US core inflation uptick caps larger rate cut bets

Good morning. Here's what happened overnight and what you need to know today.

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1.

Sticky inflation: US inflation showed mixed results in August, with core CPI rising 0.3% from July, the highest in four months, driven by higher shelter and service costs. Core CPI excludes food and energy. On a year-on-year basis, it rose 3.2%. Overall CPI increased 0.2%, in line with forecasts and advancing 2.5% year-on-year, its smallest rise since early 2021 and down from 2.9% in July. While goods prices declined, housing, airfares and services pushed inflation higher. The mixed messages delivered by the data lowered the chances of a larger half-point rate cut by the Federal Reserve on 18 September from the current year-long range of 5.25% to 5.5% — a 23-year high. Treasury yields rose, the S&P 500 dipped and then recovered, and the US dollar pared losses after the data was released. (Capital Brief) (US Bureau of Statistics)

2.

Labor reforms: Labor will introduce a revamped bill targeting misinformation, as well as new privacy reforms that include proposals to criminalise doxxing with penalties of up to six years in prison. The changes, to be introduced to Parliament on Thursday, include a more severe punishment of seven years if doxxing targets individuals based on race, religion or other protected attributes. The bill also introduces a statutory tort for serious invasions of privacy, allowing victims to seek compensation through the courts. Other measures include $3 million for a children’s online privacy code and enhanced enforcement powers for the Australian Information Commissioner. The doxxing crackdown was expedited after pro-Palestine activists leaked private information about Jewish writers and artists. The disinformation bill, meanwhile, will grant the Australian Communications and Media Authority (ACMA) new powers to oversee digital platforms and enforce industry codes if self-regulation fails. (Capital Brief)

3.

Chip tensions: Nvidia CEO Jensen Huang said frustrations among customers were mounting due to shortages in the company's AI chips. Speaking at a Goldman Sachs conference, Huang said customer relations were straining as everyone was racing to secure Nvidia's latest chips for AI development. “The demand on it is so great, and everyone wants to be first and everyone wants to be most,” Huang said. “We probably have more emotional customers today. Deservedly so. It’s tense. We’re trying to do the best we can.” Most of Nvidia’s revenue is tied to major data centre operators like Microsoft and Meta. Huang said that while AI spending is under scrutiny, businesses have little choice but to adopt Nvidia’s advanced technologies to handle both traditional and AI-driven workloads. Acknowledging Nvidia's reliance on TSMC, Huang also said geopolitical risks with China could force a supplier change, though it may lower chip quality. (Bloomberg)

4.

Market leaks: ASIC is grappling with a surge in reports of market misconduct including insider trading and market manipulation, Capital Brief reported, citing data obtained under a freedom of information request. Suspicious activity reports (SARs) submitted with the regulator are on track to set a new record in 2024, according to the data. ASIC is expected to receive around 180 reports of misconduct this year — 30% more than last year and more than double the number received in 2021. University of Technology Sydney professor Talis Putnins attributed the rise to improved surveillance and corporate information leaks, made worse by the shift to remote working. Despite the uptick in reports, ASIC rejected suggestions of declining market integrity. The regulator currently has six insider trading prosecutions under way and is using advanced tools like Project Artemis for enhanced surveillance. (Capital Brief)

5.

Jobs axe: Samsung Electronics is cutting up to 30% of its overseas staff in sales, marketing and administration, with reductions of 15-30% planned for various divisions by year’s end, Reuters reported citing unnamed sources. The world's leading smartphone and TV maker is facing a downturn in its memory chips business and stiff competition from Apple and Huawei. The India unit of the South Korean-based company may lose up to 1,000 employees, while 30% of its sales staff in China is also at risk. The job cuts are in response to a projected global slowdown in demand for tech products as the global economy slows, one of the sources said. Meanwhile, a separate report by the Wall Street Journal said PwC’s US unit will lay off around 1,800 workers representing 2.5% of its workforce, in the unit’s first formal layoff round since 2009. (Reuters)

6.

Trump loss: Traders unwound positions tied to Donald Trump after many analysts judged Kamala Harris outperformed the Republican candidate in the presidential debate. Trump Media & Technology (TMTG) shares tumbled by as much as 17.87%, while Bitcoin fell 3.4% before recovering slightly to USD55,850 ($83,841). Shortly after the debate, pop megastar Taylor Swift told her 280 million Instagram followers she would vote for the Democratic ticket. Betting markets moved in Harris’s favour, further contributing to TMTG’s decline, ahead of the expiration of a lockup period on 19 September, when Trump and other insiders will be allowed to sell their shares. Meanwhile, green energy stocks surged, with the Invesco Solar ETF gaining 3% on speculation that a Democratic win would boost renewable energy funding. (Bloomberg)

7.

Google’s crush: Evidence from Google’s antitrust trial revealed a former executive told colleagues in 2009 that the company's goal was to "crush" rival advertising networks. Former president of display advertising, David Rosenblatt, who joined Google after its acquisition of DoubleClick and left the following year, said Google would “be able to crush the other networks and that’s our goal,” according to notes shown in court. "We're both Goldman and NYSE," he said, exemplifying the advantages of dominating the ad tech market by controlling both sides of the advertising process. Prosecutors argue Google sought to monopolise ad exchanges and ad servers, while Google denies the claims, citing competition from Microsoft, Amazon and Meta. (Reuters)

8.

M&A surprise: UniCredit CEO Andrea Orcel has approached Commerzbank management about exploring merger talks after the Italian bank acquired a 9% stake in the Munich-based lender to become its second-largest shareholder behind the German government, Reuters reported, citing an unnamed source. Commerzbank was caught by surprise but is reviewing its options, including defence strategies advised by Goldman Sachs, to maintain independence, the publication said. While Commerzbank is reportedly open to discussions, it remains focused on its standalone strategy. The German government recently reduced its stake from 16.5% to 12%. The move could trigger further consolidation in European banking, though it might face potential political and regulatory hurdles. Commerzbank shares rose 16.55% and UniCredit saw marginal gains. (FT)(Reuters)(Bloomberg)