US ECONOMY & POLITICS

US Core CPI Picks Up, Keeping Another Fed Hike in Play This Year – Bloomberg, 9/13/2023

• Underlying US inflation ran at a faster-than-expected monthly pace in August, leaving the door open for additional interest-rate hikes from the Federal Reserve.
• The so-called core consumer price index, which excludes food and energy costs, advanced 0.3% from July, marking the first acceleration since February, Bureau of Labor Statistics data showed Wednesday.
• From a year ago, it increased 4.3%, in line with estimates and marking the smallest advance in nearly two years.

• Economists favor the core gauge as a better indicator of underlying inflation than the overall CPI.
• That measure rose 0.6% from the prior month, the most in over a year and reflecting higher energy prices.
• Gasoline costs accounted for over half of the advance in the overall measure in August, according to BLS.
• The advance in the CPI was supported by higher costs for rent, air travel and motor-vehicle insurance, which rose the most annually since 1976.
• New-car prices rose for the first time in five months.
• Costs declined for used cars and admissions to concerts and movies.
• Shelter prices, which are the biggest services component and make up about a third of the overall CPI index, increased 0.3%, the smallest gain since early last year and dragged down by hotel stays.
• A moderation in housing costs is an essential feature for a sustained downward trend in core inflation.
• Excluding housing and energy, services prices rose 0.4% from July, the fastest in five months, and 4% from a year ago, according to Bloomberg calculations.
• So-called core goods prices, which exclude food and energy commodities, fell for a third month.
• Inflation-adjusted wages rose 0.5% from a year earlier, marking a second month of decelerating earnings growth, a separate report showed Wednesday.

Tech Titans Look to Lobby Washington on AI—In Different Directions – Wall Street Journal, 9/13/2023

• Titans of Silicon Valley are descending on Washington Wednesday to brief U.S. senators on artificial intelligence, in a meeting aimed at advancing nascent efforts to regulate the new technology.
• The closed-door all-senators’ session, organized by Senate Majority Leader Chuck Schumer (D., N.Y.), will feature Elon Musk, Mark Zuckerberg, Bill Gates and more than a dozen other executives and civil-society leaders.
• These tech bosses are already locked in a market-driven race to roll out sophisticated artificial-intelligence systems, especially generative tools that can quickly produce humanlike outputs.
• The Capitol Hill gathering gives them a chance to shape the priorities of lawmakers, some of whom are racing just as fast to place guardrails on AI development.
• Wednesday also might be the first time Musk and Zuckerberg find themselves in the same room following their called-off cage match.
• Assuming the tech leaders keep their fisticuffs in check, their previous comments suggest they will try to pull senators in different directions.

Fed Says Jefferson, Cook, Kugler Sworn In to Board Positions – Bloomberg, 9/13/2023

• The Federal Reserve said Philip Jefferson was sworn in as vice chair while Lisa Cook and Adriana Kugler took oaths as governors.
• Fed Chair Jerome Powell administered the oaths that took place at the US central bank’s headquarters in Washington on Wednesday, the Fed said in a statement.
• With Kugler now sworn in, the Fed board will have a full slate of seven members heading into its policy meeting next week.
• Jefferson — the fourth Black male governor on the Fed board — will be the second Black vice chair after Roger Ferguson.
• He was confirmed in a 88-10 vote last week.
• Cook — whom President Joe Biden named as a governor on the board last year and whose current term expires in January — was endorsed for a full term in a 51-47 vote on the same day.
• The Senate confirmed Kugler to the board in a 53-45 vote last Thursday, approving the central bank’s first Hispanic policymaker and capping a Biden administration diversity push at one of the world’s most powerful economic institutions.

Even Transportation Secretary Pete Buttigieg Can’t Find a Reliable EV Charger – Wall Street Journal, 9/13/2023

• America’s electric-vehicle drivers are increasingly unhappy with public charging, as problems that include glitchy or inoperable equipment seem to be getting worse, not better.
• Now the U.S. government plans to launch a $100 million effort to try to tackle the reliability issue and make public charging less annoying and more consistent.
• The funding aims to repair and replace thousands of old or out-of-commission chargers that are contributing to a roll-of-the-dice sensation among EV drivers, who never know what they might find.
• “Imagine what it would be like if you couldn’t be sure when you pulled into a gas station that you’d actually get gas out of it,” said Transportation Secretary Pete Buttigieg in an interview.
• “This is about making sure that access to charging is as reliable as access to fuel is today for gas cars, and we know that that’s not just a question of quantity but also one of quality,” he said.

