US ECONOMY & POLITICS

US Core PCE Prices Post Smallest Monthly Rise Since Late 2020 – Bloomberg, 9/29/2023

• The Federal Reserve’s preferred measure of underlying inflation rose at the slowest monthly pace since late 2020, helping to lay the groundwork for policymakers to forgo an interest-rate hike at their next meeting.
• The core personal consumption expenditures price index, which strips out the volatile food and energy components, climbed 0.1% in August, according to the Bureau of Economic Analysis report out Friday.

• Inflation-adjusted consumer spending rose 0.1% last month.
• On a nominal basis, personal outlays increased 0.4%.
• Services inflation excluding housing and energy rose 0.1%, according to the BEA.
• The overall PCE price index, meanwhile, jumped 0.4% on a pickup in energy costs.
• The report showed inflation-adjusted spending on services rose 0.2%, helped by a pickup in outlays on transportation and recreation.
• Spending on merchandise fell 0.2%, the first drop since March, as purchases of motor vehicles and home furnishings declined.
• While wages and salaries growth accelerated, real disposable income, the main support to consumer spending, declined 0.2% for a second month.

Consumer sentiment improves slightly ahead of possible government shutdown – Market Watch, 9/29/2023

• Consumer sentiment improved slightly at the end of September, but Americans were unsure about the future of the economy.
• The final reading of the sentiment survey rose to 68.1 from 67.7 earlier in the month, the University of Michigan said Friday.
• Higher gas prices and rising interest rates are pinching households more than they were earlier in the year.
• A gauge that measures what consumers think about the current state of the economy rose to 71.4 from 69.8 in early September.
• A measurement of expectations for the next six months dipped to 66.0 from a preliminary 66.3.
• Americans think inflation will average 3.2% in the next year, down from 3.5% in the prior month.
• The official rate of inflation is 3.7%, using the consumer-price index.

Kevin McCarthy Wins Three, Loses One in Late-Night Spending Votes  – Wall Street Journal, 9/29/2023

• House Republicans largely succeeded in passing a series of annual spending bills late Thursday night, trying to show that the often fractured conference can stay united on legislation headed into any last-gasp negotiations with Democrats to avert a government shutdown this weekend.
• As the clock ticked toward midnight, the House passed the GOP’s annual State Department and foreign aid appropriations bill, then the yearlong Defense Department and Homeland Security measures, with only a handful of defections in the three votes.
• But the final bill of the evening—funding the Agriculture Department—failed, with more than two dozen Republicans joining Democrats in opposition.
• The votes came as Speaker Kevin McCarthy (R., Calif.) is embracing border security as a possible way to break a congressional impasse over funding the government, saying it could be a key ingredient in any deal.
• Leaders from both parties in the House and Senate are hoping to strike a short-term funding deal to keep the government open for a matter of weeks or months while efforts to pass full-year legislation continue.
• The next step in the House comes Friday, when McCarthy plans a vote on a short-term spending patch, but some conservatives have said they plan to oppose the measure—and it has no pathway in the Senate in any case.

Biden OK’s Limited Offshore Drilling, Relenting on Campaign Promise – Wall Street Journal, 9/29/2023

• The Biden administration plans to schedule three oil and gas lease sales in the Gulf of Mexico over the next five years, a reversal of the president’s campaign promise to stop all new offshore drilling under his administration.
• The Interior Department, which oversees oil leases, said the sales are necessary because of last year’s clean-energy legislation, the Inflation Reduction Act.
• The agency said the law mandated that millions of acres of oil and gas leases needed to be offered by the administration in exchange for the expansion of offshore wind projects.
• The five-year program will be the fewest oil and gas lease sales in U.S. history and will allow the Biden administration to “support the growing offshore wind industry,” Interior Secretary Deb Haaland said.

