The economy is running hot, oil is running hotter, and the Fed is running out of things not to say · Daily Briefing

In 30 seconds: A string of hotter-than-expected US economic data—including surging import prices, strong industrial production, and retail sales—reinforced inflation concerns, while the US fiscal deficit widened to $2 trillion against a backdrop of 120% debt-to-GDP and rising professional forecaster inflation expectations. Tech and semiconductor stocks experienced sharp volatility, with CoreWeave breaking below key lows, the Nasdaq 100 posting a rare five-day losing streak, and the semi ETF swinging 15% in each direction, as CEO confidence fell and AI-driven valuation concerns mounted. Brent crude surged past $100 per barrel amid fears of Houthi attacks on Saudi infrastructure at Yanbu, Chinese supply of missile components to Houthis, and ongoing disruptions to Middle East oil supply chains linked to the Iran War. Fed Chair Kevin Warsh declined to offer forward guidance on an October rate hike, which markets interpreted as a hawkish hold signal, even as hot inflation data had briefly pushed rate-hike odds to 44%.

Import prices surged 1.1% month-over-month, with fuel imports up 4.8% and even nonfuel imports climbing 0.7%. On a year-over-year basis, overall import price inflation hit 8.1%, the highest since July 2022, while capital goods import inflation reached a record 8.4%. Export prices jumped 2.2%, with the prior revised up to 1.2% from 0.6%. Industrial production expanded 0.7%, nearly doubling the 0.4% consensus estimate and dwarfing the prior month's 0.1%. Manufacturing output rose 0.3%. Retail sales at restaurants and bars posted 1.0% growth on a three-month moving average, the largest in more than a year. The New York Fed Services PMI employment index flatlined at 0.0 in October, down from 4.9 the prior month. The 5-year PCE inflation forecast sits at 2.5%, a figure that has been drifting higher over the last two quarters. Consumer prices have risen at a 4% annualized rate since January 2020, double the Fed's 2% target. The CPI now sits 14% above where the Fed's target path would have placed it. The fiscal backdrop does not help. Federal spending runs $7.4 trillion against $5.4 trillion in revenue. You might say past cycles offer guidance. You would be wrong.

It was just the 8th time the Nasdaq 100 has fallen all five trading days with a 2%+ drop on Friday in history, and the pattern offers cold comfort: in 5 of the prior 7 instances the following Monday saw a bounce, and 6 of 7 times the subsequent week was higher. VIX: 20.12. Only 9 prior sessions have seen a bigger VIX reaction relative to a 1.1% S&P decline. CoreWeave ($CRWV) IPO'd. Breadth tells a split story. S&P 500 daily breadth reading: 259. But that improvement was concentrated: big improvement for S&P 500 … not so much for Nasdaq and Russell 2000. The Russell 2000 closed at 2,721.37, down -1.6587% on the day. Meanwhile, CEO confidence fell -6 points to 46, its lowest since Q2 2025. October OPEX SPX sample size: 16.

Brent crude prompt futures hit $110 per barrel this week, their highest level since May, before a sharp intraday reversal knocked the Dated Brent benchmark down roughly $10 a barrel in a single session. By Friday the benchmark had settled near $107 per barrel. The supply picture is tangled on multiple fronts: Ukrainian strikes have hammered Russian refineries, the US blockade has cratered Iranian exports, and the Iran War remains the larger overall driver — all at once. September was the low point for Russian exports in 2025, adding another constraint. It has pushed tankers carrying more than 100 million barrels to cross the Strait of Hormuz over the last 7 days (that's more than 14 million barrels per day via the Strait of Hormuz, excluding bypasses). On October 15, 9 VLCCs and 2 Suezmax/Aframax vessels loaded a combined 20 million barrels at Yanbu. Satellite imagery confirms the Saudi East-West pipeline is operating close to 6 million barrels per day. Everyone knows Yanbu is loading as much as possible, because it can be destroyed any time Iran wants. With China reportedly supplying advanced missile parts to the Houthis, Yanbu described as vulnerable to Iranian strikes at any moment, and the Iran War characterized as anything but a short conflict, the geopolitical picture surrounding oil supply keeps adding new layers of risk.

There is a particular kind of communication that consists of not communicating. The logic: he declined to offer forward guidance because he would have said something if he was going to raise rates. You can see the appeal of this reasoning. You can also see why it might drive a central banker slightly insane. The rate-hike odds tell a fun little story of their own. After one hot inflation report, market pricing for a pre-election rate hike jumped from 22% to 44%, then settled back down to 28%. By end of week, market odds of a rate hike had fallen to 14%. Meanwhile, the Fed Chairman found time to muse that AI is going to "fundamentally change the conduct of monetary policy" by improving forecasts. He elaborated: "We torture data with old-fashioned models to try to find out what's underlying inflation trends.