Week of Dec 20, 2024 Weekly Recap & The Week Ahead
Monday, December 30th, 2024“Yesterday’s home runs don’t win today’s games.” … — Unknown
1. US Retail Sales Strengthen on Jump in Motor Vehicle Purchases — The value of retail purchases, not adjusted for inflation, increased 0.7% after upward revisions to the prior two months, Census Bureau data showed Tuesday. Excluding autos, sales climbed a more modest 0.2% for a second month. E-commerce sales jumped 1.8%, as Black Friday and Cyber Monday promotions generated massive sales on platforms like Amazon.com Inc. and TikTok Shop. Receipts at building material stores rose 0.4%. Spending at restaurants and bars, the only service-sector category in the retail report, fell for the first time since March. Grocery store sales also declined. The data suggest consumers remained resilient during the crucial holiday shopping season, lured by discounts and bolstered by incomes that have been rising faster than prices. Measures of confidence have also been climbing since the November election, and some consumers have reported they could avoid higher prices from possible new tariffs imposed by the Trump administration by purchasing big-ticket items now.
2. Fed cuts by a quarter point, indicates fewer reductions ahead — In a move widely anticipated by markets, the Federal Open Market Committee cut its overnight borrowing rate to a target range of 4.25%-4.5%, back to the level where it was in December 2022 when rates were on the move higher. In delivering the 25 basis point cut, the Fed indicated that it probably would only lower twice more in 2025, according to the closely watched “dot plot” matrix of individual members’ future rate expectations. The two cuts indicated slice in half the committee’s intentions when the plot was last updated in September. Assuming quarter-point increments, officials indicated two more cuts in 2026 and another in 2027. Over the longer term, the committee sees the “neutral” funds rate at 3%, 0.1 percentage point higher than the September update as the level has drifted gradually higher this year.
3. Trump, Musk Throw Congress Into Chaos With US Shutdown Looming — With less than two days until federal agencies shutter, House Republicans huddled Thursday in Johnson’s office and struggled to write a Plan B that could appease Trump and his agitator-in-chief, Elon Musk. The last-minute dealmaking followed an extraordinary day Wednesday. Backroom spending discussions on Capitol Hill spilled out into an open clash on X, with Musk, the social media platform’s owner, denouncing the compromise Johnson had negotiated to keep funding going into next year.
The drama left Johnson, just days after sitting with the president-elect at the Army-Navy football outside Washington, meeting with allies in his Capitol office to come up with a new plan to keep the government financed and avoid the political pain of a shutdown before the funding deadline lapses on Friday night.
4. US Growth Revised to 3.1% on Stronger Consumer Spending, Exports — Gross domestic product increased at a 3.1% annualized rate in the July-to-September period, the third estimate of the figures from the Bureau of Economic Analysis showed Thursday. That compared to a previous projection of 2.8%. Growth in consumer spending was marked up to 3.7% — the fastest since early 2023 — and exports also grew faster than previously estimated, both thanks to services.
5. Fed’s Favored Inflation Gauge Cools to Slowest Pace Since May — The so-called core personal consumption expenditures price index, which excludes food and energy items, increased 0.1% from October and 2.8% from a year earlier, according to Bureau of Economic Analysis data out Friday. The monthly advance was the slowest since May. The data marks one of the first reports indicating renewed progress on inflation after stalling in recent months. That had prompted Fed officials to update forecasts earlier this week showing a higher path for prices and interest rates in 2025, which helped trigger a broad market selloff.
The week ahead — Economic data from Econoday.com:
Posted in Week of Dec 13, 2024 Weekly Recap & The Week Ahead
Monday, December 16th, 2024“Knowledge born from actual experience is the answer to why one profits; lack of it is the reason one loses” — Gerald M. Loeb
1. Inflation Ticked Up to 2.7% in November — The consumer-price index rose 2.7% from a year earlier, the Labor Department said Wednesday, after climbing 2.6% in October. Core prices, which exclude volatile food and energy items, rising 3.3% over the previous 12 months. The CPI index rose 0.3% from the prior month, the strongest month-over-month increase since April. The increase was driven by persistent inflationary pressures in the cost of food, vehicles and medical care. The pace of housing-cost increases cooled slightly from the prior month, which economists said was a welcome development. But they voiced concerns about persistent inflation in the services sector, which makes up the lion’s share of U.S. economic activity. Core goods inflation also picked up from the prior month, led by a jump in vehicle prices.
