A heavyweight piece of data has landed.
On the evening of February 9th (Friday) at 21:30 Beijing time, the US Bureau of Labor Statistics released a seasonally adjusted correction for monthly inflation, which showed that the annualized growth rate of core CPI in the fourth quarter of 2023 remained unchanged at 3.3%; The month on month growth rate of US CPI in December has been revised down from 0.3% to 0.2%. This result generally meets market expectations.
On the eve of the release of this CPI correction data, the Federal Reserve was extremely nervous. Among them, Federal Reserve Chairman Powell stated that he will closely monitor the CPI inflation correction value. In addition, Federal Reserve Director Christopher Waller also mentioned the importance of CPI correction values in a speech in January this year. The latest revised data undoubtedly breathes a sigh of relief for Federal Reserve officials.
In addition, Sun Zhengyi, founder of SoftBank Group in Japan, fought a "turnaround battle" in the US stock market. On the evening of February 8th, SoftBank Group's heavily held Arm surged by 47.89% overnight, causing the market value of SoftBank's shares to increase by $34.3 billion (approximately RMB 250 billion) in a single day, from nearly $71.6 billion to $105.9 billion.
Latest announcement from the United States
On the evening of February 9th (Friday) at 21:30 Beijing time, the US Bureau of Labor Statistics released a seasonally adjusted correction for monthly inflation, which has attracted close attention from Wall Street and economists.
The latest released data shows that the annualized growth rate of core CPI in the fourth quarter of the United States remained unchanged at 3.3% after correction; The month on month growth rate of US CPI in December has been revised down from 0.3% to 0.2%.
This result generally meets market expectations. Previously, analysts estimated that this CPI correction would not cause significant fluctuations and would not affect the outlook for the Federal Reserve's monetary policy.
After the release of this data, the yield of the 10-year treasury bond bond of the United States dropped, and now it is 4.146%; Spot gold rose by $10 in the short term to $2035 per ounce.
The three major US stock index futures rose slightly, with the Dow Jones index futures up 0.28%, the S&P 500 index futures up 0.34%, and the Nasdaq index futures up 0.37%.
It should be noted that the US Bureau of Labor Statistics regularly adjusts monthly CPI data to eliminate seasonal factors that affect the data, such as those related to holiday shopping. By seasonally adjusting and smoothing these factors, meaningful comparisons of inflation in different months of the same year can be made.
The annual revision of the CPI index usually does not attract special attention. But the data was significantly revised up last year, causing the market to be surprised and causing severe fluctuations. Market funds were skeptical about the progress of inflation cooling.
The latest revised data released is "lackluster", which has relieved Federal Reserve officials who are seeking more evidence that price pressures are continuing to dissipate before they begin to cut interest rates.
Federal Reserve, speak up intensively
On the eve of the release of CPI correction data, the Federal Reserve was extremely nervous. Federal Reserve Chairman Powell has almost never emphasized that he expects specific economic data, but he stated at the recent meeting of the Federal Open Market Committee (FOMC) that he will closely monitor the CPI inflation correction.
Powell said that a year ago, when inflation seemed to be rapidly falling, seasonal factors corrected the trend. In mid February, we will receive the CPI report for January and the annual CPI correction for 2023, which may change the inflation situation. I hope the revised values can confirm the progress of inflation decline, and the policy is based on data rather than hope.
In addition, Federal Reserve Director Christopher Waller also mentioned the importance of CPI correction values in a speech in January this year.
Therefore, global financial markets closely monitor the correction of CPI to prevent changes in inflation prospects that could affect interest rate cuts, which is currently the most important factor affecting the stock and bond markets.
Recently, Federal Reserve officials collectively released hawks, intending to cool down market expectations of interest rate cuts.
Among them, the Federal Reserve's Loretta Mester stated that it is expected that the Fed will gain confidence to cut interest rates later this year, and if inflation does not decrease, the Fed can maintain its current policy. When the Federal Reserve cuts interest rates, it may take a gradual step.
Mester believes that there is no urgency for interest rate cuts and more data is needed before deciding on interest rates. Cutting interest rates too early would be a mistake, and there is still a tendency towards three rate cuts in 2024.
Boston Federal Reserve Bank President Susan Collins said on Wednesday, "Currently, policies are still in a favorable position, and we are carefully evaluating the constantly changing data and prospects. I believe it may be appropriate to start relaxing policy constraints later this year." The strong performance of the labor market and economy suggests that economic cooling will take some time, and the start of interest rate cuts should be gradual.
Minneapolis Federal Reserve Bank President Neel Kashkari said in an interview that 2-3 rate cuts seem appropriate, and if the job market continues to be strong, the Federal Reserve may cut rates "quite slowly".
Richmond Fed Chairman Thomas Barkin stated that he still does not fully believe in the view that inflation will continue to make progress, as the deflation so far has come from a decline in commodity prices and has not yet affected the service and leasing industries. Like Kashkari, Balgin often belongs to the hawkish camp among Federal Reserve policy makers.
Overnight profit of 250 billion yuan
On February 8th local time, US chip stocks collectively surged, with Arm held by SoftBank, a subsidiary of Sun Zhengyi, skyrocketing by 47.89% overnight, increasing the value of SoftBank's shares by $34.3 billion (approximately RMB 250 billion), from nearly $71.6 billion to $105.9 billion.
The trigger for the sharp rise in Arm's stock price was the latest released performance report, which showed that in the third quarter ending in December last year, Arm's sales were 824 million US dollars, higher than the expected 761.6 million US dollars; The adjusted earnings per share were $0.29, higher than the expected $0.25. The revenue for the three months ending in March is expected to be between $850 million and $900 million, with analysts estimating an average of $778 million. Excluding some items, the expected earnings per share is about 30 cents, far higher than the expected 21 cents.
SoftBank acquired Arm for $32 billion in 2016 and currently holds approximately 930 million shares, accounting for approximately 90% of Arm's issued shares.
In September 2023, SoftBank launched Arm for listing. Arm raised $4.9 billion in its IPO, making it the largest initial public offering on a US exchange in 2023.
The sharp rise in Arm's stock price finally made Sun Zhengyi proud.
Prior to this, the well-known shared office celebrity WeWork filed for bankruptcy, leaving Sun Zhengyi with a black history of billions of dollars in losses.
According to SoftBank's second quarter performance report released in November 2023, a net loss of 931.1 billion yen ($6.17 billion) in a single quarter was the fourth consecutive quarterly loss, mainly due to the drag of WeWork.
SoftBank reported a total loss of 234.4 billion yen (approximately 1.55 billion US dollars) in the first half of the fiscal year due to investment and financial support for WeWork. The media reported that its cumulative losses to WeWork amounted to $14.3 billion (approximately RMB 103 billion).