Data released on Tuesday indicated that US consumer prices grew more than anticipated in December.
What does this mean?
Thrilled by July's lower-than-anticipated inflation, optimistic economists believed August's prognosis may maintain the positive momentum. Well, it didn't: energy costs may have decreased by 5% from the previous month as a result of a much-needed 11% drop in gas prices, but that benefit was nearly entirely offset elsewhere.
Food and medical service expenses increased by 0.8%, while lodging costs, which account for a third of overall inflation, experienced their biggest increase in roughly 30 years.
Overall, US consumer prices increased by 0.1% in August, which was somewhat higher than the 0.1% reduction economists had predicted but less than the 8.3% surge they had projected.
Why should I care?
Energy prices have been a major contributor to US inflation this year, but they are now finally declining. It's unfortunate that growing prices everywhere else are fanned the flames rather than putting out the fires, indicating that once-concentrated inflation has expanded and will no longer be as easily put out.
That could be the reason why markets have now entirely discounted any earlier expectations of 0.5% and fully priced in a 0.75% hike from the Federal Reserve (the Fed) next week.
Some even believe there is a 10% chance the Fed will increase rates by one full percentage point, signaling a more aggressive policy.
For markets: Investors are fed up.
The thought of a longer, more aggressive interest rate campaign to combat inflation that is proving to be increasingly difficult to control will irritate investors. In the end, a stock's value is determined by its future earnings, which are discounted to the present day and lose value when interest rates rise. This could be the reason why the Nasdaq, which is stacked high with tech companies that are extremely sensitive to rate hikes, plunged a staggering 3.3% when the news emerged while the S&P 500 fell 2.6%.
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Oracle’s Latest Revelation
Oracle reported strong quarterly results from its cloud business earlier this week.
What does this mean?
Investors are pondering if Oracle's years-long slog in the database and software markets can be revived by a better-late-than-never push into the rapidly expanding cloud market. When you exclude sales from Oracle's $2 billion or so acquisition of medical records supplier Cerner last year, its cloud segment's revenue increased by 29% and by 45% over the same period the previous year. The healthcare sector is a little behind the cloud trend, but Oracle is hoping Cerner can help it capitalize on a surge of businesses ready to increase their cloud expenditure. This is Oracle's newest growth engine, and it has great potential. Larry Ellison, expressed optimism on all fronts on Monday, claiming that Oracle is able to lure clients away from larger rival Amazon.
Why should I care?
Oracle's organic cloud growth increasing by 29% is no minor accomplishment, especially given that enterprises are making cuts due to recessionary anxieties. But you can bet that companies like Amazon, Microsoft, and Alphabet will want to top that. These companies boasted bumper revenue growth between 30 and 40% last quarter, and they'll want to maintain that when they report this quarter's earnings in the coming months, allowing for a slight drop-off given the disastrous state of the world.
Oracle's organic cloud growth increasing by 29% is no small feat, especially in light of the fact that businesses are cutting costs as a result of recessionary concerns. However, you can guarantee that organizations like Alphabet, Microsoft, and Amazon will strive to surpass that. These businesses had impressive sales growth of between 30 and 40% during the previous quarter, and they'll want to keep up that trend when they announce their results for the current quarter in the months to come, allowing for a small decline given the dire situation in the world.
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