US data gives mixed signals ahead of election, Fed cut

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

1.

Mixed signals: US data showing rising US consumer confidence, a cooling labour market and a widening trade deficit gave mixed economic signals, highlighting the challenge for policymakers to balance growth optimism with signs of slowing job demand and trade pressures. US consumer confidence surged in October, marking the strongest monthly rise since March 2021, as optimism over the economy and labour market grew, data from the Conference Board showed. The boost in confidence, however, came alongside data from the Bureau of Labor Statistics showing a decline in job openings to 7.44 million in September, the lowest since January 2021, according to its JOLTS survey. Elsewhere, the US Census Bureau also said the US trade deficit in goods surged by 14.9% in September to USD108.2 billion ($162.04 billion), the highest in over two years, as imports rose 3.8% amid strong consumer demand and stockpiling ahead of a potential portworkers’ strike. (Capital Brief)

2.

Chip build: OpenAI has partnered with Broadcom and TSMC to develop its first custom AI chip, Reuters reported citing unnamed sources. The chip is specifically designed for inference – meaning it helps AI make decisions based on new data – as OpenAI pulls back from an earlier, expensive plan to build its own network of chip factories, known as "foundries," which make chips from scratch. To meet its high infrastructure demands, OpenAI is also diversifying its chip supply by adding AMD’s MI300X chips alongside Nvidia’s GPUs, according to the report. Broadcom has assisted OpenAI with chip design and securing TSMC's manufacturing capacity, aiming to produce the chip by 2026. It comes as OpenAI’s attempts to manage surging compute costs, which are projected to push its annual loss to USD5 billion. (Reuters)

3.

AI hustle: Elon Musk’s xAI is in early talks with investors to raise billions at a valuation of over USD40 billion ($61 billion), up from USD24 billion in May, The Wall Street Journal reported. The startup, which shares resources with Musk’s other businesses, raised USD6 billion raise in the US spring, with the funds supporting the expansion of its data centre in Memphis, Tennessee, which Musk claims is the world’s largest AI training cluster. Musk recently announced plans to double the facility’s capacity from 100,000 to 200,000 GPUs. Musk’s vision is to outpace OpenAI, valued at USD157 billion, as major players like Alphabet and Meta intensify AI competition. (The Wall Street Journal)

4.

Final push: Vice President Kamala Harris will deliver a “closing argument” speech on Tuesday night (Wednesday morning AEDT time), to underscore the risks she believes Donald Trump poses to American democracy. Set at the Ellipse near the White House—the same site of Trump’s January 6, 2021 rally—Harris will seek to sway undecided voters by focusing on Trump’s coarse and tribal politics, according to advisers that spoke to The New York Times. She will also reiterate her own agenda to support Americans with economic policies and reproductive rights. Meanwhile, fallout from Trump’s Madison Square Garden rally continued as the Puerto Rican Republican party chairman demanded an apology over a featured comic who called the country a “floating island of garbage”. Trump dismissed criticism of his rally, labelling it “a love fest,” while allies attempted damage control amid concerns the backlash could sway battleground voters just one week to Election Day. (The New York Times)

5.

Afghan secrets: The Department of Defence is being investigated by the Office of the Australian Information Commissioner (OAIC) over claims it hid documents in response to a freedom of information (FOI) request related to a 2012 war crimes incident in Afghanistan, where Australian forces are accused of killing civilians in Uruzgan Province. The probe follows a request from war crimes researcher Chris Elliott, who sought internal Defence documents on the incident that were previously referenced in leaked ABC reports, known as "The Afghan Files." Defence claimed no such documents existed, though Elliott requested an OAIC review, arguing the documents clearly did exist given they were referenced in the Afghan Files and then-ADF commander David Hurley had spoken publicly about them. Defence submitted it took "all reasonable steps" to locate the records, but in correspondence cited by Capital Brief, the OAIC confirms its investigation is progressing. (Capital Brief)

6.

Upgrade inquiry: Prime Minister Anthony Albanese is facing the looming prospect of a Senate inquiry into the Qantas upgrades scandal with the Greens and senators David Pocock and Malcolm Roberts saying they are open to the idea. But crossbenchers want any probe to focus broadly on issues around lobbying, rather than act solely as a vehicle for the Coalition to attack the embattled prime minister, Capital Brief reported Albanese is under fire over claims – outlined in a new book by Joe Aston, The Chairman’s Lounge – that as transport minister in the Gillard government, he arranged guaranteed free upgrades on Qantas flights with the company’s chief executive Alan Joyce. Albanese has not denied a separate claim by Aston, that he personally liaised with Joyce to have his son made a member of the exclusive Qantas Chairman’s Lounge. (Capital Brief)

7.

HSBC boost: HSBC’s third-quarter profit rose 10% year-over-year to USD8.5 billion ($12.96 billion), surpassing forecasts of USD7.6 billion and aided by growth in wealth and wholesale banking despite volatile market conditions. HSBC also announced a new USD3 billion share buyback and an interim dividend of 10 US cents per share. Revenue increased by 5% year-over-year in the September quarter, reaching USD17 billion. Europe’s largest bank’s shift to an East-West geographic management structure reignited discussions among some analysts and investors about a potential split, echoing past calls from its former largest investor, China’s Ping An Insurance Group, which pushed for such a move in 2022-23 without success. But on Tuesday, CEO Georges Elhedery addressed the talk, saying "[The reorganisation] does not in any way signal our intention to split the group." (Capital Brief)

8.

Banking job cuts: Banco Santander, Spain’s biggest bank, will shed about 1,425 jobs in the UK this year as part of an ongoing plan to cut costs and streamline operations through automation, Reuters and Bloomberg reported citing CEO Hector Grisi. The reductions could increase based on customer support needs, Grisi told a press conference. The cuts began roughly two weeks ago, mainly in the bank's UK headquarters, according to Bloomberg. “It could affect additional” jobs, Grisi said in a press conference on Tuesday. “It will depend how many people we need for customer relations et cetera.” The company posted €3.25 billion ($3.51 billion) in net income for the September quarter, surpassing analyst forecasts. But net profit in Britain fell 19% year-on-year in the third quarter, while lending income was down 7%, according to Reuters. Santander’s UK workforce numbered 21,812 as of September, a decrease of 392 in the past year. (Capital Brief)