ECB Preview – Lowering the Bar
ECB is likely to cut rates for a third time during this cycle on Thursday from 3.50% to 3.25% – rapid disinflation and a shakier economy support such a decision
- With inflation now a touch below the 2% objective – analysts see ECB lowering rates by a quarter point at all meetings through March 2025
- Cracks appearing in labor market after years of unexpected resilience – major companies such as BASF and Thyssenkrupp are already offloading staff
- Persistent weakness in manufacturing is another concern – squeezed by fragile Chinese demand and competitive disadvantages at home
- Terminal rate now seen at 2% – previous poll predicted cycle would end at 2.5%
China – Lacking Convinction
The outcome of the eagerly awaited conference of the Chinese Ministry of Finance has been marked by light and shadow:
- A certain lack of detail has been noted in both, the maneuvers to support economic growth, as well as aid to the lower income households has not been specified
- Encouraging signs came from the openness to a change in fiscal policy
- A constructive contribution has been made by the recapitalization of the major banks, which should lead to increased lending activity
- The expected support to the depressed property sector was given with the aim of reactivate the activity in the segment
USA - Milton’s Billion-Dollar Fallout
Hurricane Milton devastated U.S. East Coast, with insurance, construction, and utility sectors set to see major financial impacts:
- Insured losses from Hurricane Milton estimated at over $50 billion – insurance companies brace for a surge in claims
- CAT bond prices drop sharply due to increased risk premiums – concerns over insurers’ reserves and future premiums
- Construction and utilities expected to benefit from recovery efforts, boosting earnings in Q4
- Short-term disruption likely, but recovery spending could drive growth into 2025
- No immediate FED policy changes expected – markets await October CPI for inflation insights
Tecnhology – Better, Faster, Stronger
Tech innovation is accelerating, reshaping industries at an unprecedented pace. From our latest observations, here are the key insights driving change:
- Innovation speed doubling – Companies like Nvidia have halved their product cycles, now launching new architectures annually
- Semiconductor shift – The industry is moving from simple chips to complex, integrated systems, requiring advancements in materials and packaging
- Energy bottleneck – AI’s rapid expansion is constrained by energy needs, with firms like Nvidia and TSMC focusing on efficiency improvements
- AI-first revolution – New cognitive AI software are cutting operational costs drastically (e.g., Harvey AI reduces legal costs by 99.97%)
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