Gold prices hit a record high in Asian trade on Monday, extending a rally from last week as uncertainty over the U.S. election and anticipation of Israel’s retaliation against Iran fueled safe haven demand.
Other precious metals also advanced, with silver in particular racing to a 12-year peak, while industrial metal prices, specifically copper, also firmed following an interest rate cut in top importer China.
Metal prices rose even as the dollar remained close to its highest levels since early-August, as traders penciled in a slower pace of interest rate cuts by the Federal Reserve.
Spot gold rose 0.4% to a record high of $2,732.86 an ounce, while gold futures expiring in December rose 0.6% to $2,747.70 an ounce.
Gold, silver prices surge on safe haven demand
Precious metal prices were buoyed chiefly by increased safe haven demand, especially as reports over the weekend showed Israel was planning a strike against Iran over a missile strike earlier in the month.
Hostilities between Israel and Hamas and Hezbollah also continued, pointing to little deescalation in Middle East tensions.
Traders were also biased towards safe havens before the U.S. presidential elections in early-November, with analysts at ANZ stating that the race was “too close to call.”
Recent polls showed Donald Trump and Kamala Harris almost neck-and-neck, although prediction markets largely favored a Tump victory.
The safe haven demand helped precious metals firm past signs of resilience in the U.S. economy, which saw traders positioning for a slower pace of rate cuts by the Fed. The Fed is widely expected to cut rates by 25 basis points in November.
Silver futures rallied 3.1% to $34.328 an ounce- their highest level since September 2012, while platinum futures 0.6% to $1,031.15 an ounce.
Copper rallies as China cuts interest rates
Among industrial metals, copper prices rose following a slightly bigger-than-expected rate cut by top importer China.
Benchmark copper futures on the London Metal Exchange rose 1.2% to $9,746.0 a ton, while December copper futures rose 1.2% to $4.4450 a pound.
The People’s Bank of China cut its benchmark loan prime rate slightly more than expected on Monday, the latest in a flurry of stimulus measures from Beijing.
But earlier signals on stimulus had somewhat underwhelmed traders, given that Beijing did not provide key details on the timing or scale of its planned measures.
This saw copper nursing steep losses over the past week.
Precious metal surpassed its prior record of $2,708.70 an ounce set in late September
Gold futures hit a fresh record as geopolitical tensions simmer and economic uncertainty mounts, and they look set to climb even higher.
Continuous gold futures on the New York Mercantile Exchange rose 0.75% to $2,727.90 a troy ounce in European midday trading, having reached as high as $2,729.30 earlier in the session.
The precious metal has been on a tear in recent days, climbing more than 3% in the past week and finally surpassing its prior record of $2,708.70 an ounce set in late September.
“Gold is likely to perform well over the long term, driven by several key trends: the ongoing debasement of the U.S. dollar, the precarious fiscal situations of many Western nations, and the global desire for a store of value independent of other assets and institutions,” said Ryan McIntyre, managing partner at asset manager Sprott.
Physical demand for gold—as opposed to investor demand—has likely been weak, given its elevated price levels and strong recent gains, Macquarie analysts said in a note. Instead, hedge funds have driven most of the action. Global gold exchange-traded funds added an additional 5% over September to bring gold assets under management to a month-end peak of $271 billion, with North American funds contributing the most, according to a recent report from the World Gold Council.
Challenging fiscal outlooks across developed markets are presently a key structurally bullish market feature for gold—and the upcoming U.S. election evidently contributes to uncertainty on that front, Macquarie analysts said.
Economic uncertainty is a prevailing factor, agreed Sprott’s McIntyre. Both U.S. presidential candidates Kamala Harris and Donald Trump are likely to be favorable for gold prices, as fiscal irresponsibility is expected to persist in either case, McIntyre said.
Consistently strong U.S. labor-market data has damped hopes for another jumbo Federal Reserve interest-rate cut, but the market is still pricing in smaller rate cuts before the end of the year—typically a boon for non-interest bearing bullion, as it lowers the opportunity cost, McIntyre said.
