Inflation fight may go down bumpy path

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Inflation fight may go down bumpy path

A view of grocery store in Washington DC, United States on February 14, 2024. 

Mostafa Bassim | Anadolu | Getty Images

This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

What you need to know today 

Nikkei rallies
Asia markets were largely higher Thursday as Japan slipped into a recession. The Nikkei 225 rose, closing above the 38,000 level for the first time since 1990 despite GDP missing estimates. The broad-based Topix also advanced. Overnight, U.S. stocks also climbed as Wall Street rebounded modestly from the previous session. The benchmark S&P 500 rose 0.96%, while the Nasdaq Composite advanced 1.3%. The blue-chip Dow also ended higher, adding over 100 points.

Japan in recession
Japan has lost its crown as the world’s third-largest economy to Germany. Japan’s nominal GDP in 2023 totaled 591.48 trillion yen ($4.2 trillion) while Germany’s reached 4.12 trillion euros ($4.46 trillion) in the same period. Once the second largest economy in the world, Japan slipped into recession after its economy shrank for two quarters in a row due to weak domestic demand.

BRICS millionaires soar
A report by Henley & Partners forecast that BRICS nations will see an 85% jump in millionaires over the next decade, exceeding the rise in G7 countries. “The 85% forecast for BRICS will be the highest wealth growth of any bloc or region globally,” Andrew Amolis, wealth analyst at New World Wealth told CNBC.

TSMC surges
Shares of Taiwan Semiconductor Manufacturing Company hit an all-time high Thursday after Morgan Stanley raised the price target on chip designer Nvidia, citing an increase in AI demand. TSMC, the world’s largest producer of advanced processors, makes chips for companies such as Nvidia and Apple.

[PRO] Asia’s top picks
Morgan Stanley has some stock ideas for February which offer what the bank calls “alpha” opportunities. Alpha stocks are those that can beat the market, and one particular stock has a nearly 80% upside.

The bottom line

Wall Street returned to some level of calm after markets nosedived a day earlier over inflation jitters.  

But that issue continued to remain front and center.

Fed Vice Chair for Supervision Michael Barr on Wednesday, noted that the central bank remains confident on hitting its inflation target.

But January’s report “on consumer product index inflation is a reminder that the path back to 2 percent inflation may be a bumpy one,” he said.

Investors are getting skittish on whether the Federal Reserve can bring down inflation without derailing an economy that keeps surprising to the upside.

Barr highlighted he agreed with the “careful approach” to cutting rates advocated by Chair Jerome Powell.

“We need to see continued good data before we can begin the process of reducing the federal funds rate.”

Chicago Fed President Austan Goolsbee, who also spoke Wednesday, echoed a similar sentiment, that even if inflation comes in a bit higher for a few months, “it would still be consistent with our path back to target.”

But he pushed backed against market reaction to the latest inflation data.

“Let’s not get amped up on one month of CPI that was higher than it was expected to be,” Goolsbee added.

If he is right, then investors have nothing to worry about.  

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