Inflation Came in a Little Light in October, Up 0.4% Instead of 0.6%… The annual inflation rate eased from 8.2% to 7.7%, less than the expected 7.9%. This was the lowest inflation reading since January.
What it means— This is normally where we would be telling people not to get too excited and to use any major liftoffs to day trade, but that ship sailed right after the CPI numbers hit the tape. The Nasdaq soared more than 7%, as growth names had a monster day and news outlets immediately hopped on the “Will the Fed stop tightening?” train. Here’s a guess. They won’t. Or at least, they won’t yet. We’ve not been a fan of this central bank move, because they’re fighting inflation they didn’t create and it would have been much smarter for them to stop buying bonds first instead of doing that while raising rates. But now that we’re here, the central bankers won’t risk looking like they stopped the fight against inflation too soon. They will spend the next month talking about how they’ll keep up the good fight. Look for a 50-basis-point hike in December, and then possibly another 25-basis-point hike early next year. It’s all about the terminal rate. If they stop at 4.5% or lower, then expect the Fed to start cutting rates before the end of next year.
The Republicans Gained Ground in the House, While the Senate Is Still Up for Grabs… Immediately before the election, Democrats were bracing to get shellacked. It didn’t happen. They lost, but by much less than the party in power usually gives up.
What it means— It looks like the Republicans will narrowly control the House. We know that at least the Georgia Senate race will go to runoff, but we will have to see how several other Senate races turn out to see if the Georgia race decides control. If the Democrats hang on to the Senate, then the president could still confirm judges.
High-Tech Companies, Including Twitter, Start Firing Workers… Twitter fired nearly half of its staff, around 3,700, while Meta let go 11,000 of its people.
What it means— Lyft, Stripe, Coinbase, Shopify, and Redfin are just some of the high-tech darlings of yesterday that have been announcing layoffs over the last couple of weeks. While such news might make headlines, it likely won’t make much of a difference in the economy. Initial jobless claims remain rather low, at 225,000 last week, and many of the workers have skills that will allow them to work remotely. No one likes to lose a job, and we should expect unemployment to move higher as the Fed cools off the economy, but this isn’t the same as a manufacturing town in Ohio in the 1980s losing its main employers.
For the Last Time, Stop Licking the Toad… That’s the warning from the National Park Service concerning the Sonoran Desert toad. The seven-inch creature secretes toxins, some of which can send you on a psychedelic “trip,” while others can cause heart arrhythmia, tissue damage, or a host of other ills. To top it off, the toads are getting so popular that they are at risk of being over collected, causing population collapse. So, for the last time, stop licking the toads—and, whatever you do, don’t put one in your mouth.
Data supplied by HS Dent Research
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