Elsewhere, safe-haven demand amid heightened geopolitical risks and U.S. election uncertainty are keeping gold well-supported, ING analysts said in a note.
Traders are seeking safety in bullion after Israel said it killed Hamas leader Yahya Sinwar late Thursday, marking a potential turning point in the war, ING said. Israeli Prime Minister Benjamin Netanyahu said the country would keep fighting until all of the hostages captured in the Oct. 7 attack last year are freed, though he is likely to face increased pressure from the U.S. and domestically to end the military offensive and reach a deal.
BMI analysts said they are neutral to bullish toward gold for the end of 2024 through to the first quarter of 2025, as prices receive support from the Fed’s rate cuts and high levels of geopolitical tension. BMI expects spot gold prices to trade within the range of $2,500-$2,800 an ounce in the coming months.
Private investors are continuing to take profit at these record high levels, but the pace of liquidations are far from a rush—because investors aren’t selling as fast as prices rise, said Adrian Ash, director of research at online precious metals marketplace BullionVault.
“The measured pace of net selling overall shows that investors remain confident in gold’s long-term outlook,” Ash said.
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The federal government ran a budget deficit that topped $1.8 trillion last year, according to the CBO’s estimate
The federal government’s budget deficit was nearly $2 trillion last year and is expected to widen further in future years, with experts warning that the government needs to rein in deficits to ensure fiscal stability.
The nonpartisan Congressional Budget Office (CBO) released its preliminary estimated deficit for fiscal year 2024, which was $1.834 trillion. The FY2024 deficit was $139 billion larger than the actual deficit recorded in the prior fiscal year, as spending growth eclipsed the rise in tax revenue.
Based on the preliminary estimate for the FY2024 deficit, it ranked as the third-largest budget deficit in U.S. history. It trails only the $3.132 trillion deficit in FY2020 and the $2.775 trillion deficit in FY2021, each of which were incurred amid elevated federal spending on pandemic relief programs.
The deficit’s growth comes amid rising federal spending on entitlement programs like Social Security and Medicare amid the aging of America’s population, as well as higher interest payments on the debt caused by elevated interest rates and a growing national debt.
Spending on net interest payments on the debt rose by $240 billion in FY2024 compared to last year, according to the CBO’s estimate. Social Security spending was up $107 billion and Medicare rose $25 billion from a year ago.
“With one fiscal year ending and another starting anew, it’s clear that we have a lot of course correcting to do,” said Maya MacGuineas, president of the nonpartisan Committee for a Responsible Federal Budget (CRFB). “We’re now borrowing $5 billion per day, while interest payments are soaring.”
“At nearly $2 trillion, last year’s deficit was almost double pre-pandemic levels. We face massive headwinds with debt set to reach an all-time record share of the economy by 2027; and we don’t even have a plan to address our fiscal challenges,” she said.
“As rising interest costs and our structural deficits drive the national debt higher and higher, it’s clear that this is a fiscal election with enormous implications for America’s future,” said Michael Peterson, CEO of the nonpartisan Peter G. Peterson Foundation.
Deficits are projected to continue to widen in the years ahead. The CBO projected that deficits are on track to surpass $2 trillion a year starting in FY2030 and will be nearly $2.9 trillion just four years later.
The economic plans released to date by the two leading presidential contenders, Vice President Harris and former President Trump, have each been projected to cause the deficit to widen at a faster pace and opted against addressing the looming insolvency of a key Social Security trust fund in the next decade.
An analysis by CRFB found that Harris’ economic plan would likely result in deficits being $3.5 trillion larger over the 2026-2035 period, while Trump’s plan would widen deficits by $7.5 trillion in that period.
“We cannot afford to continue to borrow at this rate indefinitely. It is long past time that policymakers stop adding to our growing national debt and instead agree on a path forward that puts the debt on a downward, sustainable path for future generations,” MacGuineas explained.