Dianne Feinstein, Longest-Serving Female Senator, Dies at 90 – Bloomberg, 9/29/2023

• Dianne Feinstein, whose 30-plus-year tenure as a US senator was the longest in history by a woman and was distinguished by the battles she took on against gunmakers and the US intelligence community, has died.
• She was 90.
• She died on Thursday night at her home in Washington, according to a statement from her chief of staff, James Sauls.
• “There is much to say about who she was and what she did, but for now, we are going to grieve the passing of our beloved boss, mentor and friend,” he said.
• Amid questions about her age and fitness to keep serving, Feinstein had announced in February that she wouldn’t run for a seventh term in 2024.

EUROPE & WORLD

Euro-Zone Core Inflation Hits 1-Year Low, Backing ECB Pause – Bloomberg, 9/29/2023

• Euro-area core inflation eased to its slowest pace in a year, supporting expectations that the European Central Bank will keep interest rates on hold to gauge the impact of its unprecedented campaign of hikes.
• Underlying price gains, which strip out energy and food costs, came in at 4.5% in September, Eurostat said Friday.
• That’s down from 5.3% in August and much less than the 4.8% median estimate in a Bloomberg survey of economists.
• Headline inflation moderated to 4.3% from 5.2%, an almost two-year low that was also below expectations, led by a drop in energy costs but with services also slowing sharply.
• France’s central bank chief, Francois Villeroy de Galhau, said the current level of borrowing costs is “appropriate” as Friday’s euro-area data increase confidence that the ECB can get inflation back to target.
• “It’s probably the case that we are done with interest-rate increases,” Slovenian central bank head Bostjan Vasle told a panel discussion earlier.
• “We’re seeing some signs of inflation going down, also some first signs of sustainability of this trend. But on the other hand, there are still many uncertainties.”
• Bloomberg Economics’ nowcast model, which correctly predicted September’s inflation number, points to an October reading of 3.1%.

China’s Economy Improves in September, Satellite Data Show – Bloomberg, 9/29/2023v

• China’s economy showed signs of a stronger recovery in September, according to several early indicators and a firm analyzing the global economy using satellite data.
• Activity around Chinese shopping malls remained at relatively high levels in September following an increase in August, according to SpaceKnow, a US company that analyzes satellite images.
• A pickup in cement manufacturing, which began in June, was also sustained through this month, the data show.
• “We are in the ‘early signs of recovery’ team,” said Jan Pintera, an economist at SpaceKnow.
• He said satellite imagery showed a “positive direction for the Chinese construction sector” and “renewed consumer confidence.”
• Supporting the recovery story, traffic congestion in China surged in the week to September 27, reaching the highest level recorded for any week in 2022 and 2023, according to analysis of data from Baidu by Bloomberg New Energy Finance.
• The traffic gauge has been rising steadily since the start of August.
• Other indicators suggest China’s economy gained momentum in recent weeks. World Economics’s all sector Sales Growth Index for China increased to 53.1 in September, a six-month high.
• The Emerging Industries PMI, which some economists see as a leading indicator for China’s official manufacturing PMI, increased to 54 in September from 48.1 the previous month.

LVMH Billionaire Bernard Arnault Probed Over Possible Money Laundering – Bloomberg, 9/29/2023

• French billionaire Bernard Arnault’s dealings with a Russian businessman are being investigated for possible money laundering, the Paris public prosecutor’s office said Friday.
• The investigation into Arnault and Nikolai Sarkisov involves transactions related to property in the exclusive ski resort of Courchevel, according to Le Monde newspaper.
• The French daily reported that Sarkisov bought a series of properties in 2018 in Courchevel through intermediary companies but the end-buyer turned out to be Arnault.
• The chief executive officer of LVMH Moet Hennessy Louis Vuitton is alleged to have paid Sarkisov about €20 million ($21.2 million) to own the assets, while Sarkisov allegedly made a profit of around €2 million from the deals.
• The transactions appeared to mask the origin of the funds and the identity of the ultimate buyer, Arnault, investigators said, according to Le Monde.

