🚀 US inflation at 3.7%

Market Overview
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Year To Date Performances:

1. The Commerce Department reported Wednesday that the Federal Reserve’s preferred inflation metric, the personal consumption expenditures price index, increased 0.2 percent in July. This brings an annual rate of 3.7 percent, slightly topping consensus estimates, while core PCE rose 0.2 percent monthly and 3.3 percent annually in line with expectations. A 0.1 percent decline in goods prices was offset by a 0.3 percent rise in services costs, even as personal income and spending both came in stronger than anticipated. With inflation remaining stubbornly above the central bank’s two percent target and Treasury yields hovering near multi-year highs amid broader fiscal debt concerns, the mixed economic data leaves Federal Open Market Committee policymakers weighing their next interest rate move ahead of Federal Reserve Chair Kevin Warsh's upcoming address at the annual Jackson Hole symposium.

2. Meta has agreed to a landmark $16.7 billion settlement with a bipartisan coalition of 29 states led by California. This settlement resolves a high-profile federal lawsuit in Oakland that accused the social media company of downplaying the mental health risks its platforms pose to youth. Beyond financial payouts—which will be distributed over ten years to fund state-directed online safety initiatives, alongside a separate $1 billion settlement with Texas—the proposed consent judgment mandates major operational changes for Facebook and Instagram, including enforced daily usage limits and nighttime locks for teenagers, robust age verification steps, and enhanced parental controls. While Meta's shares rose nearly two percent following the announcement despite expecting a $10 billion legal expense accrual in the third quarter of 2026, the company continues to face legal exposure from separate youth-safety actions, personal injury suits, and nationwide claims brought by public school districts against Meta and competing platforms like TikTok and YouTube.

3. Bill Gates has issued a stark warning in a new essay published Wednesday, cautioning that society lacks a unified strategy to handle the severe economic, political, and social disruption incoming from rapid artificial intelligence integration. Shifting from his historically optimistic posture, Gates argued that AI risks becoming "the worst source of injustice" by automating both white-collar knowledge work and blue-collar labour faster than the market can generate new roles, leaving young professionals and displaced workers vulnerable to widespread structural unemployment. To mitigate these systemic risks while harnessing the technology's potential to address climate change and global health crises, Gates called for the immediate creation of dedicated national regulatory bodies alongside a novel international governing organization modelled on aviation safety frameworks and nuclear non-proliferation regimes.

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