• Bonds: Treasury yields diverged as cooler wholesale inflation sent the 2-year yield lower, while the benchmark 10-year yield climbed above 5.1%.
• Stocks: The Nasdaq led declines as another chip-stock rout dragged down the S&P 500 despite gains in most of its companies, while the Dow also slipped.
• Crypto: Bitcoin plunged below $70,000 for the first time since August as the tech selloff spilled into crypto, triggering roughly $1.3 billion in liquidations of bullish bets.

Economy

Shannon May, Photos: Adobe Stock, Getty Images

This year, you may not be thankful for the cost of getting all those cranberries and sweet potatoes onto your Thanksgiving table.

New numbers from the BLS find that the Producer Price Index, which tracks the average prices businesses receive for their goods and services, rose 0.3% in October from the previous month and 6.5% from a year earlier. Although the costs increased less than expected, it marks the biggest annual increase in wholesale inflation in nearly four years.

What’s fueling the spike? Surging energy costs tied to the Iran war. Although diesel prices actually fell 7.9%, the damage had already spilled over into US supply chains, driving up costs. Truck freight fees soared 3.9% in October and 26.7% for the year. And since trucks haul much of what we buy, shoppers could eventually end up picking up the tab.

Wholesale food prices are feeling the pressure in particular, rising 1.3% in October—their second straight monthly increase and biggest jump since July 2022. Fresh and dry vegetables saw the steepest rise, surging 26.7% in October after leaping 30.7% the month before.

PPI isn’t a perfect predictor of what consumers end up paying at checkout, but it can provide hints of where costs could be heading. And the latest CPI report released earlier this week offered little relief: Retail prices rose 0.4% in October—slower than September’s 0.6% increase, but still hotter than expected, burning up any hopes that inflation is under control.

Another helping of rate hikes?

This week’s deadly combo of red-hot CPI and PPI data further sets the stage for the Federal Reserve to hike interest rates at their next meeting December 8–9.

Markets have priced in an 89% chance of a quarter-point hike, according to CME FedWatch. There’s also an 11% chance of a half-point increase—and the Fed might not stop there. As Nationwide senior economist Ben Ayers warned, “Impacts from the spike in fuel prices could linger into 2027, warranting further tightening by the Fed to limit second and third order inflation impacts.”

Still, the Fed’s next move will also hinge on a third inflation gauge: the Personal Consumption Expenditures (PCE) price index. This report is the Fed’s favorite, since it tracks a wider basket of goods and services. And since elements of the PPI report feed directly into PCE, Morgan Stanley economists are now expecting core PCE to rise by 0.3% for October, with the annual inflation rate edging up to 3.2% from 3.1%.

Just to keep things interesting, the next PCE report lands November 25—the day before Thanksgiving. Looks like we’ll have one more round of inflation numbers to digest before that overpriced turkey hits the table.—JD

      

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Stocks

🟢 What’s up

• Cerebras Systems surged 11.22% following its third-quarter earnings report and the announcement of a new deal with Microsoft.
• Modine Manufacturing jumped 27.84% on reports that Samsung is in talks to acquire the data center cooling company.
• Geospatial analytics company HawkEye 360 rallied 23.62% thanks to a 76% jump in quarterly international revenue.
• Marketing software company Liftoff Mobile climbed 30.63% after beating quarterly earnings expectations and raising its full-year outlook.
• Nu Holdings gained 12.13% on record third-quarter profit and the launch of its banking operations in Mexico.
• Domino’s Pizza rose 2.55% following a Baird upgrade to Outperform, citing improving prospects for same-store sales and franchisee profitability.

🔴 What’s down

• Nvidia slipped 2.01% amid concerns about AI spending and the fallout from Jensen Huang’s resignation, marking its sixth consecutive weekly decline and longest losing streak since 2012.
• Cisco Systems fell 6.24% despite reporting stronger-than-expected fiscal first-quarter results.
• York Space Systems dropped 12.36% and AST SpaceMobile lost 5.51% following their third-quarter earnings reports.
• Strategy, Coinbase, and Robinhood sank 2.44%, 2.31%, and 4.29%, respectively, as Bitcoin fell to its lowest level since August.

Stock of the day

Microsoft 364

Morning Brew Inc., Photo: Adobe Stock

Millions of office workers were forced to confront a terrifying possibility yesterday: a workday without Outlook.

The email platform was among several Microsoft 365 services hit by a massive global outage lasting more than 12 hours. Identifying server problems, Microsoft said email queues were “approaching normal levels,” though some users were still experiencing disruptions Friday morning. The stock remained largely flat today.

The outage triggered complaints from more than 70 countries and territories, leaving businesses scrambling to find other ways to operate. European stock exchange operator Euronext told listed companies to pick up the phone for urgent matters, while some Taiwanese financial firms dusted off their fax machines to confirm trades. Cartier owner Richemont even briefly delayed its earnings announcement (more on that later).

The cost of going dark

That single blackout could cost somewhere between $300 million and $500 million in global insured losses, according to Morningstar DBRS. And the broader financial toll may be higher, since many businesses aren’t covered for technical disruptions.