“The leaders we elect this fall will face a series of critical deadlines, including the return of the debt ceiling, the expiration of trillions in tax cuts, and automatic cuts in Social Security growing ever closer. Voters are taking notice and want to hear about fiscal solutions, but unfortunately we have yet to see adequate plans from either of the presidential candidates,” Peterson added.
Read the full article HERE.
Gold advanced towards record highs on Wednesday as gains in non-yielding bullion were bolstered by weakness in U.S. bond yields and expected rate cuts by major central banks, with additional safe-haven support from ongoing geopolitical conflicts.
Spot gold rose 0.7% to $2,681.50 per ounce by 9:30 a.m. ET (1330 GMT), just a whisker away from record high of $2,685.42 it hit on Sept. 26. U.S. gold futures gained 0.7% to $2,698.20.
Expectations of a 25-basis-point rate cut by the U.S. Federal Reserve in November are solidifying, weaker inflation data in Europe and the UK have increased expectations for more aggressive easing from the central banks, leading to generally lower yields which have lifted gold, said Peter A. Grant, vice president and senior metals strategist at Zaner Metals.
“There’s even an outside chance we could see close to $3,000, and that’s probably more of a Q1 2025 target,” Grant said.
U.S. Treasury yields fell to their lowest in over a week, making gold more attractive as it tends to thrive in a low interest rate environment.
Traders currently see about a 96% chance of a 25-basis-point U.S. rate cut in November, according to the CME FedWatch tool, opens new tab.
The European Central Bank looks set to deliver another rate cut on Thursday, while a drop in British inflation indicated a rate cut next month by the Bank of England.
The main bullish drivers for gold include risk of fiscal instability, safe-haven appeal, geopolitical tensions, de-dollarization, U.S. Presidential election uncertainties and rate cuts by central banks, said Ole Hansen, head of commodity strategy at Saxo Bank.
Delegates to the London Bullion Market Association’s annual gathering predicted gold prices would rise to $2,941 over the next 12 months and silver prices would jump to $45 per ounce.
Spot silver firmed 1.5% to $31.94. Platinum rose 1.1% to $995.40 and palladium climbed 1% to $1,019.83.
Read the full article HERE.
The S&P 500 could see a setback in the next 12 months as the bull market enters its third year: CFRA Research
U.S. stocks were kicking off their third year in the bull market with the S&P 500 scoring a fresh record on Monday — but history suggests investors need to be prepared for a potential setback in the coming 12 months.
Since 1947, all 11 bull markets that celebrated their second birthday experienced at least one decline of 5% or more in the subsequent 12 months, with some even turning into new bear markets, according to Sam Stovall, chief investment strategist at CFRA Research.
“The average return following the 11 bull markets [since 1947] that celebrated their second birthday was a mere 2%,” Stovall said in a Monday client note. “What’s more, all of them experienced a decline of 5% [in the next 12 months], while five endured selloffs in excess of 10% but less than 20%, and three succumbed to new bear markets.”
The S&P 500 has climbed nearly 64% since Oct. 12, 2022, when the large-cap benchmark index hit a bear-market closing low of 3,577.03. The index surged 0.8% on Monday to finish at 5,859.85, according to FactSet data.
The table below shows the first year of the current bull market saw a 22% advance for the S&P 500, which was the third lowest since 1947. However, the index posted the highest of all second-year increases of 34%, versus the median of 11.5%, according to CFRA Research.
In Stovall’s view, the current high valuation of the U.S. stock market, especially large-cap stocks, is “concerning” as the bull market enters its third year.
The trailing price-to-earnings ratio for the S&P 500 is currently 25 — the highest valuation for the second year of a bull market since World War II. That level is also 48% higher than the median second-year P/E for all bull markets since 1947, according to CFRA Research.
