Written by Shane Balkham
Last week was naturally focused on the opening speeches at the Jackson Hole symposium, an annual gathering of policymakers from around the world, to discuss topical financial events and trends. The Federal Reserve Bank of Kansas City was hosting as normal, with the theme for this year’s event being “Structural Shifts in the Global Economy.”
As many suspected, there were no surprises coming from this year’s conference. Dusting down much of 2022’s speech, Jerome Powell, the Chair of the US Federal Reserve, reiterated the fight against inflation, with an emphasis on risk-management in restoring price stability across the globe. This could mean we are close to peak rates in many developed economies, but it could also mean leaving rates on pause for longer to ensure the battle has been won.
Winning the battle for dominance of supplying the burgeoning demand for AI systems was Nvidia, which became the first semiconductor company to pass $1 trillion market cap. The chip manufacturer gave another strong quarterly revenue forecast as orders for its AI processors, adept at handling the heavy workloads required by AI, surged allowing it to create a market leading position.
Forecasts do get revised, and the US gave a downward revision to the March jobs’ forecast that was originally reported. It was initially estimated that around 300,000 fewer jobs were created, which could be good news for central banks, as they would like to see a slightly weaker labour market. The balance between fighting inflation and supporting economic growth is becoming increasingly difficult. This is starting to show in the US retail sector, where excess consumer savings built up during the pandemic are perceived to be running out as the interest rate hikes are starting to pinch. Department stores are seeing a fall in sales and a worsening in their credit card delinquencies.
Something that cannot be ignored for too long is Russia. Last week saw the Wagner mercenary group founder Yevgeny Prigozhin killed, as the plane he was on exploded killing all that were aboard. Putin’s comment on the crash saw him describe Prigozhin as “a man with a complicated fate.”
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