💰The Fed Bears are talking again🧸

Equity markets wobbled on Thursday after Fed officials talked down on the inflation outlook. It was yet again hawkish comments that dampened risk-on sentiments. As we know, Fed President Bullard, contrary to his name, often gave bearish and hawkish remarks, and that certainty drove profit-taking after a spectacular run-up in stock prices for the past two weeks. 

Bullard believed that the Fed still has a long path and that the Federal fund rate could hit 7%. Of course, as we know, such a rate is often in symphony with the inflation rate, and thus it is not a surprise, but the higher level beyond Fed’s earlier projection seems to unnerve investors. 

Pika World does not expect any loosening of the financial conditions in the short term.

🚘General Motors: A path towards profitability in 3 years🔑

Investors have some good news for GM. First, the company is projecting profitability by 2025. That is a good path ahead for the traditional company makers that intend to increase their EV production massively. 

During an investor meeting, the CEO, Mary Barra, conveyed her plan on what it takes for GM to be profitable. First, the EV business is burning huge cash rather than producing the needed revenue in the initial stage. Second, scaling up is critical as an auto business is all amount economies of scale in production. 

The Tesla playbook shows that the company established a profit in 2020 for its operating profit. Moreover, it was the year when the company delivered half a million vehicles. As such, GM is gunning for scale. 

Investors who buy into the long-term story might consider an entry point. However, Pika World is tempted and is mindful of the softening macroeconomic environment.

📮What’s on the menu today?📖

At 11 pm, we will have the existing home sales data for October. We expect a significant decline to 4.38M from 4.71M in the prior period. This is expected, given the elevated mortgage rate.