“P/E multiples typically shrank during the third year of the bull market, since earnings-per-share growth tended to accelerate and confirm the optimism implicit in the sharp price advances during the early years of bull markets,” Stovall noted.
To be sure, Wall Street analysts are expecting year-over-year earnings growth rates of 14.2%, 13.9% and 13.1% for the fourth quarter of 2024 and the first and the second quarters of 2025, respectively, according to John Butters, senior earnings analyst at FactSet Research.
Earnings are also expected to grow around 15% in fiscal-year 2025, compared with an expected growth rate of around 10% in 2024, Butters said in a Friday note.
U.S. stocks ended higher on Monday as investors turned their attention to the next batch of corporate earnings. The Dow Jones Industrial Average was up over 200 points, or 0.5%, while the Nasdaq Composite rose 0.9%, according to FactSet data.
Read the full story HERE.
JPMorgan Chase CEO Jamie Dimon kicked off third-quarter earnings season Friday with a stern warning about geopolitical threats that could hurt the global economy. “Recent events show that conditions are treacherous and getting worse,” he wrote in a press release.
“There is significant human suffering, and the outcome of these situations could have far-reaching effects on both short-term economic outcomes and more importantly on the course of history,” he said, referring to war in Ukraine and Israel’s war against Hamas and Hezbollah.
Dimon noted that inflation is slowing and the US economy has avoided recession but that “several critical issues remain, including large fiscal deficits, infrastructure needs, restructuring of trade and remilitarization of the world.”
The world’s largest bank beat analysts’ expectations last quarter, even as its profit fell 2% from a year earlier.
Shares of JPMorgan (JPM) jumped about 4.5% in morning trading and are 30% higher so far this year.
Global woes
Dimon has been sounding the alarm on geopolitical instability for over a year, repeatedly calling it the largest threat to the global economy and saying that the world order established at the conclusion of World War II is under attack.
Last month, Dimon said that these worries dwarf all others. “Iran, North Korea and Russia, I think you can legitimately call them (an) evil axis,” he said at September’s Financial Markets Quality Conference in Washington, referring to the term first used by George W. Bush in 2002 to describe Ba’athist Iraq, Iran and North Korea.
Dimon’s reimagining of the axis is “working every day to make it worse for the Western world and for America,” he said.
The economy, hurricanes and the Fed
Dimon also expressed some uncertainty about his outlook for the US economy but said that overall it remained resilient.
JPMorgan Chase CFO Jeremy Barnum echoed Dimon’s feelings on an earnings call Friday morning, citing the strength of consumer spending. “We see spending patterns as being solid and consistent with the narrative that the consumer is on solid footing and with a strong labor market,” he said.
Those patterns support the case for a “no landing scenario,” he added, referring to when the economy avoids both a recession and a sharp slowdown, continuing to grow steadily despite higher interest rates.
Still, US federal debt surpassed $35 trillion this year and has been a major point of concern for Dimon. He’s repeatedly warned that rising government debt could stoke inflation and complicate the Federal Reserve’s ability to manage the economy.
While the Fed has become more optimistic, cutting its inflation forecast for this year and next, Dimon isn’t convinced that price pressures will ease so quickly.
“I wouldn’t count my eggs,” he said last month, noting that he only sees a 35% to 40% chance of the economy avoiding recession.
Dimon also acknowledged on Friday the human toll that hurricanes Milton and Helene have taken in the US but minimized the impact they’ll have on the economy.
“First and foremost, our hearts go out to all those people affected and the families who lost lives. We’re also helping our employees and customers, to do everything we can to be prepared at the state level,” he told CNN on a press call. But, he said, the hurricanes likely wouldn’t have large and lasting consequences for the economy.
“Hurricanes have never had a traumatic effect on the global economy,” he said.
Elections and Dimon’s legacy
Friday was JPMorgan’s final earnings call before the upcoming US presidential election on November 5, and Dimon steered clear of wading into political waters, emphasizing that he wouldn’t be endorsing any candidate and didn’t want to comment on the election. His reluctance followed a social media post from former President Donald Trump last week claiming Dimon had endorsed him — a statement that JPMorgan quickly denied.
