Weekly Economic Report 10.16.26
This week’s most closely watched data releases were the slightly hotter than expected CPI and the much stronger than expected retail sales, both of which reinforced investors expectations that the Federal Reserve would continue to tighten – but at the December meeting, rather than just ahead of election day. We completely agree – but we found the spike in the less closely watched PPI, and the blowout in the Chinese trade surplus told us much more about the state of the global economy – and where the risks of a slowdown in AI investment truly lie. Meanwhile, concern about an AI bubble bursting was amplified by the troubles at Coreweave, a plunge in the previously high flying South Korean KOSPI, and the 15% sell off in the Philadelphia Semiconductor Index. In the battle between fear and greed, fear has had the upper hand since the start of June, with the S&P500 up less than 1% over four and a half months – after a spectacular run.
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