💴 Inflation at 2.4%

and earnings start flowing

Good morning investors! The new earnings season is starting and it isn’t looking too bright.

Today we cover:

  • Inflation at 2.4%.

  • Earnings reports are here.

  • Investing in real estate.

💰 October isn’t looking like a great month but options traders are still making money. If you want to try your hand at options trading, have a look at this "Cash Flow From Options" Workshop that will also give you access to a free guide covering 10 top picks to help you make money.

📊 Economy and News 

Inflation Comes at 2.4% in September as Jobless Claims Jump

In September, the Consumer Price Index (CPI) increased by a seasonally adjusted 0.2%, bringing the annual inflation rate to 2.4%. Both figures were slightly higher than expected, by 0.1 percentage points.

When excluding volatile categories like food and energy, core inflation rose by 0.3% for the month, with an annual rate reaching 3.3%.

What Drove Inflation Higher

Food and shelter were the main drivers of inflation, with food prices rising 0.4% and shelter costs increasing 0.2%.

Egg prices surged 8.4%, resulting in a 39.6% year-over-year increase, while butter rose 2.8% for a 7.8% annual gain.

Shelter costs increased 4.9% annually. Additionally, used vehicle prices rose 0.3%, new vehicles 0.2%, medical care services 0.7%, and apparel surged 1.1%.

What Declined: Energy and Other Adjustments

The rise in inflation was offset by a notable 1.9% drop in energy prices.

Impact on the Federal Reserve's Interest Rate Outlook

Despite rising inflation, futures markets indicated increased confidence that the Federal Reserve will lower interest rates in November. The CME Group’s FedWatch gauge shows an 86% chance of a quarter-point rate cut, reflecting optimism that inflation will ease enough for the Fed to act.

Also, Federal Reserve policymakers are seen as likely to deliver a quarter-percentage-point interest-rate cut next month and continue to lower the policy rate gradually until it gets to 3.5%, or possibly lower, by late next year, based on bets in interest-rate futures contracts.

Global hits:

Unemployment Claims Surge Unexpectedly: Initial unemployment claims rose unexpectedly to 258,000 for the week ending October 5, the highest since early August and 33,000 more than the previous week, exceeding the forecast of 230,000. Part of the surge was due to Hurricane Helene, with Florida and North Carolina seeing a combined increase of 12,376 claims. Continuing claims also rose by 42,000 to 1.861 million.

Exciting: British employees are set to gain a slew of employment benefits under flagship legislation put forward by the new Labour government on Thursday, including the right to paternity leave or unpaid parental leave from the first day on the job.

📈 Stocks

S&P 500 5,780.05 (-0.21%)
DJIA 42,454.12 (-0.14%)
NASDAQ 18,282.05 (-0.052%)
BRENT CRUDE 79.33 (+3.26%)
* Prices as of Oct 11th, 12:20 AM UTC

Earnings start flowing – Delta, IKEA, and More

Companies have started to announce earnings and guidance:

Delta: Delta Air Lines reported a profitable third quarter, as the airline weathered a $500 million hit from a July service meltdown related to the CrowdStrike computer outage, as well as the impact of Hurricane Helene at the end of the quarter.

The company expects fourth-quarter earnings of between $1.60 and $1.85 a share.

CEO Ed Bastian said consumers will likely pause travel plans around the U.S. election.

IKEA: IKEA annual sales fell 5% after the Swedish budget homeware retailer cut prices in a bid to attract more shoppers and maintain its share of a shrinking home furniture market, but it expects a recovery next year.

7-Eleven: Japanese convenience retailer Seven & i Holdings slashed its earnings forecasts for the fiscal year ending February 2025.

The owner of 7-Eleven stores said it will set up an intermediate holding company for its supermarket food business, specialty store and other businesses, amid growing pressure from investors to trim down its large business portfolios.

Airbus halts? Airbus’s goal for annual aircraft deliveries is seen as “difficult, but achievable,” after the company delivered 50 planes in September, down from 55 in the same month last year.

Ongoing supply chain disruptions and production hurdles continue to create difficulties for the aviation industry, as airlines push to upgrade their fleets.

In June, Airbus lowered its annual delivery target, and analysts from Citi suggested that the company might reduce it further when reporting its third-quarter results.

Good to know: GSK agrees to settle about 80,000 Zantac lawsuits for up to $2.2 billion. Elsewhere, AMD has launched AI chip to rival Nvidia’s Blackwell.

🔐 Crypto

Bitcoin $59,543 (-3.43%)
Ether $2,344 (-3.21%)
Solana $139 (-3.14%)
Total market cap $2.08T (-3.54%)
* Prices as of Oct 11th, 12:20 AM UTC

Ripple launches crypto storage services for banks

Ripple said it is launching a slew of features aimed at helping banks and fintechs store digital tokens — as part of a broader push into crypto custody.

Crypto custody, a type of service that helps clients manage crypto assets, is a nascent business for Ripple, which has consolidated its efforts under a single brand called Ripple Custody.

Moreover, Ripple Labs has announced plans to file a cross-appeal in its ongoing legal case with the U.S. Securities and Exchange Commission.

Check this: BTC is once again under $60,000 as the SEC intends to sue Crypto.com for allegedly operating as an unregistered broker-dealer and securities clearing agency.

💵 Personal Finance

Investing in real estate

Here’s how to invest in real estate.

Make a purchase

You can invest in real estate by buying a property such as a house or an office.

The average house in the US costs $495,100, which makes it hard for most people to invest in real estate. Buying a house will give you several ways to make money, including rental income and capital appreciation.

Plus, there might be some relief in the form of discounted rates if you are a first time buyer or if you belong to a specific earning group. Check federal and local grants to make the process easier.

Try REITs

A real estate investment trust (REIT) is “a company that owns, operates, or finances income-generating real estate.” This can be a great option for people who wish to invest in real estate but do not have the funds to make a complete purchase.

They offer some benefits over buying real estate such as higher liquidity and a wide variety such as apartments, hotels, and offices.

Some top performing REITs include Prologis with a forward earning yield of 3.3%, Ventas with a forward earning yield of 4.2%, and Public Storage with a forward earning yield of 4.9%.

On the plus side, you can buy shares of a REIT in a taxable brokerage account, as well as a tax-advantaged retirement account such as an IRA or employer-sponsored 401(k).

Investing apps

Just like REITs, investing apps allow users to invest in real estate but with some differences:

  • You enjoy rent and also profit from capital appreciation.

  • Less liquid than REITs, as you don’t typically get the option to sell when desired.

  • Can be a little more risky. Hence, we suggest that you only invest in a registered app.

Some top names include Getstake, which works in the UAE market, and RealtyMogul.

Construction stocks

Investing in construction companies can be a clever way to benefit from rising real estate prices. However, construction companies, like many industrial stocks, are usually classified as slow and steady income stocks more likely to return money to shareholders than to double in value overnight.

Some of the top names include Caterpillar, United Rentals, Vulcan Materials, and Fluor.

💰 Be a Better Investor

“Generally, the greater the stigma or revulsion, the better the bargain.”

Seth Klarman

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👩🏽‍⚖️ Legal Stuff
Nothing in this newsletter is financial advice. Always do your own research and think for yourself.