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Rachel Reeves has told the Budget watchdog that she plans to increase income tax, according to Steven Swinford from The Times.

Reeves informed the OBR that personal tax measures will be included in her budget on November 26 but the report notes that the plans could still be reversed.

“The chancellor is considering a 2p rise in income tax and a 2p cut in national insurance,” the report says.

It will be offset somewhat as “she is considering limiting the national insurance cut to earnings below £50,270, reducing the rate from 8 per cent to 6 per cent,” according to the report.

This article was written by Adam Button at investinglive.com.

No one knows what the economics of massive investments in computer chips for AI will reap. That’s the takeaway from comments from OpenAI’s CFO that were cited today by a WSJ reporter.

In addition, the ways they are planning to pay for it may not align with anything that users would prefer.

The battle is to stay on the cutting edge and OpenAI floated government loan backstops in order to do that, setting off a discourse about ‘AI bailouts’ that’s probably already poisoned that well. Sam Altman just weighed in on that.

What’s clear is that it’s an arms race and no one really understands if there will be a return on the investments. The company said it doesn’t know how long the useful lifecycle of the chips are. If it’s two years, it’s hard to finance, if it’s seven years, it works.

They note that they’re currently using some 6-7 year old chips because the demand is so high but they’re always going to need to have the best available chipset.

To me, this sounds like a big red flag that even the people at the top are flying blind and desperate to win on technology, no matter the cost. With several companies fighting that same battle, eventually there will be losers and at least some of the buyers for Nvidia chips will dry up. At the same time, the entire market and demand for AI could just mean that the winners spend more.

This whole dynamic has led to the recent moves to vendor financing that have the market concerned about circular investments that don’t really add up.

In addition, the CFO outlined ‘creative commercial deals’ where they demand payment for discovery and the transaction. That’s another way of saying that Wal-Mart — who they’re already partnered with — will show up in your searches and chats because they’ve paid to be there, not because they’re the best. That’s certainly not in the customer’s best interest and the whole thing starts to look like Google with a different set of clothes.

A more novel idea they’re working on is in pharma where they could partner with companies to discover drugs on the condition they get revenue from drugs developed from it. That could bring in some hefty sums but the timelines on drug approval are so long that it’s a cash burn for many years (on compute) before you get any kind of return. Moreover, if you can crank out drugs with this generation of GPT, why wouldn’t future LLMs be able to find better ones? That would shorten the useful lifecycle of whatever drugs they might help to develop.

Here are the WSJ notes:

This article was written by Adam Button at investinglive.com.

• Vote was 4-1
• Heath dissented in favor of holding
• Inflation projected to converge to target in Q3 of 2026

The peso is trading at 18.60.

This article was written by Adam Button at investinglive.com.

Nikkei is reporting that:

• Discrepancies have emerged over the details of China’s agreement with the US to pause rare earth export restrictions.
• Washington says pass controls will also be eliminated. China has not announced they were on board with that.

There seems to be a bit of a disconnect.

Earlier today, the Federal Register posted the details of an Executive Agreement whereby it said:

Under the Arrangement, the
PRC has committed to, among other things, postpone and
effectively eliminate the PRC’s current and proposed coercive
global export controls on rare earth elements and other critical
minerals, and address Chinese retaliation against United States
semiconductor manufacturers and other major companies in the
3
semiconductor supply chain. The PRC has also committed to
purchase United States agricultural exports integral to the
economy and general welfare of the United States, including
soybeans, sorghum, and logs. And the PRC has committed to
suspend or remove many retaliatory actions against the United
States, including suspending tariffs on a vast swath of United
States agricultural products until December 31, 2026, and
extending the PRC’s market-based tariff exclusion process for
United States imports until November 10, 2026.
The United States, in turn, committed to, among other
things, maintain the suspension of heightened reciprocal tariffs
on imports of the PRC until 12:01 a.m. eastern standard time on
November 10, 2026.

It was added that:

I determined that it was necessary
and appropriate to address the emergency declared in Executive
Order 14257 by suspending application of the heightened
ad valorem duties imposed on the PRC under Executive Order
14257, as amended, and to instead impose on articles of the PRC
an additional ad valorem rate of duty of 10 percent.

This article was written by Greg Michalowski at investinglive.com.

This comment could be hurting market sentiment but I wouldn’t take anything from a politicians mouth too seriously. Yesterday, some Republican Senators cited by the WSJ said they were increasingly optimistic about a deal by the end of the weekend.

Cancelling flights is not going to fly with Americans.

