Hey Snackers,
For the holidays, Gen Z wants something cute, something scary, and something cute and scary. An entertainment consulting agency says Gen Z is obsessed with Minions, horror movies, and Dwayne “The Rock” Johnson.
Stocks rose after November inflation data came in cooler than forecast, boosting investors’ expectations that the Fed will hike rates by “only” 50 basis points at its big meeting today.
November’s consumer prices show “disinflation,” but reaching acceptable levels could mean more pain
One-two punch… It’s a big week for markets, with back-to-back economic headliner events. Today the Fed meets on rate hikes, and its decision will likely be informed by yesterday’s inflation report. US consumer prices were up 7.1% in November from last year (vs. 7.3% expected). The pace of inflation slowed again from 7.7% in October, showing “disinflation.”
- Disinflation: Like a balloon that’s getting more inflated, but at a less noticeable pace. Prices are rising — just not as fast as they were in previous months.
- Deflation: Like a balloon that’s losing air — aka: not what’s happening now. Deflation is a broad drop in prices and can signal an economic downturn.
- Expectation: Investors celebrated the report because it raises the likelihood that the Fed will hike rates by 50 basis points today (vs. another 75 bps hike, as we had the past four times).
Potato-potahto… While food prices continued ticking up, price growth has slowed since July (potatoes led the charge, with prices falling a spudtacular 8.4% in November). Meanwhile, the energy index fell 1.6% for the month as gas and electricity prices dropped, contributing to disinflation (oil prices are actually down for the year). But housing and rent prices canceled out the energy cooldown, accounting for nearly half the total increase in core inflation. We’re not out of the inflated woods just yet.
Pausing ≠ reducing… While disinflation is happening, inflation’s still abnormally high (energy prices alone are still up 13% from last November). That’s why the Fed’s expected to keep hiking into the new year, though less aggressively. Even if Fed Chair Powell pauses hikes early next year, high interest levels could stick around until the Fed sees a meaningful cooldown in growth. And it could be a while before the Fed actually starts cutting.
Sam Bankman-Fried's arrest could bring about major changes for crypto
Less white-sand beaches… more courtroom speeches. Disgraced crypto "wunderkind" Sam Bankman-Fried was arrested Monday in the Bahamas at the request of the US gov’t (see: $1B+ of customer funds missing). Instead of attending his scheduled remote testimony before Congress yesterday (with planned remarks feat. an F-bomb), the former FTX CEO appeared in Bahamian court. Earlier, US federal prosecutors had charged him with numerous counts of fraud and violations of campaign-finance regulations.
- New tech, old playbook… John Jay Ray III, who's overseeing FTX's bankruptcy, yesterday described the case to Congress as "old-fashioned embezzlement."
- 'Twasn't the season… Prosecutors accused SBF of criminal activity dating back to 2019 — long before crypto winter.
Everyone wants in… on FTX's punishment. While federal prosecutors brought criminal charges against SBF, the Securities and Exchange Commission filed a civil complaint charging FTX with scheming to defraud investors. Yesterday, SEC Chair Gary Gensler said SBF built a “house of cards on a foundation of deception.” Also yesterday, the Commodity Futures Trading Commission charged SBF, FTX, and Alameda Research (SBF's crypto hedge fund) with fraud.
- If convicted on all criminal charges, SBF could face life in prison. But he suggested in Bahamian court yesterday (notably wearing a suit instead of his trademark shorts) that he might fight extradition to the US.
- If he stays in the Bahamas, he could be sent to a prison known to be dangerously overcrowded. SBF's bail request was denied.
Centralized crypto could face consequences… FTX was a centralized exchange (it directly held customers' funds/crypto) controlled by only a few people (vs. a decentralized exchange). The consequences it faces could set precedents for other centralized crypto players. Lawmakers and regulators like the SEC and CFTC are debating who, exactly, has crypto-oversight power. But as they consider new regulations following FTX's meltdown, they mostly now agree on at least one point: whoever has oversight, controls need to be tighter.
What else we’re Snackin’
- Crunch: Apple will reportedly allow third-party app stores on its devices in the EU. The decision could settle years of criticism by regulators and developers over Apple’s App Store dominance and “app tax.”
- Blast: US scientists made a major breakthrough after using nuclear fusion to create more energy than they used for the first time. FYI: nuclear fusion releases 4M times more energy than burning oil, coal, or gas.
- Shrink: Moderna and Merck said their experimental cancer-vaccine treatment reduced the risk of melanoma recurrence or death by 44% in a clinical trial. Melanoma makes up 1% of all skin cancers, but it causes most skin-cancer deaths.
- Pause: A trio of lawmakers introduced a bill aimed at banning TikTok in the US. Despite TikTok’s swipey popularity, legislators say they doubt the app’s ability to protect US user data from the Chinese government.
- Pump: Chinese President Xi is pushing to use the country’s own currency to buy oil and gas. Since most of the world's trade is tied to the US dollar, a switch to the yuan could weaken the USD’s dominance.
Wednesday
- Fed rate-hike meeting
- Earnings expected from Lennar, Trip.com, and Planet Labs
Authors of this Snacks own: shares of Apple, Moderna, and Tesla
ID: 2638860