Reuters Morning Bid framed the week around three linked stories: hot U.S. inflation, the AI-driven chip boom, and a Blue Origin rocket setback. The hosts argued that inflation is no longer just an energy story, with core PCE also hot and even some Fed officials suggesting AI-related power and capex costs may be adding to price pressure. At the same time, chipmakers and AI-linked funding continue to attract huge capital flows, while Blue Origin’s rocket failure underscores how far Jeff Bezos still is from catching SpaceX.
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This Reuters Morning Bid episode is a compact market wrap focused on macro inflation, AI-related equity exuberance, and a headline-grabbing space setback. The anchor thesis is that the market is being pulled in two directions: inflation is proving stickier than expected, while parts of the AI complex are still compounding so fast that they are crossing symbolic valuation thresholds. The hosts present both as live market stories rather than isolated headlines. On inflation, Elena Cassas and Peter Devlin stress that the Fed’s preferred PCE gauge rose 3.8% year over year, the fastest in over three years, and that core PCE also accelerated to 3.3%. Their framing is that this is no longer simply an energy-price problem; it is becoming more embedded. …
Near term, the hot PCE print keeps the Fed hawkish-tilted and leaves rate-sensitive assets vulnerable if the market reprices policy delay. AI chip names can still run, but after the trillion-dollar headlines they look more exposed to profit-taking than fresh discovery.
Over the next few months, the key question is whether inflation persists above target while AI spending remains intense; that combination would support a sticky-rates, strong-semis regime. If services inflation cools or AI-related costs fail to pass through, the argument that AI is inflationary will fade.
Structurally, the transcript points to a world where AI is not automatically disinflationary: huge compute, power, and memory demand can lift input costs even as productivity rises elsewhere. The longer-run regime implication is a more selective market, with semis, utilities, and infrastructure potentially benefiting from the AI buildout while policy remains constrained by sticky prices.
U.S. inflation came in at 3.8%, the fastest pace in over three years.
The hosts open with this as the week’s key macro surprise and tie it directly to the Fed's preferred gauge.
Core PCE also rose 3.3% year over year, showing inflation is broader than energy.
This is the main evidence used to argue the inflation problem is not transitory.
Some Fed officials think AI is now contributing to inflation through data-center power demand, memory chips, and capex.
The hosts present a novel causal channel from AI investment to price pressure, but as an argument rather than proven fact.
Did markets feel the heat from US inflation numbers hitting the fastest pace in over 3 years?
Elena explains that core PCE also gained 3.3% year-on-year, and Fed board members now say inflation no longer looks transitory. She notes a split view on AI — some Fed members believe AI is driving inflation up via data center power costs and memory chip prices, while incoming chair Kevin Walsh believes AI will drive inflation down through productivity gains.
What really pushed SK Hynix and Micron over the trillion-dollar valuation bar this week?
Elena says the chip shortage is central — companies can't produce chips fast enough to meet data center demand, driving revenues higher. She also notes Samsung reached a generous pay deal linking worker bonuses to chip revenue for the first time, with some bonuses exceeding $400,000.
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