This article was written by Adam Button at investinglive.com.

Goldman Sachs is now expecting that the Bank of England will cut rates by 25 basis points in December after their interest rate decision today. About today was 5 – 4 with the 4 dissenters arguing for a cut of 25 basis points.

Governor Bailey signalled that the BoE is likely to follow a gradual downward path for rates, provided inflation continues to ease. He emphasised that the committee is not yet ready to cut rates because it wants to observe clearer evidence that inflation is on a sustained downward trajectory.

He noted that inflation remains “a long way above” the 2 % target, so the BoE must remain cautious about risks of persistence—particularly pay and price setting reversal or “second-round” effects from food and energy inflation.

At the same time, Bailey acknowledged that economic activity is weak—for example the labour market is showing signs of softening—and thus there are two opposing forces: sticky inflation on one hand, and weak demand on the other.

With Bailey siding with the “keep rates unchanged” he may once again be the deciding vote in December. The BOE meets again on December 18.

This article was written by Greg Michalowski at investinglive.com.

The Energy Act of 2020 directed the USGS to update the list of critical minerals, and the list is timely to provide guidance for use of the Bipartisan Infrastructure Law funds, both for the USGS and other agencies. The act also indicates that at least every three years, the Department of the Interior must review and update the list of critical minerals, update the methodology used to identify potential critical minerals, take interagency feedback and public comment through the Federal Register, and ultimately finalize the list of critical minerals.

The 2022 list of critical minerals includes the following

• Aluminum, used in almost all sectors of the economy
• Antimony, used in lead-acid batteries and flame retardants
• Arsenic, used in semi-conductors
• Barite, used in hydrocarbon production.
• Beryllium, used as an alloying agent in aerospace and defense industries
• Bismuth, used in medical and atomic research
• Cerium, used in catalytic converters, ceramics, glass, metallurgy, and polishing compounds
• Cesium, used in research and development
• Chromium, used primarily in stainless steel and other alloys
• Cobalt, used in rechargeable batteries and superalloys
• Dysprosium, used in permanent magnets, data storage devices, and lasers
• Erbium, used in fiber optics, optical amplifiers, lasers, and glass colorants
• Europium, used in phosphors and nuclear control rods
• Fluorspar, used in the manufacture of aluminum, cement, steel, gasoline, and fluorine chemicals
• Gadolinium, used in medical imaging, permanent magnets, and steelmaking
• Gallium, used for integrated circuits and optical devices like LEDs
• Germanium, used for fiber optics and night vision applications
• Graphite , used for lubricants, batteries, and fuel cells
• Hafnium, used for nuclear control rods, alloys, and high-temperature ceramics
• Holmium, used in permanent magnets, nuclear control rods, and lasers
• Indium, used in liquid crystal display screens
• Iridium, used as coating of anodes for electrochemical processes and as a chemical catalyst
• Lanthanum, used to produce catalysts, ceramics, glass, polishing compounds, metallurgy, and batteries
• Lithium, used for rechargeable batteries
• Lutetium, used in scintillators for medical imaging, electronics, and some cancer therapies
• Magnesium, used as an alloy and for reducing metals
• Manganese, used in steelmaking and batteries
• Neodymium, used in permanent magnets, rubber catalysts, and in medical and industrial lasers
• Nickel, used to make stainless steel, superalloys, and rechargeable batteries
• Niobium, used mostly in steel and superalloys
• Palladium, used in catalytic converters and as a catalyst agent
• Platinum, used in catalytic converters
• Praseodymium, used in permanent magnets, batteries, aerospace alloys, ceramics, and colorants
• Rhodium, used in catalytic converters, electrical components, and as a catalyst
• Rubidium, used for research and development in electronics
• Ruthenium, used as catalysts, as well as electrical contacts and chip resistors in computers
• Samarium, used in permanent magnets, as an absorber in nuclear reactors, and in cancer treatments
• Scandium, used for alloys, ceramics, and fuel cells
• Tantalum, used in electronic components, mostly capacitors and in superalloys
• Tellurium, used in solar cells, thermoelectric devices, and as alloying additive
• Terbium, used in permanent magnets, fiber optics, lasers, and solid-state devices
• Thulium, used in various metal alloys and in lasers
• Tin, used as protective coatings and alloys for steel
• Titanium, used as a white pigment or metal alloys
• Tungsten, primarily used to make wear-resistant metals
• Vanadium, primarily used as alloying agent for iron and steel
• Ytterbium, used for catalysts, scintillometers, lasers, and metallurgy
• Yttrium, used for ceramic, catalysts, lasers, metallurgy, and phosphors
• Zinc, primarily used in metallurgy to produce galvanized steel
• Zirconium, used in the high-temperature ceramics and corrosion-resistant alloys.