2. OPEC Makes Deepest Cut Yet to 2024 World Oil Demand Forecast — The Organization of Petroleum Exporting Countries chopped projections for consumption growth in 2024 by 210,000 barrels a day to 1.6 million barrels a day, according to its monthly report. The cartel has slashed projections by 27% since July as it belatedly recognizes the deteriorating market picture. Last week, the OPEC+ alliance led by Saudi Arabia and Russia agreed for a third time to delay plans to restart halted crude production, while also slowing the pace of increases once they do begin next year. The first in a scheduled series of hikes was postponed to April from January. Oil prices have declined 17% since early July as China falters and supply from OPEC’s rivals in the Americas booms. Brent futures are trading near $73 a barrel, too low for the Saudis and many others in the coalition to cover government spending.
3. Wholesale prices rose 0.4% in November, more than expected — The producer price index, or PPI, which measures what producers get for their products at the final-demand stage, increased 0.4% for the month, higher than the Dow Jones consensus estimate for 0.2%. On an annual basis, PPI rose 3%, the biggest advance since February 2023. However, excluding food and energy, core PPI increased 0.2%, meeting the forecast. Also, subtracting trade services left the PPI increase at just 0.1%. The year-over-year increase of 3.5% also was the most since February 2023. Final-demand goods prices leaped 0.7% on the month, the biggest move since February of this year. Some 80% of the move came from a 3.1% surge in food prices, according to the BLS.
4. ‘Wanted’ Signs Targeting Wall Street and Healthcare Executives Pop Up in New York City — “Wanted” posters threatening healthcare and Wall Street executives have gone up around New York City, the latest escalation of vitriol since last week’s assassination of a UnitedHealth executive.
The posters seen around lower Manhattan this week showed the names and faces of Wall Street and healthcare executives. The signs encouraged violence against them. “Health care CEOs should not feel safe,” the posters said. One displayed Brian Thompson, the UnitedHealthcare chief who was killed, with a red X over his face. The posters dragged conversations about corporate violence from the internet into the real world. Some people online have said Thompson’s death outside a Midtown hotel was justified because he ran a company that denied patients lifesaving care. The same pockets are holding up Mangione as a quasi-folk hero who exposed long-simmering anger at the U.S. healthcare system.
The week ahead — Economic data from Econoday.com:
Posted in Week of Dec 6, 2024 Weekly Recap & The Week Ahead
Tuesday, December 10th, 20241. US Job Openings Pick Up to 7.7 Million as Labor Demand Steadies — Available positions increased to 7.74 million from a revised 7.37 million reading in September, the Bureau of Labor Statistics Job Openings and Labor Turnover Survey, known as JOLTS, showed Tuesday. The median estimate in a Bloomberg survey of economists called for 7.52 million openings. The advance in openings was led nearly entirely by professional and business services and accommodation and food services. The overall uptick followed months of steep declines — including a big drop in September. The levels of layoffs decreased to the lowest since June, while quits picked up to the highest since May, indicating workers are more confident in their ability to find a new job.
2. UnitedHealth Exec Brian Thompson Killed in ‘Brazen, Targeted’ Shooting — the shooting took place early Wednesday morning outside a Manhattan hotel where UnitedHealth Group was scheduled to hold its investor conference. The conference began as scheduled at 8 a.m., but was abruptly canceled. Police officials said the suspect targeted Thompson specifically. “This does not appear to have been a random act of violence,” New York City’s police commissioner, Jessica Tisch, said at a press conference. “It appears the suspect was lying in wait for several minutes.”
