Friday, 12 November 2021
Written by Royce Tan, Chief Market Insights Officer of GAX MD
> Consumer prices in the United States (US) rose to its highest in 30 years for the month of October 2021. The consumer price index (CPI) recorded a rate of 6.2%, compared to the same period last year. This was a significant jump from 5.4% in September 2021. On a month-on-month basis, it was a 0.9% increase as compared to 0.4% in September. The Bureau of Labour Statistics (BLS) attributed the hike to a broad-based increase across several sectors, mainly energy, shelter, food, used cars and trucks and new vehicles.
The producer price index (PPI) in the US registered a solid increase of 0.6% in October, as compared to 0.5% in September. On a year-on-year (y-o-y) comparison, this has been an increase of 8.7%. This is mainly due to surging gasoline prices, which accounted for a third of the increase in prices of goods. Both the high CPI and PPI could signal that high inflation may drag on as the global supply and demand remains unstable. The Federal Reserve acknowledged these concerns earlier this month when it announced that it would begin tapering bond purchases later this month, though it maintained its stance that the factors are expected to be transitory.
> Over at the world’s second largest economy, inflationary fears are also starting to intensify. China posted a year-on-year (y-o-y) PPI of 13.5%, its highest in 26 years on the back of rising commodity prices resulting from the country’s ongoing power crunch, hitting manufacturing activities. Coal prices spiraled 103.7% y-o-y last month. China’s CPI also hit a 13-month high at 1.5% y-o-y in October as compared to 0.7% in September.
> Tesla Inc chief executive officer Elon Musk disposed more than 4.5 million units of Tesla shares this week, just days after Nov 7 when he asked his 63 million Twitter followers whether he should sell 10% of his holdings. The disposal is believed to have netted him about US$5bil. The counter tanked 17.42% to a low of US$1,008.99 per stock in just two days before it began picking up again. More than just a social media experiment, reports have surfaced that Musk is facing a US$15bil tax bill, which could be why he is selling some of his stake in Tesla.
> The trade tensions between US and China may have intensified further as President Joe Biden inked a legislation on Nov 11, which prevents Chinese telecom and tech companies deemed security threats from receiving new licenses from US regulators, just days before both leaders are expected to hold a virtual summit. This will affect companies such as Huawei Technology Co, ZTE Corp, Hytera Communications Corp, Hangzhou Hikvision Digital Technology Co and Zhejiang Dahua Technology Co.
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