Hamas Invades Israel, Slaughters Civilians, and Takes Hostages… So far, the Israeli government has reported more than 1,200 dead, 2,000 wounded, and 100 hostages.
What it means— There’s a lot to say about this, but we try to keep to commentary that affects our financial lives. So far, the geopolitical response has pushed long bonds a bit lower but has not had much of an effect on equities. Remember, that’s so far. Israel immediately put the Gaza Strip under siege. The region is without power and running out of food and water. When things get really ugly, expect yields to ease a bit, but not for long. Our friend inflation (that we would like to “unfriend”) is still around. Even JP Morgan CEO said we are still spending like drunken sailors.
Minutes of Last Federal Reserve Meeting Show Federal Open Market Committee Members Split on Rising Rates… The minutes showed that several members believed they had raised rates to a level that possibly was restrictive, which would give them a reason not to raise rates in November.
What it means— Data, data, data. At the end of last week, with the 10-year Treasury bond yield over 4.8% and the 30-year Treasury briefly over 5%, it would be easy to see how the Federal Open Market Committee (FOMC) members would think that the market had done its job for them. Now, maybe not. We’ll have to see how rates and inflation shake out between now and then.
CBO Reports U.S. Fiscal Year Ended September 30 With $1.7T Deficit… The CBO estimates the budget deficit will rise to $2T this year.
What it means— Keep an eye on the Fed balance sheet. After topping $8.95T 18 months ago, the central bank has shed $1T, all while our federal government runs huge annual deficits. Someone has to buy all those IOUs from Uncle Sam. If the Fed runs down its balance sheet by another $1T or $2T, expect long rates to melt higher, resulting in a positive yield curve.
Consumer Prices up 0.4% in September, up 3.7% for the Year…The monthly inflation rate was just above the 0.3% expectation level, with shelter, up 0.6%, as the main driver.
What it means— Core inflation increased 0.3% last month and 4.1% over the last year mostly due to rising shelter prices, while easing energy prices pulled down the headline numbers. Core inflation, which people seemed to focus on until it jumped above overall inflation, hasn’t been below 4% since May 2021.
With wars running hot both in Ukraine and Gaza, winter still in front of us, and self-imposed OPEC+ production quotas in place, don’t expect energy prices to bail us out. For the record, new car prices, which have gone up about 30% over the last three years, were up 0.3% last month and 2.5% over the last year. Rising labor costs will push prices higher at legacy carmakers. After three months of year-over-year gains, real average weekly earnings fell in September by 0.1%. That’s not going to help workers pay for more-expensive gas and car insurance.
Social Security Cost-of-Living Adjustment for 2024 Released: 3.2%… The cost-of-living adjustment (COLA) is based on the Consumer Price Index.
What it means— The 3.2% benefit hike probably won’t feel as good as the 8.7% bump that Social Security beneficiaries received last year, but it’s better than nothing. Given that much of our current inflation is based on shelter and more than 76% of seniors own their homes, they are a bit shielded from the price hikes.
U.S. Customs and Border Patrol Confiscates Giraffe Feces From Woman Returning to U.S. From Kenya… To be fair, the woman acknowledged the poop on her declaration form, so Customs (CBP) knew she had it. She claimed she planned to make it into a necklace, just like she had with moose scat. Feces can carry lots of diseases, and foreign-animal feces can carry diseases that are more dangerous for our domestic population than poop of domestic animals. Still, it seems the CBP is overstating it when claiming that “there is a high possibility a person could have contracted a disease from this jewelry and developed serious health issues.” Since the woman already has a necklace made of moose dung; most people who know her probably know to stay away when she’s wearing chunky jewelry.
Data supplied by HS Dent Research
“When the facts change, I change my mind.
What do you do?” ~ John Maynard Keynes
Our plan is “the plan will change.”
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