As usual it’s a good news-bad news situation when it comes to US inflation. The bad news for Americans is that President Donald Trump’s trade war continues to gradually push up consumer prices, with inflation hitting the 3% mark—its highest point since Trump returned to the White House.
And that trade war, by the way, got even worse on Friday. When a plucky Canadian advertisement pointed out that the founder of the modern Republican Party wasn’t a big fan of tariffs, Trump erupted, abruptly canceling talks with Ottawa.
So where is the good news here? Well if you’re on Wall Street, the fact that the inflation numbers—distributed late by the Bureau of Labor Statistics, part of the US Department of Labor—were more tepid than expected makes another rate cut from the Federal Reserve more likely. So there’s that. —David E. Rovella
What You Need to Know Today
A drama is unfolding behind the scenes on said Street, and it involves some heavy-hitting professionals. Quant funds are suffering this month amid reversals in crowded and previously money-minting positions. The risks in stretched momentum trades were laid bare this week in sessions like Wednesday, when high-flying gold, tech shares and crypto were torpedoed all at once.
Quant long-short funds are down 1.7% in October, posting their first losses since another big bout of volatility in July, according to Goldman Sachs’s prime brokerage. That compares with roughly flat returns for their fundamental peers. So what does it mean? This essentially translates to a stalling out in steady winners like artificial intelligence and European banking shares, as well as assets like gold.
It’s beginning to look like the big banks are putting more than a toe in when it comes to that ocean of funny digital money out there. It turns out that JPMorgan plans to allow institutional clients to use their holdings of Bitcoin and Ether as collateral for loans by the end of the year. That would be a major dip into the pool of crypto integration. The program is said to rely on a third-party custodian to safeguard the pledged tokens, and builds on JPMorgan’s earlier move to accept crypto-linked exchange-traded funds as collateral.
The expansion underscores how quickly crypto is being pulled into the financial system’s core plumbing. With Bitcoin rallying this year and the Trump administration rolling back regulatory precautions, major banks are starting to bring digital assets deeper into the lending system. Wall Street is already licking its collective lips at the prospect of investing your 401(k) in crypto as well as private assets. What could go wrong?
US auto plants are two to four weeks away from “significant impacts” on vehicle production due to the European conflict with China over chipmaker Nexperia, a key source of chips used by the automotive and consumer electronics industries. Beijing this month blocked Nexperia’s parent company from exporting from its facilities in China. The move was in response to the Dutch government decision to seize control of Nexperia, a Netherlands-based unit of China’s Wingtech Technology. The Dutch used an emergency Cold-War era law for the first time to ensure Europe retains unfettered access to Nexperia’s chips.
When Trump was demolishing the Bonwit Teller building on Manhattan’s Fifth Avenue in 1980 to make way for Trump Tower, the Metropolitan Museum of Art approached him with a small request. It asked the young developer to preserve a pair of historic limestone friezes adorning Bonwit’s façade, Timothy L. O’Brien writes in Bloomberg Opinion. Trump agreed to look after the friezes and donate them to the museum. But later, Trump ordered them “smashed by jackhammers” after reportedly deciding they were too expensive to preserve and “without artistic merit.” So museum-quality limestone friezes? Nah. And, 45 years later, the East Wing of the White House? Nah.
Demolition of the East Wing of the White House by the Trump administration this week. Trump had promised that the project, undertaken without approval from preservationists, would not damage the East Wing. Photographer: Will Oliver/EPA
The Met couldn’t have anticipated that Trump’s taste, as it turned out, was decidedly and irretrievably gilded, O’Brien writes. His baroque triplex in Trump Tower wound up festooned in gold leaf and featured gold linoleum on the kitchen floor. Trump’s penchant for gold was merely cartoonish during his real estate and casino days, he says. Now he’s turning the White House into his own golden goose. Amid a government shutdown, ballooning federal debt, economic uncertainty, the gutting of benefits for average Americans, the militarization of city streets and an assault on civil rights, courts, and democracy, it’s a grift that doesn’t glitter.