Dimon also addressed whether or not he would consider taking a government position under the next administration. “I think the chance is almost nil… I love what I do. I intend to be doing what I do. I almost guarantee I’ll be doing this for a long period of time, or at least until the board kicks me out,” he said during Friday’s earnings call.
Credit problems
While JPMorgan beat analysts’ expectations on its earnings on Friday, the bank also reported it set aside $1 billion more in reserves to cover growing losses from unpaid loans.
In the third quarter, the bank set aside $3.1 billion to cover potential loan losses — more than twice as much as last year — mainly due to a 40% rise in unpaid loans, especially in its credit card division.
Despite some signs of an improving economy, JPMorgan said it added to its reserves due to higher card balances and economic uncertainty, which contributed to a 2% drop in quarterly net income to $12.9 billion.
“Cash is a very valuable asset in a turbulent world,” said Dimon on Friday. “You see my friend Warren Buffett stockpiling cash right now. I mean, people should be a little more thoughtful about how we’re trying to navigate in this world and grow for the long term for our company.”
Read the full article HERE.
Homeowners in California were the most active in taking out home-equity loans
Homeowners across the U.S. may be locked in, but they can still cash out.
With home values soaring over the last few years, homeowners who have built up equity are turning to home-equity loans to cash in on their gains.
In the first half of this year, home-equity lending has soared to the highest level since 2008, real-estate data-analytics firm CoreLogic said in a report released Wednesday.
Over that period, lenders originated more than 333,000 new home-equity loans totaling about $23.6 billion, the company said.
Home-equity loan versus HELOC
Home-equity loans are different from home-equity lines of credit, or HELOCs.
When a homeowner takes out a home-equity loan, they get a lump sum up front, have a rate that is fixed and make payments on a schedule until the loan is paid off.
A HELOC, on the other hand, is a type of revolving credit that allows a homeowner to borrow against the equity in their home. Borrowers can spend up to their credit limit during the draw period, which can be up to 10 years, after which they enter a repayment period, according to the Consumer Financial Protection Bureau. Rates on HELOCs are variable and are tied to Federal Reserve policy rates.
The average interest rate on a home-equity loan was 8.36% as of Oct. 9, according to Bankrate, while the average HELOC interest rate was 8.73%.
HELOC activity surged in the first half of 2022, but that demand has since waned.
Over the first half of 2024, lenders originated 671,00 new HELOCs totaling about $105 billion, CoreLogic said, which was down from the same period last year.
Why homeowners are raiding their homes for cash
Homeowners are tapping into their home equity to cover expenses such as home renovations or to consolidate debt. They’re taking on a second mortgage rather than refinancing because they want to avoid giving up the relatively low rate on their primary mortgage.
Nearly nine in 10 homeowners with a mortgage have a rate below 6%, many of them far lower than the prevailing 30-year rate of 6.67% reported by Mortgage News Daily on Thursday morning. That has created a persistent lock-in effect that has put a damper on home-sales activity.
With the housing market likely to remain frozen for the time being, and “given prolonged high home prices, some owners are likely to continue to tap accrued home equity for necessities such as home renovations or settling higher-interest-rate debts,” CoreLogic added.
Homeowners in California were the most active in terms of home-equity lending activity.
The four metropolitan areas with the most home-equity loans in the first half of 2024 were all in California: Los Angeles-Long Beach-Glendale, Anaheim-Santa Ana-Irvine, San Diego-Chula Vista-Carlsbad and Riverside-San Bernardino-Ontario.
The average California homeowner gained approximately $55,000 in equity over the past year, CoreLogic noted.
Read the full article HERE!
US consumer sentiment unexpectedly fell for the first time in three months as lingering frustration with a high cost of living offset more sanguine views of the job market.