The new list has added uranium, copper, silver, metallurgical coal, potash, silicon, and lead.

The “national security” angle has become more more “critical” when defining executive powers. That power is being tested in the courts with yesterday’s Supreme Court arguments presented by the Trump administration in hopes to keep the executive power on tariffs, using national security as the argument.

Needless to say extending the list is a benefit to the presidents defense. If China withholds critical materials – or now copper, or lead, does that give the Pres. powers to retaliate with tariffs.

This article was written by Greg Michalowski at investinglive.com.

• Prior was 59.8
• Non-seasonally adjusted 51.7 vs 61.6 prior

This is a poor indicator but we’re all starving for data.

This article was written by Adam Button at investinglive.com.

Food stamps were cut this week and it looks like air travel is next. Sources cited by Reuters say the Federal Aviation Administration is working to hammer out details of flight cuts that will start tomorrow.

That’s going to make a different subset of voters angry and might even get politicians to start working together.

This article was written by Adam Button at investinglive.com.

Headlines:

• BOE leaves bank rate unchanged at 4.00% in November monetary policy meeting
• BOE governor Bailey: We are likely to continue gradual downward path on the bank rate
• China reportedly made purchases of two cargoes of US wheat for December shipment
• ECB’s de Guindos: Inflation news is positive
• US October Challenger layoffs 153.074k vs 54.064k prior
• Eurozone September retail sales -0.1% vs +0.2% m/m expected
• Germany September industrial production +1.3% vs +3.0% m/m expected
• Germany October construction PMI 42.8 vs 46.2 prior
• UK October construction PMI 44.1 vs 46.7 expected

Markets:

• EUR and JPY lead, NZD lags on the day
• European equities lower; S&P 500 futures up 0.1%
• US 10-year yields down 1.9 bps to 4.137%
• Gold up 0.6% to $4,008.34
• WTI crude oil up 0.7% to $60.03
• Bitcoin down 1.1% to $102,572

The main event on the session was the BOE policy decision and the central bank held the bank rate steady at 4.00% as expected, though the voting margin was as tight as it could be in siding with a decision to hold. The bank rate vote was 5-4 in favour of keeping rates steady, with dissents coming from Breeden, Ramsden, Dhingra, and Taylor in wanting a 25 bps rate cut.

GBP/USD fell slightly from 1.3090 to 1.3060 after the decision but there wasn’t anything overly dovish, with the pair now clawing back losses to 1.3085 currently as Bailey speaks.

Besides that, there wasn’t too much in it during the session. US Challenger job cuts continue to reflect heavy layoffs for the year, reaffirming a softening labour market picture. That’s not seeing much of a market reaction though as the risk mood keeps a bit more steadier after the rebound in Wall Street yesterday.

US futures are a little higher while Treasury yields are not following up on the break higher yesterday, with 10-year yields down 1.9 bps to 4.137% for now.

That’s keeping broader markets in check with the dollar holding slightly lower at the margin today. EUR/USD is up 0.3% to 1.1525 with USD/JPY down 0.3% to 153.60 at the moment. Meanwhile, gold is seeing dip buyers start to show some appetite again in a push back above $4,000 and breaking back above key near-term levels here.

This article was written by Justin Low at investinglive.com.

• Prior +0.1%; revised to -0.1%

That’s a miss on estimates with the drop mostly coming from a decline in sales for non-food products (-0.2%). Meanwhile, food sales were stable on the month. This is a bit of a lagging release, so it won’t change the ECB outlook whatsoever.

This article was written by Justin Low at investinglive.com.

The data is released earlier than expected by the source. US-based employers announced 153,074 job cuts in October this year, which is up a whopping 175% from the 55,597 cuts announced in October 2024. Even compared to September, the number of layoffs is up a staggering 183% last month. And historically for October, this is the highest one since October 2003.

“October’s pace of job cutting was much higher than average for the month. Some industries are correcting after the hiring boom of the pandemic, but this comes as AI adoption, softening consumer and corporate spending, and rising costs drive belt-tightening and hiring freezes. Those laid off now are finding it harder to quickly secure new roles, which could further loosen the labor market.”

Looking at the details,

More to come..

This article was written by Justin Low at investinglive.com.