednesday, BLS data showed slowing PPI, and the Nasdaq was up slightly. However, investors stayed cautious ahead of Thursday's CPI report. BTC and ETH continue their demise on technicals suggesting weak support at 27K and 1.6K, respectively. Other news: UK Parliament attacks NFTs.

Details

Producer prices (PPI) rose 0.5% in September, the lowest increase in three months. This was higher than economists' expectations but lower than the previous month. The increase was driven by higher goods prices, led by a surge in gasoline costs. Prices for some services also increased, but prices for airline passenger services and other services fell. At the same time, FOMC meeting minutes showed that the Fed intends to keep interest rates at restrictive levels for a prolonged period. Of course, it happened before the Middle East war erupted.

Comment: FYI

What are the advantages of PPI over CPI as an economic trends leading indicator?

The Producer Price Index (PPI) has several advantages over the Consumer Price Index (CPI) as an economic trends leading indicator.

PPI is more timely. The PPI is released two weeks before the CPI, which gives economists and investors more time to react to changes in economic trends.
PPI is more sensitive to changes in economic activity. The PPI measures the prices that businesses receive for their goods and services, while the CPI measures the prices that consumers pay for goods and services. Businesses are more likely to adjust their prices quickly in response to changes in economic activity, so the PPI is more sensitive to these changes than the CPI.
PPI is less affected by government policy changes. The CPI can be affected by government policy changes, such as changes in taxes or subsidies.
Overall, the PPI is a more timely, sensitive, and reliable leading indicator of economic trends than the CPI, and its current slowing down might be a positive sign for traders, as it strengthens the position of "doves" in the FOMC. Still, Powell pays more attention to the CPI, so it is more watched by analysts.

Crypto

The UK Parliament's Culture, Media and Sport Committee published a report highlighting the challenges and risks of NFTs. The report found that NFTs have revolutionized the art and sports sectors, but they also pose significant copyright infringement, misleading advertising, and fraudulent sales concerns. The committee urged the government to work with NFT marketplaces to protect artists' copyright and to ensure transparent advertising practices. Fan tokens also pose potential financial risks for fans, despite being presented as a fan engagement tool.

Comment

The hypocrisy of Boomers is astonishing. They defend the current centralized, financial system, saying that the Fed stands for the "interests of the Society" by "mediating" the inconveniences of the "free market, which does not exist any way."

The Fed does this by decreasing rates when it's recession and increasing them when there's inflation. Boomers only do not answer the question of who and when might flawlessly defines what "recession" is and for whom this recession is really going on—and for whom it is not.

That is what is happening now. Boomers accumulated 7 Trillion worth of assets during their unusually long lives, and for them, investing in Treasuries for 5% is a dream they don't want to end. For the rest of us we have to work hard and to invest even harder to just make the ends meet.

At the same time, all Fed's officials and top decision makers bureaucrats are Boomers—so, please, don't tell me that it's a "coincidence" that they insist on keeping rates higher even now, when already two wars are raging, inflation is getting to its lowest at 3%, and several sectors of the economy (real estate, tech, and finance) are going to hell.

Of course, all "definitions" are a question of "taste," and that's the point. Either we are following the capitalist system, where market forces and competition on all fronts decide what to produce, what not to produce, and what rates to maintain, or we delegate that to 2-3 old dudes, which is what we're doing now.

In that case, please, stop calling this system "free and democratic." It is the Stalinism in its purest form, expressed by other means, when the financial fate of billions of people is decided based on the personal interests of a narrow group of privileged individuals in their "golden ages" with delusional views on almost everything.