Thompson was CEO of UnitedHealth Group’s UnitedHealthcare division since 2021. He had previously worked as a senior executive within the division since 2017. UnitedHealthcare is one of the largest insurers in the U.S., with plans covering medical services for 27.3 million people. Its revenue was $281.4 billion in 2023, accounting for 75% of UnitedHealth Group’s total revenue that year.
3. Payrolls increased 227,000 in November, more than expected; unemployment rate at 4.2% — Nonfarm payrolls increased by 227,000 for the month, compared with an upwardly revised 36,000 in October and the Dow Jones consensus estimate for 214,000. September’s payroll count also was revised upward, to 255,000, up 32,000 from the prior estimate. October’s number was held back by impacts from Hurricane Milton and the Boeing strike. The unemployment rate edged higher to 4.2%, as expected. The jobless figure rose as the labor force participation rate nudged lower and the labor force itself declined. A broader measure that includes discouraged workers and those holding part-time jobs for economic reasons moved slightly higher to 7.8%.
The week ahead — Economic data from Econoday.com:
Posted in Week of Nov 29, 2024 Weekly Recap & The Week Ahead
Wednesday, December 4th, 2024It’s not whether you’re right or wrong that’s important, it’s how much money you make when you’re right and how much you lose when you’re wrong. George Soros
1. Fed Minutes Show Officials Prefer Future Rate Cuts to Be Gradual — Federal Reserve officials indicated broad support for a careful approach to future interest-rate cuts as the economy remains solid and inflation slowly cools, minutes from their latest policy meeting showed. The Fed lowered its benchmark interest rate by a quarter-percentage point earlier this month, to a range of 4.5%-4.75%, following a larger-than-usual, half-point reduction in September. Fed Chair Jerome Powell said earlier this month that the economy is not sending signals policymakers need to be in a hurry to lower rates. Fed officials will gather for their last policy meeting of the year on Dec. 17-18. The record of the November meeting showed some officials said the Fed could pause rate cuts and hold borrowing costs at a restrictive level if inflation remains elevated. Some noted reductions could be accelerated if the economy or labor market deteriorates.
2. US GDP Grows at Solid 2.8% Pace, Helped by Consumer Spending — Gross domestic product increased at a 2.8% annualized pace in the third quarter, the second estimate of the figures from the Bureau of Economic Analysis showed. The economy’s primary growth engine — consumer spending — advanced 3.5%, the most this year. While still strong, household spending was revised modestly lower from the initial reading, reflecting slightly less robust outlays for merchandise. At the same time, business investment in research and development was revised higher.
3. Fed’s Favored Inflation Gauge Picks Up, Backs Cautious Approach — The so-called core personal consumption expenditures price index, which strips out volatile food and energy items, increased 2.8% from October last year and 0.3% from a month earlier, according to Bureau of Economic Analysis data out Wednesday. A good part of that acceleration was due to the impact of higher stock prices on the calculation. On a three-month annualized basis — a metric economists say paints a more accurate picture of the trajectory of inflation — the core PCE price gauge advanced 2.8%. The figures support recent comments by many Fed officials that there’s no rush to cut interest rates so long as the labor market remains healthy and the economy continues to power ahead.
4. Canada Sues Google, Alleging Anticompetitive Online-Ad Practices — In a notice filed Thursday with Canada’s Competition Tribunal, the watchdog—known as the Competition Bureau—said it seeks to “put a decisive end to Google’s structural dominance and anticompetitive practice, [and] restore competition” in the country’s online-advertising marketplace.
The antitrust watchdog wants the tribunal to force the company to sell two crucial pieces of advertising-market software and pay a fine of as much as 3% of the company’s global revenue. The Canadian lawsuit is the latest legal challenge for Google on the antitrust front. Investigators for Canada’s antitrust watchdog started to look into Google’s online-advertising practices in 2020, to verify whether the digital company was impeding competitors, thereby resulting in higher prices and reduced choice. Google is dealing with the fallout from a U.S. federal judge’s ruling last August that the company engaged in illegal practices to preserve its search-engine monopoly.
The week ahead — Economic data from Econoday.com:
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