Diesel Supply Strains Deepen While Trucking Demand Recovers in US – Bloomberg, 9/13/2023

• The US trucking industry appears poised for a rebound and that’s a bad omen for a diesel market already contending with some of the lowest stockpiles in more than two decades.
• Domestic freight demand is on the rise after touching a seven-month low in April, industry figures showed.
• Construction projects fostered by President Joe Biden’s stimulus programs also are boosting use of diesel-powered truck fleets, said Craig Fuller, CEO of data and price-reporting company FreightWaves.
• That means diesel consumption is set to rise at a time when domestic fuel stockpiles are languishing at the second-lowest seasonal levels since 2000.
• At risk are farmers who need diesel to harvest crops and homeowners who rely on its sister fuel, heating oil, to get through the winter.
• Diesel is so deeply embedded within manufacturing and transportation that its cost permeates the supply chain, and a price squeeze would almost certainly point to broader inflationary pressures in everything from groceries to electronics.
• Diesel futures already are trading near the highest level since January in New York, and the premium that near-term supplies are fetching relative to deliveries later this year is discouraging arbitrageurs from stowing fuel in storage tanks.
• Meanwhile, government analysts at the Energy Information Administration on Tuesday lifted their full-year 2023 forecast for distillates consumption — the category that includes diesel and heating oil — to 3.93 million barrels a day.

EUROPE & WORLD

Zara owner Inditex profit jumps 40% as price rises slow – CNBC, 9/13/2023

• Zara owner Inditex on Wednesday beat expectations with a 40% jump in half-year net profit despite the world’s biggest fast fashion company slowing the pace of its price increases.
• Inditex sales rose 13.5% to 16.9 billion euros and a gross margin of 58.2%.
• The group, which also owns Bershka, Pull & Bear and other brands, said sales at constant currencies between Aug. 1 and Sept. 11 were 14% higher than a year earlier, showing that the pace of summer sales continues as autumn collections start to arrive.
• With a big share of its costs in euros, Inditex said it expects currencies to have a -3.5% impact on sales this year, worse than the -2.5% impact it expected previously.
• The company posted a net profit of 2.5 billion euros ($2.7 billion) for the six months to July 31, outpacing a 2.38 billion euro market forecast according to data from LSEG.
• The retailer’s flagship brand Zara plans further store expansion in the United States, a market that two years ago became Inditex’s biggest after Spain.
• Worldwide Inditex reduced its stores to 5,745 from 5,801 in the second quarter, showing how the retailer has managed to increase sales while reducing space.

Arm Is Set for US IPO Pricing in Test to AI Hype, China Risk – Bloomberg, 9/13/2023

• Arm Holdings’s long-anticipated initial public offering is set to price Wednesday and investors will be watching to see how owner SoftBank Group fares in what is set to be the largest listing of the year — and whether it helps reignite equity capital markets.
• The IPO touches on an array of hot-button issues for tech investors, including potentially excess enthusiasm related to artificial intelligence, as well as geopolitical risks involving China and its role in the chip wars.
• The offering even includes the world’s most valuable semiconductor company, Nvidia, as a participant.
• If all goes well, the debut could boost the reputation of Masayoshi Son, SoftBank’s founder, chairman and chief executive officer.
• The participation of anchor investors, combined with the smaller float, could deter funds from flipping shares for a quick sale once they start trading on Nasdaq.
• If Arm’s listing and those by Instacart and Klaviyo go smoothly, others such as software company Rubrik and car-sharing platform Turo could follow, Bloomberg News has reported.

