US inflation sees unexpected rise in February

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

1.

Unwelcome data: US headline inflation increased unexpectedly to 3.2% during February, remaining well ahead of the Federal Reserve's 2% inflation target. The data released overnight shows US core inflation, which excludes changes in food and energy costs, was 3.8% during February compared with 3.9% the month prior. Economists had expected a fall to 3.7%. The figure shows a 0.4% climb from January and a 3.8% increase from one year ago. Core CPI is a preferred measure to overall CPI. The inflation data will be closely scrutinised by the Federal Reserve ahead of its upcoming meeting on March 20 next week. The central bank is expected to hold rates steady at its next meeting, having said it plans to wait until it sees signs of cooling inflation before beginning to make cuts. (US Bureau of Labor Statistics)(Bloomberg)

2.

Tech truce: Yielding to pressure from European regulators, Apple will allow iPhone apps to be directly downloaded from developers’ websites to meet new rules forcing the tech giant to open up its ecosystem. The European Union’s Digital Markets Act, which came into force last week, requires Apple to offer app store competitors on their iPhones, and allow developers to opt out of Apple’s in-app payment system which charges up to 30% in fees. Apple explained that it will provide access to APIs that facilitate the distribution of developers’ apps from the web, integrate with system functionality, back-up and restore users’ apps. Developers will be required to pay a core technology fee of €0.50 per install over one million downloads per year, as well as for each install over one million downloaded over the past 12 months. (Apple Press Release)(Reuters)

3.

PwC pain: The AFR has confirmed that PwC Australia will announce a wave of redundancies today, after partners were made aware of the cost-cutting drive during a webcast at 5pm on Tuesday evening. 400 roles will be made redundant as part of the restructure, amounting to over 5% of the firm’s 7,200 workers. The firm aims to reduce its costs by $100 million amid a consulting slowdown. According to the newspaper, the restructure, which has been codenamed Project Maple, will centralise back office and other support functions that had been split across PwC’s three divisions. The cuts will largely come from duplicated support roles and the firm’s consulting group. Project Maple will also involve other cost-cutting measures, with the possibility of more layoffs down the line remaining. (Australian Financial Review)

4.

Microsoft, Meta and the media: Microsoft has reaffirmed its support of Australia’s media code as Meta continues to dig in its heels. “Microsoft supported the News Media Bargaining Code in Australia and other legislative efforts elsewhere, to provide fair compensation for local, public interest journalism,” a Microsoft spokesperson told Capital Brief. The tech giant was an early and consistent support of the framework which compels its rivals Meta and Google to strike deals with news providers and is designed to redress a bargaining power imbalance between platforms and publishers. Earlier this month Meta said it would no longer pay for news in Australia or any other country, putting around $70 million of deals struck under the deal at risk. (Capital Brief)

5.

Big Tech = Big legal battles: Competition and big tech regulation in Australia is set to take centre stage as Apple, Google and Epic Games begin a 16 week legal battle before the Australian Federal Court this week. Hot on the heels of Apple’s decision to allow EU developers to directly distribute apps outside of the tech giant’s App Store, Epic alleges that Apple and Google engage in restrictive trading practices and misuse of market power via their respective app stores. The dispute is likely to influence ongoing regulatory discussion in the country beyond in-app marketplaces. (Capital Brief)

6.

Murdoch M&A: Rupert Murdoch’s News Corp. and the owner of the UK’s Daily Mail are considering a joint takeover bid for the Telegraph and the Spectator. Under the offer, if the Daily Mail owner DGMT and News Corp. join the UAE-backed consortium Redbird IMI it would reduce Redbird’s ultimate stake in the Telegraph Media Group, easing government concerns around control of the outlet. Sources cited by Bloomberg say that the discussions are in preliminary stages and it remains unclear as to whether the parties would seek to eventually split up the assets. (Bloomberg)

7.

Golden age of Goldman credit: Goldman Sachs Asset Management is planning to expand its private credit portfolio to USD300 billion ($454.27 billion) over the next five years. Goldman’s global head of asset and wealth management, Marc Nachmann, told Reuters that the firm plans to extend its current USD130 billion portfolio, as Wall Street banks continue to build out private credit businesses by partnering with PE firms and asset managers. Nachmann added that of the USD30-USD40 billion Goldman plans to raise for alternative investments this year, at least one third will be dedicated to financing private credit strategies. (Reuters)

8.

IPO backlog: Healthcare startup Tempus, has enlisted Morgan Stanley to run its IPO in the coming months, according to unnamed sources cited by The Information. The US medical lab testing and data startup has raised over USD1.3 billion in funding from investors including Google, and was last valued at USD8 billion in 2022. Despite reaching a high valuation, the company continues to burn cash due to the cost-intensive nature of running labs, and investors have marked down the per-share value of their stakes by about 36% in the past year. Hundreds of Tempus’ lab workers voted to unionise last week, in another move which could add to the company’s cost pressures. (The Information)