Day: 29 November 2023

Posted on

U.S. GDP grew at a 5.2% in Q3, stronger than expected

U.S. GDP revision

U.S. GDP figure better that forecast

The U.S. economy grew even stronger than previously calculated in the third quarter, the result of better than expected business investment and stronger government spending, the Bureau of Economic Analysis reported  Wednesday 29th November 2023.

Gross domestic product (GDP), a measure of all goods and services produced during the three-month period, climbed to 5.2% annualised pace, the department’s second estimate showed. The increase superseded the initial 4.9% figure and was better than the 5% forecast from economists.

Upward revision

Primarily, the upward revision came from increases in non-residential fixed investment, which includes structures equipment and intellectual property. The category showed an increase of 1.3%, which still presented a sharp downward shift from previous quarters. Government spending also helped boost the Q3 estimate, rising 5.5% for the July-through-September 2023 period.

However, consumer spending registered a downward revision, now rising just 3.6%, compared to 4% in the initial estimate.

Inflation

There was some mixed news on the inflation front. The personal consumption expenditures price index, a gauge the Federal Reserve follows closely, increased 2.8% for the period, a 0.1% downward revision.

Corporate profits increased 4.3% during the period, up sharply from the 0.8% gain in the second quarter.

Posted on

Could gold prices reach new all-time highs in 2024?

Gold a safe haven

Some expect gold to above climb $2,500

Gold prices are on track to rally to all-time highs in 2024 on the back of interest rates increases, inflation fear, looming recessionary concerns and geo-political unrest.

The precious metal is always sought after as a safe haven asset. The gold price hit a record intraday high of $2,072.5 on 7th August 2020, according to data. Some analysts say it could surpass that level and push beyond the record.

Another positive driver for gold is an anticipated peak in Fed rate hiking cycle as well as upcoming topping out of U.S. dollar strength.

Gold usually performs well during uncertain times

  • Gold tends to perform well in periods of economic uncertainty such as recessions and stagflation due to its status as a reliable store of value.
  • Gold is often used as a hedge against inflation.
  • Any type of recessionary move would be positive for gold.
  • Gold should trade higher when interest rates stop rising and the dollar retreats.
  • As interest rates rise, demand for gold drops as alternative investments like bonds become more appealing and yield better returns. These may now have peaked.
  • Gold prices tend to have an inverse relationship with interest rates.
  • Central bank purchases of gold have been consistently strong, alongside consumer demand for the precious metal.

Gold price year on year

  • Some analysts are particularly bullish on gold and have called for a target of $2,500 by the end of next year.
  • There has been a return of physical gold jewellery demand from China and India as both economies improve and retail spending returns.
  • First quarter gold jewellery demand in China was reported just shy of 200 tons. Analysts project more than 700 tons of jewellery demand from China by the end of 2023.
  • Chinese retail gold demand has been resilient in 2023 even as consumption of other commodities remained weak.

The target is $2,500 by the end of 2024

Much of this has to do with the fact that recessionary forces may take hold beginning early in 2024.

Let’s watch and see.

NOTE: This is not investment advice!

You must, as always do your own careful research before making an investment.

REMEMBER: RESEARCH! RESEARCH! RESEARCH!

Posted on

Amazon announces new AI chip

Amazon AI chip

Amazon Web Services (AWS) announced Trainium2, a chip for training artificial intelligence (AI) models, and it will also offer access to Nvidia’s next-generation H200 Tensor Core graphics processing units.

Amazon’s AWS cloud department of the encompassing Amazon empire has announced new chips for customers to build and run artificial intelligence (AI) applications on, as well as plans to offer access to Nvidia’s latest chips.

Amazon Web Services is attempting to stand out as a cloud provider with a variety of cost-effective options. It won’t just sell cheap Amazon-branded products, though. Just as in its online retail marketplace, Amazon’s cloud will feature top-of-the-line products from other vendors, including highly sought after GPUs from top AI chipmaker Nvidia

AWS will host a special computing cluster for customers and Nvidia to use. AWS customers can start testing new general-purpose Graviton4 chips.

Amazon’s dual-pronged approach of both building its own chips and letting customers access Nvidia’s latest chips might will help it against its top cloud computing competitor, Microsoft. 

Posted on

Office for Budget Responsibility says UK government spending plans ‘a very big risk’

Hopeful

Spending plans outlined in the chancellor’s Autumn Statement represent ‘a very big fiscal risk’, according to the UK’s OBR.

Mr Richard Hughes, chair of the Office for Budget Responsibility (OBR), told MPs on the Treasury Select Committee that spending plans carried a level of ‘uncertainty’. He suggested that much of the promised spending is funded by projected savings rather than income already received.

Last week, the OBR slashed its forecast for UK economic growth.

In March, the OBR said it expected GDP – a measure of the size and health of a country’s economy – to grow by 1.8% in 2024 and 2.5% in 2025.

Predications cut

Those predictions have now been cut, with a new forecast suggesting the UK economy will grow by 0.7% in 2024 and 1.4% in 2025.

‘It is very difficult to assess the credibility of the government’s spending plans, because after March 2025 the government doesn’t have any spending plans,’ Mr Hughes said, as he and other members of the OBR faced questions on the Autumn Statement.

Tax by stealth

Even though the chancellor announced a cut to NI rates, he opted to leave NI and income tax thresholds untouched, meaning they remain frozen until 2028. By doing this, more workers will fall into the higher tax bracket thus creating larger than expected tax revenue for the treasury. And, as workers secure pay rises, they may end up paying more tax if they are dragged into that higher tax band.

Some 2.2 million more workers now pay the basic rate income tax of 20% compared with three years ago, according to official figures, while 1.6 million more people have found themselves in the 40% tax bracket in the same period.

Just a thought, wasn’t the former UK prime minister ousted because of unfunded projections or was that unfunded tax cuts?

Only saying…