🌴No vacation from inflation

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Tonight: The inflation news no one asked for. And SBF's ex spent another day in court. Let's get into it.

By Elisabeth Buchwald

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Last updated October 11 at 7:53 PM ET

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🌴 NO VACATION FROM INFLATION

Inflation's like a bad roommate who you're stuck living with until your lease is up.

A fresh set of that was released today leads me to believe we could be seeing more of this "roommate."

Here's the deal

Inflation's cooled a lot from a year ago. At its peak in June 2022, prices rose at a 9.1% annualized pace. In contrast, the latest Consumer Price Index report found Americans paid 3.7% more for goods and services for the 12 months ending in August than they did one year ago.

But that was the second straight month inflation accelerated after slowing for 13 consecutive months.

If the third time is the charm, prepare to be charmed when tomorrow's CPI report for September is released at 8:30 am ET. By that I mean, inflation on an annual basis is probably going to increase for the third month in a row.

I could be wrong though. Economists expect the annual inflation rate to ease slightly to 3.6%, according to consensus estimates from Refinitiv.

Reading the room

Higher energy prices are the main reason inflation has been heating up. Last month, gas prices hit new yearly highs, as oil prices pushed past $92 a barrel amid supply cuts and catastrophic flooding in Libya.

Case in point: A separate inflation gauge, the Producer Price Index, rose last month. PPI measures the average price changes that businesses pay to suppliers.

As my colleague Alicia Wallace notes, "PPI is a closely watched inflation gauge since it captures average price shifts before they reach consumers and serves as a potential signal for the prices consumers ultimately end up paying."

That's why it's not uncommon to see PPI rise in one month and CPI to rise in the following month.

Want to take a guess how consecutive many months PPI has been rising on an annual basis? I'll help you out — three.

But it's worth noting that wholesale prices are rising more slowly than consumer prices. That could help give way to lower prices for consumers.

Looking ahead

Inflation is still higher than the Federal Reserve would like it to be. The central bank's goal is 2% annual inflation.

And while some people are scratching their heads asking, "What's so special about 2%?" and wondering if 3% is close enough, Fed officials are pretty firm on getting inflation down to 2%.

The majority of Fed officials think it'll take one more rate hike to get there. But some aren't convinced that's necessary.

NUMBER OF THE DAY

$29 billion

That's nearly how much the IRS is ordering Microsoft to pay back in taxes for the years 2004 to 2013, not including penalties. Microsoft disclosed the news in a securities filing on Wednesday.

The tech giant said it planned to appeal the IRS' determination, which it said wasn't final.

👀 ELLISON'S SECOND DAY IN COURT

ICYMI: Sam Bankman-Fried's ex-girlfriend, Caroline Ellison, took the stand yesterday to testify against him in one of the biggest financial fraud trials since Bernie Madoff's.

But Ellison, who plead guilty and agreed to cooperate with prosecutors in hopes of getting a lighter sentence, had far too much tea to spill about SBF and FTX, and she was asked to come back for a second day.

Highlights of day 2 in court

Ellison, the former CEO of FTX's sister firm Alameda Research, testified that Alameda borrowed around $10 billion from FTX and had given about $5 billion in loans to FTX executives and affiliated entities.

Allison Morrow, aka the person who usually writes Nightcap and does a freaking insane job at it, reported Ellison also said:

She was in a "constant state of dread" as crypto markets tumbled in the spring of 2022 as the crypto trading firm's lenders began calling back billions in loans.
She prepared seven different balance sheets that offered a rosier picture so SBF could have his pick for which to send to a major lender that asked for it.
SBF's disheveled appearance was a calculated PR strategy.
She kept a Google doc titled, "Things Sam is freaking out about," which she updated regularly to keep tabs on the issues Bankman-Fried was fixated on.