| Good morning. Pushback against the Fed's rate cut, CPI day and volatility grips Chinese stocks. Here's what's moving markets. — Sam Unsted Five Things will publish its last edition this Friday, Oct. 11. To keep you up to speed, you will automatically begin receiving the new, more expansive subscriber-only Markets Daily newsletter starting Oct. 14. Not a Bloomberg.com subscriber yet? You'll get a complimentary trial of Markets Daily. Joe Weisenthal will continue writing regularly over on the new daily Odd Lots newsletter. Minutes from the Federal Reserve's latest meeting revealed pushback against the 50 basis point cut by the central bank, with some officials wanting to stick with a gradual pace. That may mean Chair Jerome Powell still struggle to get support for another bigger cut from policymakers if the labor market holds up. The Fed's Mary Daly, however, does see one or two more 25 basis point cuts to come this year. More fuel for the debate on the Fed's next steps will come with the September CPI report later, where economists expect to see a deceleration in key metrics from the rates seen in August. Even if there is an upside surprise, that's unlikely to sway the Fed for its November meeting, said Anna Wong from Bloomberg Economics. Treasury traders are watching closely and the increasing popular rallying cry heading into the CPI report is to sell the yen. Markets have settled into something of a holding pattern ahead of the CPI data, after the S&P 500 yesterday notched up its 44th record close of the year, despite a mixed session for big tech. Stock futures are slipping, Treasuries are drifting and the dollar is little changed. Earnings from Domino's Pizza and Delta Air Lines are top of the corporate agenda. Meanwhile, the value of Canada's stock market has caught up with the UK's. Volatility gripped Chinese stocks, which ultimately ended higher, as investors await the outcome of a planned fiscal policy briefing over the weekend, pinning their hopes on more stimulus to keep the recent rally in local markets going. The disappointment at a lack of new major stimulus earlier in the week meant that hedge funds sold a record amount of Chinese shares on Tuesday, as traders returned from the Golden Week holiday. Hurricane Milton has moved across central Florida having made landfall near Tampa, causing widespread flooding and knocking out power for about three million households. It has now moved off the eastern coast of the state and into the Atlantic. Follow a live blog assessing the damage done by the storm, which threatens tens of billions of dollars in insurance claims. This is what's caught our eye over the past 24 hours. Hello, and happy CPI day.
Economists are expecting a 0.1% monthly reading on headline CPI, and 0.2% on core. Obviously a lot seemingly has changed on the macro front in recent days. A week ago, people were still talking about a decent chance of a 50 basis point rate cut at the November meeting. As of now, there's a decent chance of no rate cut at all. We'll see. Anyway, it's my last day here in this spot, which has been a real blast the last roughly nine years. I really appreciate everyone who scrolled down here. If you wanna keep following my stuff, sign up for the Odd Lots newsletter, which will become a daily thing starting on Monday that I'll produce with my co-host Tracy Alloway. Going out on CPI day, amid a rapidly evolving macro landscape seems fitting to me. You know, sometimes talking about the economy seems like a long and subtle practical joke. Actually there's two jokes. The first is that we never really get any clarity on what's going on. The moment one debate seems to end, a new one begins. A data point comes out, and then that just raises more questions about the next one. It literally never stops. So it's always funny to me to even think about what we'll "learn" from one release to the next. But then secondly, our understanding of the past is always evolving too. At some point in 2021, there started to be a debate about whether the inflation we were seeing would be "transitory" or not. And people organized themselves into various teams. And then the inflation turned out to be much worse than many people expected, and the Fed eventually hiked rates aggressively. Yet it's not obvious to me that the debate ever ended. Yes, one thing we know for sure is that inflation went up more and for longer than what many had anticipated. But on the other hand, we don't really know to this day why inflation fell like it did. Had unemployment shot up in 2023, we'd have a nice story to tell about how the Fed had to engineer a recession to bring inflation down. But it didn't. Instead unemployment remains near historic lows, markets are around all-time highs, and growth is robust. So how much was the Fed? How much was it "transitory" factors that eventually faded? I believe that, having started this whole discussion, we are now cursed to have it for the next several decades of our life. Even to this day, the situation evolves. If the September jobs report had come in soft, then maybe we could tell a story about the so-called soft landing, and the Fed engineering a return to normal. But now they're talking about a "no landing" scenario. And now we're talking about CPI again. And that raises the question of whether there's still heat in the economy. And then once again, we're talking about the link between inflation and jobs or inflation and demand. And there are people talking about how the 50 basis point rate cut was in hindsight a mistake. So we never really know what's going on in the present. And we also really never know what happened in the past either. But at least it's something interesting to talk and write about. Follow Bloomberg's Joe Weisenthal on X @TheStalwart | 
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