Japan’s labor market continued to show tightness in September, according to data released by the Ministry of Internal Affairs and Communications and the Ministry of Health, Labour and Welfare on October 29.

The unemployment rate fell to 2.4%, down from 2.5% in the previous month, while the job-to-applicant ratio rose to 1.24 from 1.23, highlighting persistent labor shortages in the Japanese workforce.

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Japan’s largest labor union, Rengo (the Japanese Trade Union Confederation), also announced its intention to seek a 5% wage increase in next year’s negotiations, following a record 5.1% raise this year—the largest in 33 years.

This tight labor market offers a relatively positive signal for the Bank of Japan (BOJ), which has long aimed to support moderate inflation through real wage growth as part of its strategy to normalize monetary policy.

In March, the BOJ raised rates for the first time in eight years, ending its negative interest rate policy and yield curve control. In July, it raised rates again, suggesting it would consider further hikes if inflation met expectations.

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While these comments initially triggered significant market volatility, the BOJ has since clarified that it would avoid rate hikes during periods of economic instability, aiming to calm market concerns. Nevertheless, its commitment to policy normalization remains clear.

The market broadly expects the BOJ to hold rates steady in October, with further rate hikes possible in December or January.

According to a report from Bloomberg, a drug company in Mumbai, India, Shreya Life Sciences has engaged in trading chips of advanced technology to Russian, raising concerns among the U.S. and its European allies.

The report indicated that Shreya exported 1,111 units of Dell’s most advanced servers to Russia between April and August of this year. The servers, known as PowerEdge XE9680, feature chips made by NVIDIA or AMD.

The servers, which contain chips made by NVIDIA or AMD, are among the items restricted by the U.S. and the EU. However, the report noted that these shipments are only part of a series of advanced technology exports that Shreya has legally made to Russia since September 2022. The shipments, valued at $300 million, were imported by two Russian trading companies: Main Chain Ltd. and I.S. LLC, as indicated by the report.

According to the report, Shreya’s shipments highlight a loophole in Western governments’ efforts to restrict Russia’s access to dual-use technology with potential military applications. The Bloomberg report noted that India has gradually become the second-largest supplier of restricted technologies to Russia, following China.

Notably, while India serves as an intermediary helping Russia access restricted processors, the actual origin of the shipments may be Malaysia, as the report noted that Indian import data from March to August 2024 shows that 1,407 of the same Dell units were imported into India from Malaysia.

Regarding India’s business relationship with Russia, the report noted that Prime Minister Narendra Modi’s government is not participating in the various rounds of U.S. and EU sanctions against Moscow. In fact, India has been relying on Russia for military equipment.

Additionally, India has become a key buyer of Russian crude oil since European countries halted imports, taking advantage of significant discounts offered by Russia, according to the report.

In response to the report regarding the shipments, Dell stated that it stopped selling its products in Russia in February 2022, right after the full-scale invasion of Ukraine. Both NVIDIA and AMD also emphasized their commitment to full compliance with export controls, according to the report from Bloomberg.

(Photo credit: NVIDIA)

According to a report from TechNews, the AI boom has significantly boosted the share prices of the “Magnificent Seven”—Apple, Microsoft, Google’s parent company Alphabet, Amazon, NVIDIA, Meta, and Tesla—resulting in a total market value exceeding USD 16 trillion.

Alongside this growth, the report highlighted that the salaries of the CEOs of these companies have also risen. Notably, Microsoft CEO Satya Nadella’s compensation increased by over 60%, reaching an annual total of USD 79.1 million (approximately NTD 2.537 billion).

The Magnificent Seven of the U.S. stock market includes tech giants like Microsoft, Apple, Alphabet, Amazon, Meta, NVIDIA, and Tesla. These companies primarily focus on artificial intelligence, cloud computing, online gaming, and software and hardware technologies. With AI driving market growth, their stock prices have consistently hit record highs, pushing their total market value above USD 16 trillion, according to the report.

Citing statisitcs by the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), the report indicated that Tim Cook, CEO of Apple, ranks first among the CEOs of the Magnificent Seven Stocks. For the fiscal year ending in 2023, Cook’s total compensation amounts to USD 63.2 million, which includes USD 46.9 million in stock awards, USD 10.7 million in non-equity incentive plan compensation, and USD 2.5 million in other compensation, such as security costs and expenses for business and personal travel on private jets.

Microsoft CEO Satya Nadella ranks second with a total compensation of USD 48.5 million for the fiscal year ending in 2023. His compensation is largely tied to Microsoft’s performance. As of December 2023, Nadella owns 800,667 shares of Microsoft Corp. According to the Compensation Committee of the Microsoft Board of Directors, Nadella’s salary is set to reach USD 79.1 million in 2024, reflecting a 63% increase, primarily due to his success in steering Microsoft into the AI sector, as indicated by the report.

The third place goes to NVIDIA CEO Jensen Huang, who received USD 34.2 million in annual compensation, reflecting a 60% increase. This total includes USD 26.7 million in stock awards, USD 4 million in non-equity incentive plan compensation, and USD 2.5 million in other expenses. Thanks to the AI boom, Huang’s net worth has skyrocketed sixfold to USD 125.3 billion in just two years. He has also ranked among the top ten richest people in the world for the first time, as the report pointed out.

