Markets and crypto wobble as inflation rears its head

Ian Mount in Madrid here, filling in ever-so-briefly as Bernhard flies across the “pond.”

Inflation is the word of the day, and so far it’s not a happy one. Data that came out of Beijing today was not encouraging for those who regularly use the word “transitory”, and the U.S. CPI number coming out this morning is also expected to show an upward tick in October, putting more pressure on the Fed to do…something.

“A lot is resting on this inflation being transitory. This will be the multi-trillion dollar question for 2022, that’s for sure,” Deutsche Bank’s Jim Reid wrote this morning.

GE investors yesterday got what they’d been asking for—forever, it seems—as the conglomerate announced that it would break into three and stop being, well, a conglomerate. But the excitement was short lived: after spiking on the news as much as 17% in premarket trading, the fallen giant closed up a mere 2.7%.

Crypto is a bit unsure too. A day after reaching record highs and pushing the overall crypto market to a $3.1 trillion market cap, Bitcoin and Ethereum have both dropped some 2% over the past 24 hours.

At least we can look forward to watching more about people who will risk almost certain death to repair their disastrous finances. That’s right, Squid Game is coming back. The Netflix hit will return for another season, creator Hwang Dong-hyuk said at a Los Angeles event: “You leave us no choice.” One hopes Season 2 ends better than the Squid Game crypto.

Now, let’s check in on the headlines moving markets.

Markets update

Asia

• Markets in Asia were mixed, with the Hang Seng up 0.7% while the Nikkei and the Shanghai Composite fell 0.6% and 0.4% respectively.
• Producer prices in China rose 13.5% year-over-year in October, higher than the 12.3% expected—and the highest in more than a quarter century. Consumer prices also rose more economists predicted—1.5%—stoking worries that producers were passing on the pain.
• Also from China: prominent University of Chicago economist Robert Z. Aliber tells Coins2Day‘s Shawn Tully that ‘China’s economy is hitting a great wall’ as parallels to the 2008 housing crash in the U.S. Point toward a major recession.

Europe

• The European bourses were mixed at the start. The Stoxx Europe 600 is down 0.4%, while London’s FTSE 100 was up 0.3% and Germany’s Dax was down by the same amount
• The U.K.’s National Institute of Economic and Social Research warned that Britons’ living standards will take a hit as welfare payments drop and the three horseman of the economic apocalypse—inflation, interest rates and taxes—rise. “Household incomes will be painfully squeezed,” the research group said.
• Elsewhere, in COP26 land…the fashion industry promised to speed up its decarbonization, my colleague Sophie Mellor reports from Glasgow, although many of the biggest online brands sat out the declaration. Achim Berg, a McKinsey senior partner who authored a report on fashion industry emissions in 2020, was not convinced: “So halving emissions from today would be great progress but too little too late.” 

U.S.

• U.S. Futures are all trading down slightly this morning. That’s after all three major indexes fell from their record highs on Tuesday, ruining the S&P 500‘s attempt at a ninth-day winning streak, which would have been the longest run of consecutive rises since November 2004. Walt Disney reports today, after the close.
• Rivian trots out its IPO today, and it’s a big one. The EV truck maker (mostly for investor Amazon) priced shares at $78, making the offering the biggest of 2021 and the sixth-largest ever. But Rivian is not the only wannabe Tesla killer that is revving its engines.
• The Labor Department releases October CPI data at 8:30 a.m. ET, and it’s expected to be a doozy. Economists polled by Dow Jones expect a monthly pop of 0.6%, and a year-over-year gain of 5.9%—the highest since 1990.

Elsewhere

• Gold is off slightly, trading around $1,825/ounce.
• The dollar is a touch higher.
• Crude is flat with Brent  hovering above $84/barrel this morning.
• Crypto is down with Bitcoin back under $67,000.

***

Reader note: Bernhard will be back tomorrow, writing from New York. Bull Sheet will still land in your inbox before the opening bell, but it may be a bit later than normal.

***

Bernhard Warner
@BernhardWarner
[email protected]

As always, you can write to [email protected] or reply to this email with suggestions and feedback.

Today's reads

The 7 Elon Musk tweets that have sent Tesla shares on a rollercoaster ride—Coins2Day

Market candy

Quiz time

The S&P 500 is on a record-setting run. Ahead of yesterday's market open, the benchmark had closed higher in 17 of the previous 19 trading sessions. In the past month, the S&P was up 6.9% in the previous month (as of the Nov. 8 close). Which sector is the best performer in that period? Is it:

• A. Technology
• B. Financials
• C. Consumer Discretionary
• D. Energy

The answer is C, consumer discretionary, up a whopping 12.6%.