What’s going on here?

Fresh data out on Thursday showed US inflation was higher than expected in September.

What does this mean?

Stateside consumer prices were 2.4% higher in September than the same time last year – economists had been forecasting a 2.3% rise. The vast majority of the increase was down to a jump in food prices and housing costs, which offset a drop in energy prices. That said, core inflation – which doesn’t include volatile food and energy prices – was slightly higher than predicted, too, clocking in at 3.3% compared to the same time last year versus the average estimate of 3.2%.

Why should I care?

For markets: Don’t relight my fire.

After the Federal Reserve’s (the Fed) surprise jumbo interest rate cut last month, the debate among investors shifted to how big the next cut – expected in November – would be. A bigger cut of half a percentage point would give US economic growth a boost: cheaper borrowing encourages people and businesses to spend more. But that’d also run the risk of reigniting the flame of too-high inflation that central banks worldwide have been trying to extinguish. So, with inflation coming in hotter than anticipated and last week’s jobs report also rocking economists’ expectations, another big cut could boost the economy too much and reintroduce that pesky high inflation. (Remember, the Fed’s mandate is to promote stable prices and maximum employment.) Chances are, then, that the next cut will be smaller at a quarter of a percentage point: traders’ bets put it at an 85% chance.

What’s going on here?

Delta Air Lines announced on Thursday that it’s set to end the year on a high note, forecasting a profitable fourth quarter thanks to strong holiday season bookings.

What does this mean?

Delta is optimistically eyeing a lift in profit at the end of the year, which’ll be carried by strong holiday travel and initiatives to make sure flights are full. The airline predicts adjusted earnings between $1.60 to $1.85 per share for this quarter, with revenue rising by 2% to 4% compared to last year. That’s despite a potential 1% dip in average seat prices due to the US presidential election. The company pointed to strong travel demand as the industry still returns to normal post-pandemic being the key driver of a strong quarter. Supporting that optimism is a 25% fall in North American jet fuel prices, which has contributed to a 34% increase in Delta's stock value since August. In turn, that’s – well – fueled a 25% rise in the NYSE Arca Airline index, which tracks US airlines.

Why should I care?

For markets: Don’t look back in anger.

Delta’s focus on the future might be because it’s had a bit of a turbulent time recently. The company would’ve beaten investor expectations for third-quarter revenue and profit but fell short due to the CrowdStrike outage in July. See, that took out its computers and forced it to cancel flights, resulting in $380 million of lost sales and knocking 30% off its quarterly profit.

Zooming in: What investors make of Delta.

Delta’s valuation (as measured by its price-to-earnings and enterprise value to sales ratios) is broadly in line with peers, while its sales growth track record and profit margin are industry-leading – suggesting the shares could justify being more expensive than those of other airlines. What's more, Delta is one of the least volatile airlines compared to other American ones, which might help explain why so many analysts rate the stock “buy”.