Inflation proving hard to control

Market Overview
Read time 1.4 minutes

Year To Date Performances:

1. While in theory, stabilizing inflation near the Federal Reserve's 2% target seems straightforward, the reality may be more complex. The primary culprits behind the inflation surge are services and shelter costs, areas that have demonstrated resilient price growth even as other sectors have shown deceleration. Prices in sectors like rents and medical care have been more persistent than in areas such as food, gas, or vehicles, making them harder to control. Steven Blitz, Chief U.S. Economist at GlobalData TS Lombard, starkly suggests that achieving the inflation target might necessitate a recession. Recent data indicates that annual inflation, as gauged by the consumer price index, was at 3.7% in September. Notably, shelter costs rose by 7.2%, highlighting the challenges the Fed faces in achieving its inflation goal. Uncertainties dominate the market outlook, with experts debating potential policy responses, including the possibility of another interest rate hike this year. Concerns also persist about the broader impacts of rising rates on housing, a sector central to the inflation narrative. While the Federal Reserve aims to bring inflation down to its 2% target, several factors, both pandemic-related and otherwise, continue to influence the economic landscape.

2. Microsoft's whopping $69 billion acquisition of Activision Blizzard has received approval from the UK's Competition and Markets Authority, marking the clearance of a major international regulatory hurdle for the gaming industry's largest deal. To alleviate competition concerns, Microsoft has offered concessions, including the sale of specific gaming rights to French firm Ubisoft Entertainment SA. This measure, approved on Friday, aims to preserve competitive prices and improve services in the gaming sector.

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4. Headlines

   1. JPMorgan beat expectations on its earnings call last week.

   2. Russian sanctions combined with the conflict in the Middle East could lead to a drastic surge in oil prices.

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