The preliminary October sentiment index declined to 68.9 from 70.1 in September, according to the University of Michigan. The median estimate in a Bloomberg survey of economists called for a reading of 71.
Consumers expect prices will climb 2.9% over the next year, up from the 2.7% expected in September and the first increase in five months, the report issued Friday showed. At the same time, they see costs rising 3% over the next five to 10 years, down from 3.1% in the prior month.
While the rate of inflation has cooled over the past year, households remain troubled by high prices that they also see outpacing their income gains in the year ahead. A measure of consumers’ perception of their current financial situation dropped to the lowest level since the end of 2022.
The share of consumers who expect unemployment to rise in the coming year fell to 31%, the lowest reading in 10 months.
“Despite strong labor markets, high prices and inflation remain at the top of consumers’ minds,” Joanne Hsu, director of the survey, said in a statement.
Separate figures Friday showed no change in a gauge of prices paid to producers in September, suggesting further progress toward tamer inflation.
Still, respondents welcomed the Federal Reserve’s decision last month to start lowering borrowing costs. Their views of buying conditions for durable goods such as cars and major appliances edged up to a four-month high.
Looking at homebuying conditions, concerns about high interest rates fell to the lowest in 15 months. But a majority still sees borrowing costs as too high, suggesting further easing is necessary for bolster sales, the report said.
The current conditions gauge slipped to 62.7 from 63.3. A measure of expectations fell to 72.9 this month from 74.4 in September.
Read full article HERE.
The rivalry to dominate in AI, quantum computing and other technologies of the future may even intensify after November’s election
The presidential race between Donald Trump and Kamala Harris comes at a time of rising geopolitical tensions on multiple fronts. In the first of an in-depth series, Jane Cai takes a look at what lies ahead for the hi-tech rivalry between China and the US.
Washington and Beijing’s hi-tech rivalry is expected to continue and even intensify, regardless of who wins the US presidential election, according to analysts who say the tone for further strained US-China relations has already been set.
Former president Donald Trump’s boast that he took “billions and billions of dollars” from China through tariffs on a wide variety of Chinese imports, including hi-tech products, suggest that higher duties could be on the way if he wins the White House.
Meanwhile, Vice-President Kamala Harris has promised to make sure “that America – not China – wins the competition for the 21st century and that we strengthen, not abdicate, our global leadership”.
The approaches of the candidates may differ but the tech competition between China and the US will continue to weigh heavily on the international economic and geopolitical landscape, analysts said.
“Breakthroughs in science and technology will be central to the geopolitical landscape of the 21st century and to efforts by the US and China to dominate it,” said Sourabh Gupta, a senior policy specialist with the Institute for China-America Studies in Washington.
“To be clear, there is no ‘new cold war’ that is about to break out as yet in US-China relations [of] the sort of overarching zero-sum rivalry that played out between Washington and Moscow during the second half of the 20th century,” Gupta said.
“However, there is a palpable cold war-style, zero-sum equation settling into their competition to dominate the high-technology and advanced manufacturing industries of tomorrow.”
The US has been tightening its grip on technology transfers with China for years, denying market access to Chinese tech products and cracking down on technology-related investments in both directions.
Telecoms equipment giants Huawei and ZTE were banned from the US during the Trump administration because of alleged links to the Chinese government and military.
Sales of advanced chips and chip-making equipment to China by the US and its allies have also been banned on national security grounds.
Chinese President Xi Jinping has repeatedly emphasised the importance of technological self-reliance and the development of home-grown industries of the future, including AI and quantum computing, to keep China in the global tech race.
Analysts expect Harris to stick with President Joe Biden’s “small yard, high fence” approach to China if she wins in November. The strategy puts strict restrictions on a few military-related technologies while maintaining normal economic exchanges in other areas.
But the same semiconductors that are subject to export controls because of their use in advanced artificial intelligence models, weapons and surveillance systems are also used in autonomous vehicles, 5G-connected phones, and commercial applications of AI.
