October 12, 2022 | Daily JAM |
Economists surveyed by Bloomberg are looking for core inflation, that is inflation without volatile food and energy prices, to return to a four-decade high in tomorrow’s report of CPI inflation in September. Projections are looking for a 0.4%increase n core inflation in September and an annual rate of increase of 6.5%. That would match the March rate that was the highest since 1982. About a third of economists in the Bloomberg survey, however, expect an annual rate of 6.6% or more. The economists in the survey do expect a decline in headline (that is, all items) inflation to an 8.1% annual rate.
October 12, 2022 | Daily JAM, Morning Briefing |
Somehow stocks seem to be turning this into good inflation news this morning ahead of tomorrow’s big CPI inflation report–The Standard & Poor’s 500 is up 0.19% as of 12:30 p.m. New York time and even the NASDAQ Composite is slightly ahead with a gain of 0.06%–but, frankly, I don’t see how. The September producer price index (PPI), a measure of prices at the wholesale level, rose 0.4% in September after falling 0.2% during August. Economists had expected a 0.2% increase,
October 9, 2022 | Daily JAM |
Thursday’s CPI inflation report for September will overshadow everything else scheduled for this week, including the beginning of earning season. The report is so important because the financial markets continue to look for clues on how many more times the Federal Reserve will raise interest rates and how soon the central bank might begin to cut rates. For investors, the report is especially challenging because 1) there’s the task of getting the numbers right, and 2) there’s the question of how the market will react to those numbers.
October 7, 2022 | Daily JAM, Morning Briefing |
The U.S. economy added 263,000 jobs in September (after seasonal adjustments), the Labor Department reported this morning. The total was down from 315,000 in August but it was enough to bring the unemployment rate down to 3.5% from 3.7% in August. This good news for workers and families, is, of course, bad news for the financial markets, which keep looking for signs that the economy is slowing enough to slow the Federal Reserve’s aggressive round of interest rate increases.
October 6, 2022 | Daily JAM |
The U.S. dollar was up hard today, October 6. The Invesco DB U.S. Dollar Bullish Fund ETF (UUP) rose 1.00%. The Dollar Spot Index (DXY) gained 0.90% And Treasury yields resumed the upward move that has erased much of the gain in bond prices of the last week.
October 6, 2022 | Morning Briefing |
First-time claims for unemployment rose to 219,999 for the week ended October 1, Labor Department reported this morning. Economists had projected a rise to 203,000. The prior week showed a revised 193,000 initial claims. Financial markets aren’t sure how much this means for tomorrow’s report on September employment. It could be the harbinger of a drop in the rate of job creation and an uptick in unemployment. On the other hand, the ADP job survey came in hotter than expected.
October 1, 2022 | Daily JAM, Special Reports |
Today, October 1, I’ve gone back through this Special Report to update any parts of my calendar in light of what we’ve learned about the economy, about Federal Reserve interest rate policy, and about the global economy in the last few weeks. This update includes my take on the August jobs report and the September 21 meeting of the Fed. (It’s a complete revision of the original so changes are in the body of the original text.) It is different this time. And it’s likely to “be different this time” for the next five years or so. And you need an investment strategy for that period.
September 30, 2022 | Daily JAM, Morning Briefing |
The Personal Consumption Expenditures index, the Federal Reserve’s preferred inflation measure, rose in August. The index climbed 0.3% from July. Year over year the PCE is up 6.2%. Excluding food and energy, the core PC index rose 0.6% in August from July and at a 4.9% year-over-year rate.
Both the headline and core numbers showed a month-to-month acceleration in inflation. That’s bad news for the Federal Reserve, investors, and consumers since it indicates that inflation is stickier than hoped and that it will take the Fed longer to bring inflation down to its 2% target. This ratchets up the importance of the Consumer Price Index for September with that inflation number due on Thursday, October 13.
September 22, 2022 | Daily JAM, Morning Briefing |
One of the oddest things about yesterday’s reaction to news from the Federal Reserve of a 75 basis point increase in interest rates was that the market initially rallied. Yesterday, September 21, from 3801 at 10:25 a.m.New York time, the Standard & Poor’s 500 moved up to 3895 at 2:40 p.m. right after the Fed released its news. And, then, markets began a retreat with the S&P 500 closing down 1.71% on the day. It’s almost like the markets constructed one story–relatively positive–in the immediate aftermath of the news. And, then, upon further consideration, built a different much less positive story to the close of the day. Make that “exactly” instead of “almost like.”
September 21, 2022 | Daily JAM |
At today’s meeting of the Federal Open Market Committee, the U.S. central bank raised interest rates by 75 basis points for a third straight meeting. That took the Fed’s short-term benchmark rate to a range of 3% to 3.25%. This move was widely expected with the CME FedWatch Tool giving odds of 84% yesterday on a 75 basis point increase. What the market hadn’t expected was how negative the Fed’s projections in its Dot Plot would be. To sum up: Higher interest rates (with more rate increases) for longer. And very low economic growth but no recession.
September 20, 2022 | Daily JAM, Morning Briefing |
You’d think that if everyone (maybe even Samuel Beckett) is expecting the Fed to raise interest rates 75 basis points at tomorrow’s meeting of the Open Market Committee, financial markets would have been able to move on today to other “issues.” (Like Ford’s huge negative earnings pre-announcement or the global supply crunch for coffee. The CME FedWatch Tool today puts the odds of a 75 basis point increase at 84%. The other 16% goes to a 100 basis point increase. Nobody is expecting just 50 tomorrow. But no. Stocks and bonds are lower but it feels like markets are just marking time.
September 17, 2022 | Daily JAM |
Investors are expecting a 75 basis point increase in interest rates from the Federal Reserve at Wednesday’s meeting of its Open Market Committee. That would take the Fed’s target interest rate to a range of 3.00% to 3.25% from the current 2.25% to 2.50%. At least that’s what the market heavily expected as of Friday. The odds of a 75 basis point increase, according to the CME FedWatch Tool, which calculates the odds of a Fed move on interest rates by tracking prices in the Fed Funds Futures market, rose to 82% on Friday, September 16 from 74.0%on September 15.
