UK CPI Rises To 3.8%, Stock Market Weakness, More
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I'm Barry Ritholtz, inviting you to join me for the Masters in Business podcast. Every week, we bring you fascinating conversations with the people who shape markets, investing, and business. CEOs, fund managers, billionaires, Nobel laureates, traders, analysts, economists, everybody that affects what's going on in the market, whether you own stocks, bonds, real estate, commodities, crypto, you really need... hear these conversations. Sometimes it's behaviorists like Dick Thaler or Bob Schiller. Sometimes it's fund managers like Peter Lynch, Bill Miller, Ray Dalio.
What recent trends are impacting UK inflation rates?
Sometimes it's authors, Michael Lewis, author of The Big Short and Moneyball. Regardless of the conversation, these are the folks that move markets each week. That's the Masters in Business podcast with me, Barry Ritholtz. Listen on Apple, Spotify or wherever you get your podcasts. News when you want it with Bloomberg News Now. I'm Anna Edwards. And I'm Stephen Carroll. UK inflation has accelerated to an 18-month high, according to the latest data. Consumer prices rose 3.8% year-on-year in July, marking an increase from the previous month and the fastest pace since January 2024. The figures add to evidence that firms are responding to the government's recent tax and minimum wage increases by passing on extra costs to consumers.
Melanie Baker is a senior economist at Royal London Asset Management. I think if I look at where the surprise comes from, it seems to be airfares. And we know that's a very volatile component. Looking at the ONS write-up, it seems to have been affected by the different timing of school holidays and when they took the price readings for things. I'm not getting too carried away with this number. Melanie Baker speaking there. As traders further trimmed bets on Bank of England rate cuts following the CPI print, the probability of another reduction by December is now around 42% as resurgent inflation collides with a cooling labour market. Global stocks have paused their record-breaking run as concerns grow that the rally of recent months has advanced too far and too fast.
The sell-off was driven by big tech companies on Wall Street yesterday, with the Nasdaq closing down 1.4%. Futures are pointing to further losses today. That's ahead of Nvidia reporting earnings next week. Daryl Cronk, CIO for Wealth and Investment at Wells Fargo, says he remains bullish on the tech sector because of their earnings growth. You've got to go where growth resides. And there's just no doubt that that's where the growth is. You saw it in the latest second quarter earnings numbers. You take the seven largest stocks, their earnings growth were 29%. If I take X of those, earnings growth was like three and a half. Well, as far as Darrell Cronk speaking to Bloomberg earlier, as traders are firming up bets on a September interest rate cuts from the Federal Reserve.
European countries are developing a plan to send British and French troops to Ukraine as part of a potential peace deal between Kiev and Moscow. Leaders are said to be looking to leverage President Trump's support for a package of security guarantees that would involve European boots on the ground with possible U.S. air support. Here's what the U.S. president told Fox News. When it comes to security, they're willing to put people on the ground. We're willing to help them with things, especially probably if you talk about Bayer, because nobody has the kind of stuff we have. Really, they don't have. But I don't think it's going to be a problem. I think if a deal is made, you know, famous last words, right?
But I think if a deal is made, I think Russia's had it. They've all had it. A very extended period of time. I don't think there'll be a problem. But there'll be some form of security. It can't be NATO because that's just not something that would ever, ever happen. He couldn't. Those comments on Fox News came as Bloomberg-led Trump called Hungary's Prime Minister Viktor Orban on Monday after European leaders pressed him to intervene in Ukraine's stalled EU membership bid.
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