Week of Nov 11, 2022 Weekly Recap & The Week Ahead
‘Only when the tide goes out that do you discover who’s been swimming naked. ‘ – Warren Buffett.
1. Consumer Prices Rose 7.7% in October From Year Earlier — the Labor Department on Thursday said that its consumer-price index increased 7.7% in October from the same month a year ago, the smallest 12-month increase since January 2022. The reading was down from 8.2% in September. June’s 9.1% inflation rate was the highest in four decades.
On a monthly basis, the CPI rose 0.4% in October from September, the same pace as the previous month. The CPI measures what consumers pay for goods and services.
The so-called core CPI—which excludes volatile energy and food prices—climbed 6.3% in October from a year earlier, down from 6.6% in September, which was the biggest increase since August 1982. The October inflation report could keep Federal Reserve officials on track to approve a half-percentage-point interest-rate increase next month and to pencil in slightly higher rates next year than they had anticipated previously.
2. FTX Hurtles Toward Bankruptcy With $8 Billion Hole, US Probe — the crisis engulfing Sam Bankman-Fried’s FTX.com is rapidly worsening, with the onetime crypto wunderkind warning of bankruptcy if his firm can’t secure funds to cover a shortfall of as much as $8 billion. The acknowledgment of his firm’s deepening troubles and limited options is a stunning turn for Bankman-Fried, who was once worth $26 billion and likened to John Pierpont Morgan. It also underscores the uncertainty hanging over FTX, its clients and cryptocurrency markets.
3. FTX Files for Bankruptcy — beleaguered cryptocurrency platform FTX filed for bankruptcy protection Friday—a swift demise for a company hailed as a trusted platform just a week ago. In a statement, the company said Chief Executive Sam Bankman-Fried resigned from his position but would remain at the company to assist with an orderly transition. FTX said that it would begin a process to review and monetize assets for stakeholders. FTX is the latest in a string of crypto companies seeking bankruptcy protection this year. Months ago, Mr. Bankman-Fried served as a lender of last resort to his industry, following the failure of other crypto companies. Its fortunes reversed in the past 10 days, after a CoinDesk report showed the depth of the relationship between FTX and Alameda, triggering a loss of faith in the platform by amateur and professional investors.
4. The midterm-election effect on the S&P500 Index — historically, midterm elections set up nice rallies with phenomenal consistency. Since 1942, after midterm elections the S&P 500 went up 7.6%, 14.1%, and 14.9% over the next three, six and 12 months, notes Ed Yardeni of Yardeni Research. That’s irrespective of the election outcome. The two charts below show the history. The green- and red-shaded areas represent the 12 months following an election. The percentage market move during the three-, six- and 12-month time frames are written below the election year.
The week ahead — Economic data from Econoday.com:
