Episode Details

US inflation continues unabated, with higher fuel costs now feeding through into logistics. CPI is running at 3.7%, with energy costs up 5.3% on the back of oil rising more than 9% on the month. This week we look at whether US manufacturing PMIs can sustain the recent momentum in industry, and in the UK, we get the latest unemployment and inflation prints.

On rates, Warsh’s first October decision comes with a twist. Once rates start moving in one direction they normally keep going, but not this month (we think!). We also look at the UK’s plans for an expanded social security scheme, which will carry a cost in both tax and debt, pointing to weaker growth, higher inflation and a softer pound.

We then turn to the likely outcome of the US midterms. A blue wave that flips Congress to the Democrats should have little effect on the legislative agenda, as the administration will veto and Trump will lean harder on executive orders. The real friction would come at state level, slowing planning for data centres and potentially leading to lower 2027 capex guidance, which markets might take well. It would also kick off the presidential election cycle and move the debate on from cost of living.

The second half of the show is a deep dive into Meta’s Muse. It is an autonomous, goal-executing platform rather than an interrogative one, which makes it always-on, memory-heavy and expensive in tokens. Deep app integration, password access and the ability to pay for services autonomously make it powerful, which is why Amazon is saying no while Shopify stands to gain from more merchant transactions. The key question is the economics. 

Reaching a long-term 15% ROIC likely requires $20-a-month subscriptions becoming the norm plus a share of merchant revenue. Jefferies’ forecast of 1bn users by end-2027 with 3% on subscriptions gets to $10.8bn, which isn’t enough; reaching $50bn needs the merchant rev share. Compute costs imply lower operating margins than today’s ad business. In short, Meta has to earn historic-level returns just to stand still.

We close with what to watch when Meta reports on Wednesday: 23% YoY revenue growth, early commentary on Muse subscriptions, take-up and retention, and capex confirmed at high levels with free cash flow still under pressure. If the Muse discussion is vague or ling-dated in terms of potential returns, that could mean weakness for a stock that has priced in a lot since launch.
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