Two Thoughts

Deflation and AI: What’s Really Driving This Market?

Today was one of those market days that left me with more questions than answers.

📉 First, PPI came in massively below expectations:
– August PPI month-over-month: -0.1% vs. +0.3% expected
– Year-over-year: 2.6% vs. 3.3% expected

That’s deflation on the monthly read, not inflation. On top of that, the Bureau of Labor Statistics revised prior jobs numbers — wiping out 911,000 jobs previously reported. Almost a million fewer than we thought. That’s rare, and it makes me wonder about the reliability of the data itself.

Markets initially rallied, then faded into the close. Maybe traders just don’t trust the numbers. Meanwhile, Fed funds futures are pricing in over a 90% chance of a 25 bp rate cut next week.

💡 Then there’s AI. Oracle surged on news of backlogged demand for its AI cloud services — deals worth billions. Nvidia, Palantir and others moved higher in sympathy. It reminded me of earlier technological revolutions: the internet, electricity. At the time, people couldn’t fully see what those innovations would become. Are we at a similar inflection point with AI?

That’s my musing for the day. Something to think about as we head into next week.

#MarketUpdate #InflationData #AIstocks #TradingInsights

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