The European Central Bank (ECB) decided to cut rates for the second time this year, following its initial cut in June. The Deposit Facility Rate, which determines the interest banks earn on deposits at the ECB, was lowered by 25 basis points to 3.50%. The Main Refinancing Rate, used for short-term loans to commercial banks, was cut to 3.65%. Despite these rate reductions, the ECB plans to proceed with caution in normalising its monetary policy stance as domestic inflation remains above target, and wage growth is still elevated. 

Regarding the macroeconomic projections, GDP growth has been slightly revised downward for this year and the following two. Inflation is expected to gradually decelerate towards the 2% target by 2026, with core inflation projections revised slightly higher for this year.

The bottom line is that the rate cut was widely anticipated, and markets continue to expect another reduction in December. However, the chances of a further rate cut in October have diminished, as inflation remains stubbornly high and growth forecasts have only seen slight revisions.

Ahead of the next Federal Reserve policy meeting, the Unites States Department of Labor reported that inflation in August fell to its lowest level since February 2021. While this indicates a softening of inflationary pressures, a key measure came in higher than anticipated, introducing additional complexity to the Federal Reserve's upcoming decision on interest rates.

The headline Consumer Price Index (CPI) rose by 0.2% month-over-month (MoM), matching expectations, while core CPI, which excludes the more volatile food and energy sectors, increased by 0.3%, slightly exceeding estimates. Additionally, the Producer Price Index (PPI) for August fell below expectations to 1.7%, indicating some easing of inflation. However, "supercore" CPI, which measures services inflation, surged by 0.33% MoM, its largest increase since April, driven by higher transportation costs.

This uptick in core inflation is likely to keep the Federal Reserve cautious, lowering the chances of a more aggressive rate hike at the upcoming policy meeting.

Key figures:

• CPI (MoM): +0.2%, in line with expectations.
• Core CPI (MoM): +0.3%, higher than expected.
• CPI (YoY): +2.5%, in line with expectations.
• Core CPI (YoY): +3.2%, in line with expectations.
• Supercore CPI (MoM): +0.33%, higher than expected.
• PPI (MoM): +1.7%, below expectations.
• Core PPI (YoY): +2.4%, below expectations.

In Q2 2024, U.S. banks reported unrealised losses on investment securities (bonds) totaling $512.9 billion. This marks the 11th consecutive quarter of losses, an unprecedented streak in banking history. 

Additionally, the number of banks on the FDIC's Problem Bank List, which tracks institutions undergoing significant financial pressure, rose to 66, representing 1.5% of all U.S. banks.

An investor who committed $10,000 to the Nasdaq 100 ($QQQ) in 1999 would have navigated through some of the most turbulent periods in recent financial history, including:

• 2000: The Dotcom bubble
• 2007: The Global Financial Crisis
• 2010: The EU Debt Crisis
• 2020: The global pandemic
• Multiple instances of drawdowns over 20%
• Several economic recessions

Yet, despite this rollercoaster of financial events and economic uncertainty, that initial investment would have grown to an impressive $104,000 today, representing a 10% compound annual growth rate (CAGR) over the period.

The Watchcharts Rolex Market Index is a measure of the average market price of pre-owned Rolex watches, specifically focusing on the top 30 models within the Rolex brand, sorted and weighted by transaction value. It is expressed in USD and rebalanced annually on January 1. The index provides insights into trends in the secondary luxury watch market, by reflecting shifts in demand, availability, and price fluctuations. Recently, it has dropped to its lowest level since November 2020, down 30% from its peak in March 2022.

The first 2024 presidential debate between Kamala Harris and Donald Trump took place on September 10, 2024, touching on several key issues including inflation, immigration, and healthcare.

Republican nominee Donald Trump announced last Thursday on Truth Social that he would not participate in another debate ahead of the November 5 election, claiming that Harris is seeking a rematch because he "clearly" won the debate.

Meanwhile, several instant polls and betting markets told a different story, with many suggesting that Harris was the perceived winner based on her performance during the debate.

The dominance of the Magnificent 7 stocks has reached a striking level, now accounting for approximately 32% of the S&P 500, near an all-time high. This concentration has surged by an impressive 10 percentage points in just the past 1.5 years.

To put this in perspective, the current share is 10 percentage points higher than during the peak of the 2000 Dot-Com Bubble.