The fourth is Meta CEO Mark Zuckerberg. Although his salary is only a symbolic USD 1, he receives USD 24.4 million annually, of which protection fees are as high as USD 23.4 million, including USD 9.4 million in direct security costs, and additional USD 14 million to “cover additional expenses related to the personal safety of Mr. Zuckerberg and his family.”

Fifth is Sundar Pichai, CEO of Alphabet, Google’s parent company, who receives USD 8.8 million annually. This includes a salary of USD 2 million and approximately USD 6.77 million for personal security. However, following several major layoffs at Google, Pichai’s salary has drawn criticism from employees worldwide, making it a controversial topic, as the report pointd out.

The sixth place goes to Amazon CEO Andy Jassy, who receives an annual compensation of USD 1.3 million. This includes a salary of USD 365,000 and a security fee of USD 992,764. When the value of vested shares is included, Jassy’s total compensation for 2023 amounts to approximately USD 29.2 million, as the report mentioned.

The seventh is Tesla CEO Elon Musk. Initially, his extraordinarily high salary of USD 56 billion for 2023 was not approved, resulting in the American Federation of Labor and Congress of Industrial Organizations reporting it as 0. However, during Tesla’s shareholders’ meeting on June 13, a new 10-year compensation package worth USD 44.9 billion was approved.

(Photo credit: NVIDIA)

Last week, U.S. stock market sectors experienced volatility, resulting in a slight 0.03% decline in the S&P 500 Index, ending its six-week winning streak. In the bond market, better-than-expected U.S. economic data led to increases in the yields of 2-year and 10-year U.S. Treasury bonds by 15.7 basis points to 4.107% and 4.276%, respectively, with the yield spread remaining at around 14 basis points. The U.S. Dollar Index also rose to around 104 due to market expectations that the Federal Reserve will slow down its rate-cut pace.

Key Economic Data Review for Last Week

China LPR: The People’s Bank of China announced cuts of 25 basis points to both the 1-year and 5-year Loan Prime Rates (LPR), bringing them to 3.1% and 3.6%, respectively. At the Financial Street Forum on October 18, PBOC Governor Pan Gongsheng stated that the central bank is likely to lower the 7-day reverse repo rate by 0.2% before the end of the year, depending on market liquidity. There is also room for further LPR reductions in the future.

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Canada Monetary Policy: The Bank of Canada announced a 50 basis point rate cut, bringing its benchmark rate to 3.75%. Governor Tiff Macklem said that inflationary pressures in Canada have broadly dissipated and that the central bank hopes to see stronger economic growth moving forward. He also indicated that further rate cuts could be on the horizon if the economy develops as expected, to maintain inflation targets and economic growth.

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Key Economic Data Review for This Week

U.S. Q3 GDP (10/30): U.S. retail sales over the past three months have consistently outperformed market expectations, indicating resilient consumer spending. In its October report, the IMF also raised its forecast for U.S. 2024 GDP growth to 2.8% (previously 2.6%) due to strong consumer and investment spending. According to estimates from the Atlanta Federal Reserve, Q3 U.S. GDP is expected to grow at an annualized rate of 3.31%.

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Japan Monetary Policy (10/31): In early October, newly appointed Prime Minister Shigeru Ishiba stated that Japan’s current economic environment is not suitable for a rate hike. Bank of Japan Governor Kazuo Ueda echoed this sentiment, citing market instability and concerns over a potential U.S. recession as key reasons for the Bank of Japan’s cautious approach to rate hikes. As a result, the market widely expects the Bank of Japan to keep its policy rate unchanged at 0.25%.

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U.S. October Employment Data (11/1): The U.S. services sector has continued to support domestic consumption and employment, pushing the unemployment rate down to 4.1% and nonfarm payrolls to a stronger-than-expected increase of 254,000. However, recent hurricanes and the Boeing strike may put downward pressure on the October jobs data. The market currently expects the unemployment rate to remain at 4.1%, with nonfarm payrolls likely to fall to 111,000 due to these short-term factors.

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China industrial profit continued to decline in September due to expanding deflationary pressure, according to data released by China’s National Bureau of Statistics on October 27.

Profits for large-scale industrial enterprises fell by 27.1% year-on-year in September, down 9.3 percentage points from the previous month’s decline of 17.8%. Cumulatively, profits for the first nine months of the year dropped by 3.5%, compared to a 3.0% decrease in the first eight months.

High-tech manufacturing remained the key driver of industrial profits, with cumulative growth of 6.3%, contributing 1.1 percentage points to overall growth. However, this was a decline from the 10.6% cumulative growth reported for January to August.

Yu Weining, a statistician from the National Bureau of Statistics, attributed the decline to weak domestic demand and falling industrial product prices. Recent figures show that China’s core CPI rose by just 0.1% year-on-year in September, down 0.2 percentage points from the previous month, while the PPI fell by 2.8%, marking 24 consecutive months of decline, reflecting persistent weakness in domestic demand.

With trade barriers expected to increase in the future, China’s manufacturing sector may struggle to absorb its excess capacity through exports and domestic demand, further compressing corporate profits and intensifying deflationary pressures. This could make it even more difficult for China to achieve its 5% annual economic growth target.

From November 4 to November 8, the Chinese government will convene the Standing Committee of the National People’s Congress in Beijing, where the market will be watching for any new stimulus measures.

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