The Biden administration has also barred hundreds of Chinese companies from importing almost all US-origin products from the US and its allies and introduced inbound and outbound investment screening if tech firms are involved.
Harris is also expected to raise the fencing over computing-related technologies, biotech and clean tech – areas singled out by the Biden administration as a “national security imperative” for the US to hold its leadership position.
The US House of Representatives passed 25 laws in just one week of September, in a largely bipartisan push to limit China’s influence by restricting access to China-linked biotech companies, China-made drones and even Chinese electric vehicle components.
Wu Hailong, president of the semi-official China Public Diplomacy Association, warned that the “anti-China bills could potentially push the Sino-US relationship into a dangerous position once again”.
The latest bills follow the Chips and Science Act, enacted in August 2022, that set aside US$53 billion to fund American semiconductor production and research and was hailed by the White House for “protecting national security” as well as “bringing semiconductor supply chains home”.
According to Pang Zhongying, chair professor in international political economy at Sichuan University in Chengdu, “there is already a complete set of rules and regulations to curb China’s technological development”.
“If Harris is elected, policy continuity will be the main theme, though she may show her own preference later, if she has a second term,” he said.
If Trump is returned to the presidency, he is likely to tilt towards a “smaller government”, reduce industry subsidies and resort to trade tariffs again as a bargaining tool, Pang said.
Trump has recently called for up to 20 per cent tariffs on all imports and 60 per cent on Chinese goods, prompting many experts to predict that a second Trump presidency would be more confrontational towards Beijing.
In 2018 and 2019, the Trump administration imposed four rounds of tariffs on about two-thirds of US imports from China, after an investigation found China’s practices related to technology transfer, intellectual property and innovation were “unreasonable or discriminatory and burdened or restricted US commerce”.
“The silver lining [for China] may be Trump’s attitude towards American allies. After all, not all companies in other countries are willing to abandon the massive market of China,” Pang said.
The Biden administration has been pressing US allies – including the Netherlands, Germany, South Korea and Japan – to tighten restrictions on China’s access to semiconductor technology.
However, Trump, an “America First” advocate, is dubious about alliances and has been a vocal critic of world organisations such as Nato.
There are also concerns in Europe that a victory for Trump in November could mean a decline in US aid to Ukraine.
Mei Xinyu, a researcher at the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce, said that while their approaches may vary, both candidates intend to press ahead with technology curbs on China.
According to Mei, the confrontation is likely to reach a peak during the next US president’s four-year tenure.
“During that period, China’s focus will be on technological development. It will spare no effort to innovate and industrialise innovation results as soon as possible by taking advantage of its economic scale.”
Beijing has pumped nearly 690 billion yuan (US$97 billion) into the chip industry since 2014, in its bid to be able to mass produce its own advanced chips, and is also pursuing a bigger say in global AI governance.
China has also doubled down on its efforts to persuade the many leading Chinese scientists overseas to return home and train domestic talent in the emerging hi-tech industries.
In June, Xi wrote to world-renowned computer scientist and AI expert Andrew Yao Chi-Chih, the only Chinese winner of the AM Turing Award, to praise his decision to leave the US two decades ago to teach at Tsinghua University.
Xi urged Yao – who heads the university’s Institute for Interdisciplinary Information Sciences and the new College of Artificial Intelligence – to continue helping China achieve self-reliance and become an educational, scientific and technological powerhouse.
According to Richard Suttmeier, a University of Oregon researcher looking at science and technology in the context of US-China relations, “in many ways, the current situation is one of lose-lose for both countries”.
“China’s commitment to high levels of self-reliance in science and technology development, in spite of numerous international ties, puts it somewhat at odds with global trends,” he said.
“US efforts to build a network of cooperation in science and technology among democracies will have some national and international benefits in the shorter run, but as a strategy that attempts to isolate China’s emergence as a science and technology superpower, is likely to run into big problems over the longer run.”