Panama Canal Says Traffic Woes Will Last Into Next Year – Bloomberg, 9/13/2023

• The operator of the Panama Canal said there’s no immediate prospect of relief from the drought that’s reduced water levels and snarled shipping and global supply chains.
• Panama Canal Administrator Ricaurte Vásquez Morales said Tuesday that abnormally high ocean temperatures, an unpredictable rainy season and the persistence of the El Niño weather phenomenon mean officials will have to continue restricting vessel traffic into 2024.
• It means the long waits bedeviling the canal are likely to continue through the months leading up to both Christmas and Chinese New Year, when it’s normally busiest.
• The number of ships moving each day through the canal has slipped to 32 from 36 because of declining reservoir levels.
• The backlog of ships waiting to enter the canal has spurred fierce bidding for open slots.
• The canal will need to maintain draft levels — the distance between the canal floor and the bottom of a ship’s hull— at 44 feet (13 meters).
• That’s enough for about 70% of the canal’s traffic.
• Officials may need to reduce the number of ships moving through the system to maintain those levels, Vásquez Morales said.

BP CEO’s Sudden Fall Puts Oil Major’s Strategy Back in Play – Bloomberg, 9/13/2023

• The abrupt resignation of BP chief Bernard Looney marks the loss of an executive who pushed for a transition to clean energy more aggressively than any of his industry peers, with mixed results.
• BP said Tuesday that the 53-year-old chief executive officer was departing after failing to fully disclose to the company board some of his past relationships with colleagues.
• Chief Financial Officer Murray Auchincloss will take the top job on an interim basis.
• Looney’s exit caps a tumultuous three years leading BP in its most radical strategy shift since John Browne transformed the company into a transatlantic giant by buying US rivals Amoco and Atlantic Richfield more than two decades earlier.
• From the North Sea to West Texas, Looney pushed BP into greener territory, with big bets on hydrogen and offshore wind.
• Without the architect of that pivot, the company’s direction is now in question.

Kim Jong Un and Vladimir Putin Meet at Russia’s Main Spaceport – Wall Street Journal, 9/13/2023

• Vladimir Putin and Kim Jong Un flaunted their burgeoning friendship at a summit, displaying a partnership between the leaders that unnerves the West over concerns that North Korea will provide munitions to support Russia’s war effort in Ukraine.
• Meeting Wednesday at Russia’s main spaceport, the two autocrats vowed greater cooperation on economic and security issues—and took aim at the U.S.-led global order.
• Putin promised assistance on North Korea’s satellite endeavors.
• Kim pledged an unbreakable bond with Moscow.
• Without mentioning any adversaries by name, Kim declared confidence in Putin’s ability to win the Ukraine war and create a stable environment for development, according to Russia’s state news agency TASS.
• The North Korean leader described the 19-month war between Russia and Ukraine as the “sacred struggle to punish the gathering of evil that claims hegemony and nourishes expansionist illusions.”
• The exchange occurred at the Vostochny Cosmodrome, located in Russia’s Far East and reachable to Kim by train.
• Kim and Putin strolled around the space facility, with Russian officials explaining how the country’s rockets get launched.
• But the talks led to no signed agreements.

H&M to sell second-hand clothes at London store – CNBC, 9/13/2023

• H&M plans to sell second-hand clothes and accessories at its flagship store in London from Oct. 5, as pressure increases on fast fashion companies to curb their environmental impact by encouraging the reuse and recycling of garments.
• With the European Union planning new regulation to crack down on textile waste in the bloc, H&M has said it is “part of the problem” and that the way fashion is produced and consumed needs to change.
• The “PRE-LOVED” womenswear collection, at H&M’s Regent Street store, will include garments from several other brands and designers as well as H&M group brands, which include Arket, Cos, Monki, and Weekday.
• It will be the second H&M store to offer second-hand clothes, after Barcelona which opened earlier this year.
• H&M also has an online second-hand offering in Sweden and Germany.
• The autumn-winter 2023 collection of the second-hand offerings will include metallic dresses and shirts, trench coats, and “trendy knits”, H&M said, with new items added every day.
• The garments will be sourced from Flamingos Vintage Kilo, a company that runs second-hand vintage clothes stores in Europe and the United States, and will be priced from 29.99 pounds ($37) to 189 pounds, H&M said.

Factmonster – TODAY in HISTORY

• Chiang Kai-Shek became president of China. – 1943
• Republican Margaret Chase Smith of Maine was elected to the U.S. Senate, becoming the first woman to have served in both houses of Congress. – 1948
• The four-day revolt at the maximum security prison in Attica, New York, ended when state police and National Guardsmen stormed the facility. Forty-two people died. – 1971
• Israeli Prime Minister Yitzhak Rabin and PLO Chairman Yasir Arafat shook hands after signing an historic peace agreement. – 1993