“The bigger worry is that this is not the first Microsoft 365 outage this year,” eToro market analyst Josh Gilbert told Reuters. The program suffered another outage in January, followed by an Azure outage last month.

“If ⁠reliability starts to look like a recurring problem, it hands every IT department a reason to think twice before putting even more of their business in one provider’s hands,” Gilbert warned. That matters for investors: While today’s share prices may not be moving, tomorrow’s customer base might.—SY

Earnings

Shannon May, Photo: Van Cleef & Arpels

Selling billions of dollars’ worth of jewelry isn’t enough to keep Wall Street happy anymore. Richemont, the Swiss luxury giant behind Cartier and Van Cleef & Arpels, reported a 13% jump in quarterly sales today, beating expectations. And while the company’s first-half profit soared 39% to roughly $2.8 billion, shares dropped more than 4%.

Why’s that? Wealthy shoppers haven’t stopped buying jewelry. But Richemont sales weren’t growing quite as fast as investors hoped, while years of industry-wide price hikes have increasingly divided luxury consumers into those who can still afford to splurge and those who can’t. As it turns out, even the industry’s brightest diamonds can lose their luster.

The luxury divide

Richemont’s jewelry business, which generates roughly three-quarters of group sales, grew 14% last quarter, below analysts’ expectations of 16% and down from 24% the previous quarter. Still, Cartier and Van Cleef remain standouts in a struggling luxury industry, partly because their wealthier customers are less vulnerable to rising living costs.

That division is becoming especially visible ahead of the holidays. A new Visa survey finds that roughly a third of Americans earning under $100,000 plan to switch to cheaper brands or stores this season. Visa expects holiday sales to climb 4.5%—but just 1.1% after adjusting for inflation.

It’s a familiar problem for luxury brands. TD Cowen estimates that while aspirational shoppers account for 65% of US luxury spending, years of inflation have squeezed their budgets. Jewelry, which skews toward wealthier buyers, has consequently held up better than handbags and accessories.

That makes Richemont one of TD Cowen’s preferred luxury stocks. Still, today’s selloff shows that even the sector’s winners aren’t immune to slowing growth.

All that glitters…costs more

Luxury brands have spent years relying on higher prices to boost sales. McKinsey estimates that roughly 80% of luxury market growth between 2023 and 2025 came from price increases rather than higher sales volumes. But that strategy has limits, especially when production costs are climbing, too.

Richemont’s first-half gross margin rose to 66.5%. Excluding a roughly $253 million one-time tariff-related gain, however, it actually fell 70 basis points as higher gold costs squeezed the company’s profitability. Price hikes and a more profitable product mix couldn’t fully offset those expenses.

The thing is, you don’t need to own a Van Cleef & Arpels Alhambra necklace to see what’s happening. Luxury brands spent years convincing shoppers that higher prices meant greater exclusivity. Now investors are asking whether those price hikes have come at the expense of future customers.

With holiday shoppers trading down, retail’s next winners may be the companies that can attract more buyers without slashing price tags or sacrificing margins. Turns out, pricing power only works if someone is still willing to pay.—HC

      

News

• Nvidia employees have sent more than 1,600 messages petitioning to give Jensen Huang another chance—and some notes sound surprisingly heartbroken.
• BMW drivers are being urged to park their rides outside—unless they want to burn the house down.
• Some oil traders had suspiciously good timing before Trump’s Iran announcements, and Democratic senators want to know what happened.
• The US’s national debt now rivals the size of its entire economy, with an analysis finding that 25 years of tax cuts added a shocking number of trillions.
• Opening packs of Pokémon and trading cards has become a $2 billion business, thanks to new apps bringing the thrill of ripping packs to your phone.
• ChatGPT can now spend your money for you.

Calendar

Monday: Baidu and XPeng kick off earnings with a look at China’s AI and EV markets. Tyson Foods, Aramark, and AECOM also release quarterly numbers. Plus, the Empire State Manufacturing Survey will provide an early read on November factory activity.

Tuesday: Nvidia headlines earnings, putting the firm under scrutiny right after Jensen Huang’s ouster. Disney, Home Depot, Tencent, and Viking Holdings also report. We’ll also get October’s retail sales, industrial production, and homebuilder confidence.

Wednesday: Fed meeting minutes will offer a closer look at policymakers’ thinking on interest rates. Target and TJX provide clues about shoppers’ budgets, while Lowe’s follows Home Depot with another home improvement update. Housing starts and pending home sales will help take the housing market’s temperature.

Thursday: Walmart leads a packed retail earnings day, alongside Alibaba, PDD Holdings, Ross Stores, Gap, Williams-Sonoma, and Bath & Body Works. Intuit, NetEase, Warner Music Group, and Manchester United also report. Plus, we’ll have the Philadelphia Fed survey to gauge manufacturing activity.

Friday: The final University of Michigan consumer survey closes out the week, updating November’s readings on consumer sentiment and inflation expectations.

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