Hi Reader, here's what you need to know for June 10th in 3:12 minutes.

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Today's big stories

Chinese inflation just hit its highest level since 2018, putting the world on edge about higher prices to come
Hedge funds have a new favorite stock, and you can either be with them or against them – Read Now
Zara-owner Inditex announced stronger-than-expected quarterly results, despite the lockdown thorn in its side

Follow The Leader

What’s Going On Here?

Data out on Wednesday showed that Chinese producer price rises grew by their fastest since 2018, and the rest of the world might not be far behind.

What Does This Mean?

China was the first place to bounce back from the coronavirus pandemic, and things are still going strong. So strong, in fact, that demand for some products seems to be outstripping supply. That’s pushing prices up, which might be why the country’s “producer price index” – which tracks the prices of manufacturer-bought goods and services – was up a higher-than-expected 9% in May compared to a year ago.

Commodities are a big reason why: the prices of oil and certain metals have gone through the roof this year, and China’s a major buyer. No wonder, then, that the country’s recently taken steps to bring commodity prices back down…

Why Should I Care?

The bigger picture: Inflation could be China's next big export.
The risk of high producer prices isn’t just that they feed into Chinese consumer prices: it’s that they’ll push up consumer prices in the US and Europe too, given that China’s one of the world's biggest exporters (tweet this). That’d push inflation in those regions even higher, at a time investors are already worried it’s too high. More worrying still is that China-linked inflation mightn’t show up in Western data. Governments, after all, don’t pay much attention to prices of West-bought Chinese goods when they calculate inflation, which means economists and central banks might miss its effects even as consumers feel the pinch.

Zooming out: US and China are leaving the others behind.
The World Bank’s expecting the Chinese and US economies to grow 9% and 7% this year compared to last, which would drive global economic growth up by 5.6%. But the world’s developing countries – which are bound to keep struggling with the pandemic – are only likely to grow 2.9%, their second-slowest growth rate in the past 20 years.

You might also like: These Chinese stocks are looking mighty attractive right now.

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2. Analyst Take

Should You Follow Hedge Funds’ Lead?

What’s Going On Here?

Fresh data has shown that hedge funds’ top stock pick right now is – drumroll please – our old friend Facebook: 27% of them own shares in the giant, and 57% have it as a top ten holding.

And you might well agree with them: the company’s revenue growth, after all, is expected to be double that of the online advertising market this year.

Or you might disagree, and point to the fact that a recent Apple software update threatens the social media company’s entire business model.

But whether you’re bullish or bearish on Facebook, there’s a way to put your money where your mouth is.

So that’s today’s Insight: why hedge funds are so keen on Facebook, and the two opposing ways to play the company’s stock.

Read or listen to the Insight here

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