Fed Officials Grapple with Data Gaps Amid Rising Inflation Expectations; Dairy Prices Fall, Oracle Faces AI Chip Rental Challenges

By / / Breaking News

Key Takeaways

  • Federal Reserve official Miran expressed optimism that the Fed will have the necessary economic data by the October FOMC meeting, while emphasizing that private data cannot fully bridge existing information gaps.
  • The New York Federal Reserve reported a notable increase in short-term inflation expectations for September, rising to 3.4% over the next year from 3.2% in August, alongside a deterioration in labor market expectations.
  • The Global Dairy Trade (GDT) Price Index, managed by New Zealand, experienced a 1.6% drop, with the average winning price falling to $3,921 per metric ton at auction.
  • Internal data from Oracle (ORCL) revealed financial challenges associated with renting out Nvidia (NVDA) chips, indicating razor-thin gross profit margins in its AI cloud business.

Federal Reserve officials are navigating a complex economic landscape marked by ongoing data concerns and shifting inflation expectations. Fed Governor Miran stated his hope that the central bank will acquire the essential economic data before the upcoming October Federal Open Market Committee (FOMC) meeting, noting that private sector data is insufficient to fill current information gaps. Miran also highlighted the global standard of U.S. government data and cautioned against its manipulation for political ends, emphasizing the need for careful analysis and interpretation of all economic figures. He further pointed out that falling response rates are becoming a significant issue for data collection.

Meanwhile, the New York Federal Reserve released its September survey, indicating that short-term inflation expectations for the next year have risen to 3.4%, up from 3.2% in August. Expected inflation over a three-year horizon remained steady at 3%, while the five-year outlook increased to 3% from 2.9%. The report also showed that households improved their personal finances in September but lowered their future financial expectations, with the highest food price increase recorded since March 2023. Labor market expectations also deteriorated during the month. Miran suggested that the neutral interest rate, which cannot be directly measured, is likely around 0.5%.

In commodity markets, the Global Dairy Trade (GDT) Price Index, overseen by New Zealand, saw a 1.6% decline in its latest auction. The average winning price for dairy products now stands at $3,921 per metric ton, with whole milk powder specifically dropping 2.3% to $3,696 per ton.

In the technology sector, internal data from Oracle (ORCL) has revealed financial challenges associated with its strategy of renting out Nvidia (NVDA) chips. Reports indicate that Oracle's AI cloud business is operating with razor-thin gross profit margins, raising questions about the profitability of its ambitious AI expansion efforts.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. We are not financial professionals. The authors and/or site operators may hold positions in the companies or assets mentioned. Always do your own research before making financial decisions.
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