Apple’s Latest China Challenge: A Crackdown That Could Shrink Its App Store – Wall Street Journal, 9/29/2023

• Apple staff met with Chinese officials in recent months to discuss concerns over new rules that will restrict the tech giant from offering many foreign apps currently available on its iPhone app store in China.
• Officials told Apple that it must strictly implement rules banning unregistered foreign apps, people familiar with the discussions said.
• Apple employees expressed concern over how the rules would be implemented and affect its users.
• China’s move to restrict the apps would close a loophole in the Great Firewall that allows Chinese iPhone users to download popular Western social-media apps such as Instagram, X (formerly Twitter), Facebook, YouTube and WhatsApp.
• While China has for years blocked web access to those sites, iPhone users who download the services’ apps can engage on the platforms if they log on through a virtual private network, or VPN, that connects them to an internet server outside the country.
• Many users, especially younger people, do this even though China bans the use of unauthorized VPNs.
• By July, Apple will no longer be able to offer such apps in its China app store unless the app operators are registered with the government, under new rules issued by China’s Ministry of Industry and Information Technology two months ago.

Nvidia Linked to Dawn Raid by French Competition Regulators – Bloomberg, 9/29/2023

• French antitrust enforcers raided the offices of a business suspected of engaging in “anticompetitive practices in the graphics cards sector,” targeting a company that the Wall Street Journal identified as Nvidia.
• “Raids do not presuppose the existence of a breach of the law,” France’s competition authority said in a statement on its website, “which only a full investigation into the merits of the case could establish, if appropriate.”
• The agency didn’t cite Nvidia by name, and the Santa Clara, California-based company declined to comment on the matter.
• The dawn raid was authorized by a liberty and custody judge, France’s competition authority said in its statement.
• The move followed a report by the agency on competition in the cloud computing market that was published on June 29.

U.S., China Talks Gain Momentum, Paving Way for Xi-Biden Summit – Wall Street Journal, 9/29/2023

• Beijing and Washington are paving the way for Chinese leader Xi Jinping to visit the U.S., moving ahead with high-level official exchanges and taking other steps to improve the tone of their turbulent relations.
• Both sides are discussing a trip to Washington by Xi’s top economic-policy aide, Vice Premier He Lifeng, according to people briefed on the matter.
• He would be the most-senior official to travel to the U.S. since President Biden took office.
• Meantime, planning is also under way for Foreign Minister Wang Yi to visit Washington in October to prepare for a Xi summit with Biden, the people said.
• China facilitated the transfer this week of an American soldier from North Korean custody, U.S. officials said.
• National security adviser Jake Sullivan had raised the soldier’s case in a meeting 10 days ago with Wang, the officials said.
• Beyond that gathering, Beijing is seeking a separate high-profile summit with Biden, something both governments see as a potential boost to the months of tentative efforts to stabilize ties.

China Blocks Executive at U.S. Firm Kroll From Leaving the Mainland – Wall Street Journal, 9/29/2023

• A senior executive at U.S. risk advisory firm Kroll has been barred from leaving mainland China for the past two months, heightening concerns about the risks foreign companies face when doing business in the country.
• Chinese authorities have taken an increasingly tough stance on foreign businesses this year.
• Authorities have raided the offices of due-diligence firm Mintz Group, questioned the staff of U.S. consulting firm Bain, and implemented strict new data rules.
• These moves have damaged American businesses’ confidence in China, which is at its lowest level in decades.
• Kroll operates a similar business model to some of the foreign firms targeted earlier this year, offering corporate investigations and due-diligence checks, as well as advising on restructurings and insolvencies.
• Michael Chan, a Hong Kong-based managing director at the company who specializes in corporate restructuring, traveled to the mainland in July and subsequently informed his employer that he cannot leave, according to people familiar with the matter.
• A Hong Kong passport holder, Chan can move freely in mainland China and is still working.

Factmonster – TODAY in HISTORY

• King Richard II became the first English monarch to abdicate his throne. – 1399
• Sir Robert Peel’s police force, the “bobbies,” began operations at Scotland Yard. – 1829
• John Paul I died one month after becoming pope. – 1978
• Seven people died after taking Extra-Strength Tylenol capsules laced with cyanide. This led to the use of safety seals on most consumer products. – 1982
• The space shuttle Discovery was launched, the first American staffed space flight since the Challenger disaster. – 1988
• Former South Vietnam president Nguyen Van Thieu died. – 2001