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Inflation main concern for markets

Inflation main concern for markets

Inflation main concern for markets

Inflationary pressures continue to be a major issue for investors around the world, as we have seen the CPI numbers coming out much stronger than anticipated in the United States, with a reading of 6.2%, to accelerate from the September number of 5.4% year on year rise. This is the fastest move in the United States for the last 31 years, suggesting that rising prices are going to continue to be a major drag on the economy.

 

Many economists still suggest that inflationary pressures will eventually ease, although it may end up being a situation where inflation settles at higher levels than were present before the pandemic. There is a huge debate as to whether or not it comes down to the supply chain issues, or if it is something more nefarious. Traders have begun to price in Federal Reserve rate hikes midyear in 2023, which has brought on a certain amount of strength to the US dollar.

Americans mull banning oil exports

Americans mull banning oil exports

President Joe Biden faces even more pressure this past week from fellow Democrats to address the rising energy prices in the United States. There is a significant call for a return to a ban on US crude oil exports, which had been lifted just six years ago after a 40-year term. The opening of US crude oil exports began to shape the US economy as a net oil exporter, but various initiatives taken by the Biden administration from day one have targeted fossil fuels.

 

In the current environment, there is a serious supply chain issue when it comes to crude oil, as well as a lack of supply to meet demand. In this scenario, just a few years ago the United States would have simply relied on its own domestic production, but this has since been shut down quite drastically. The midterm elections are in the minds of Democrats, as their chances of retaining any type of power beyond the presidency grow dimmer by the day. Furthermore, if the US does ban exports, it could upend oil markets globally. While no actual action has been taken, this is something that is worth keeping an eye on.

Chinese crackdown on tech stocks showing signs of damage to stalwarts

Chinese crackdown on tech stocks showing signs of damage to stalwarts

The year-long crackdown by China on its technology industry is starting to take a heavy toll on one of its biggest companies, Tencent Holdings Ltd. The Internet giant said that revenue rose 13% to 142.4 billion yuan for three months that ended in September, the slowest pace since the company went public in 2004. The tougher regulations imposed by Beijing have negatively affected the advertising business and has restricted its gaming operations. Shares dropped as much is 3.4% on Thursday after the results were released.

 

This is the first of China’s technology giants to report financial results, and it does signal that the impact of the Communist Party’s campaign to curb the power of its private sector may be more damaging than originally thought. A mass number of new rules and restrictions have struck at the foundations of the biggest companies, as investors will now start to look at Alibaba for further clues.

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