Six of the top 10 rising institutions in artificial intelligence between 2019 and 2023 were in China, but they remained relatively decoupled from US-led global collaboration networks, according to the latest Nature Index.
The AI index, compiled by part of the group that owns the British journal Nature, found that China’s global connectivity is lagging behind the US – the leading AI research nation – as well as Britain and Germany.
According to Michael Frank, chief executive and founder of business intelligence platform Seldon Strategies, the US-China relationship has settled into a new equilibrium that will persist for a long time.
“Tactics may change, but the US strategy of limiting technology transfer to China, and the Chinese strategy of achieving technological self-sufficiency, are fixed,” he said.
“Many countries are wary of being forced to choose between the US and China. Even if the competitors don’t make those demands explicitly, global companies will have to make a decision between which ecosystem to prioritise.”
Read the full article HERE.
The pace of price increases over the past year was higher than forecast in September while jobless claims posted an unexpected jump following Hurricane Helene and the Boeing strike, the Labor Department reported Thursday.
The consumer price index, a broad gauge measuring the costs of goods and services across the U.S. economy, increased a seasonally adjusted 0.2% for the month, putting the annual inflation rate at 2.4%. Both readings were 0.1 percentage point above the Dow Jones consensus.
The annual inflation rate was 0.1 percentage point lower than August and is the lowest since February 2021.
Excluding food and energy, core prices increased 0.3% on the month, putting the annual rate at 3.3%. Both core readings also were 0.1 percentage point above forecast.
Much of the inflation increase — more than three-quarter of the move higher — came from a 0.4% jump in food prices and a 0.2% gain in shelter costs, the Bureau of Labor Statistics said in the release. That offset a 1.9% fall in energy prices.
Other items contributing to the gain included a 0.3% increase in used vehicle costs and a 0.2% rise in new vehicles. Medical care services were up 0.7% and apparel prices surged 1.1%.
Stock market futures moved lower following the report while Treasury yields were mixed.
The release comes as the Federal Reserve has begun to lower benchmark interest rates. After a half percentage point reduction in September, the central bank is expected to continue cutting, though the pace and degree remain in question.
Fed officials have become more confident that inflation is easing back toward their 2% goal while expressing some concern over the state of the labor market.
While the CPI is not the Fed’s official inflation barometer, it is part of the dashboard central bank policymakers use when making decisions. Several of its key components filter directly into the Fed’s key personal consumption expenditures price index.
Though the inflation reading was higher than expected, traders in futures markets increased their bets that the Fed would lower rates by a quarter percentage point at their Nov. 6-7 policy meeting, to about 86%, according to the CME Group’s FedWatch gauge.
In recent days, policymakers have said they see rising risks in the labor market, and another data point Thursday helped buttress that point.
Initial filings for unemployment benefits took an unexpected turn higher, hitting as seasonally adjusted 258,000 for the week ended Oct. 5. That was the highest total since Aug. 5, 2023, a gain of 33,000 from the previous week and well above the forecast for 230,000.
Continuing claims, which run a week behind, rose to 1.861 million, a rise of 42,000.
The jobless claims figures follow the damage from Hurricane Helene, which struck Sept. 26 and impacted a large swath of the Southeast. Florida and North Carolina, two of the hardest-hit states, posted a combined increase of 12,376, according to unadjusted data.
A strike by 33,000 Boeing workers also could be hitting the numbers. Michigan had the largest gain in claims, up 9,490 on the week.
On the inflation side, rising prices across a variety of food categories showed that it is proving sticky.
Egg prices leaped 8.4% higher, putting the 12-month unadjusted gain at 39.6%. Butter was up 2.8% on the month and 7.8% from a year ago.
However, shelter costs, which have held higher than Fed officials anticipated this year, were up 4.9% year over year, a step down that could indicate an easing of broader price pressures ahead. The category makes up more than one-third of the total weighting in calculating the CPI.
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