“The worst trades are generally when people freeze and start to pray and hope rather than take some action” — Robert Mnuchin

1. CPI Report Shows U.S. Inflation Eased in November — the Labor Department on Tuesday said that its consumer-price index climbed 7.1% in November from a year ago, down sharply from 7.7% in October—building on a trend of moderating price increases since June’s 9.1% peak. Core CPI, which excludes volatile energy and food prices, rose 6% in November from a year ago, easing from a 6.3% gain in October. September’s 6.6% increase was the biggest jump since August 1982. Prices softened significantly on a month-to-month basis. The CPI increased 0.1% in November from the prior month, compared with 0.4% in October. Core CPI rose 0.2% in November, down from 0.3% in October and 0.6% in August and September. The CPI measures what consumers pay for goods and services.
The Fed has raised its benchmark interest rate this year at the fastest pace since the early 1980s to combat inflation. It is expected to announce on Wednesday a 0.5-percentage-point increase, bringing rates to a range between 4.25% and 4.5%, the highest level since December 2007.
2. Bankman-Fried Is Charged With Fraud — U.S. prosecutors on Tuesday charged FTX founder Sam Bankman-Fried with eight counts of fraud and conspiracy, in what they called a scheme to defraud his crypto exchange’s customers and his hedge fund’s lenders. The indictment, brought by the U.S. attorney’s office for the Southern District of New York, accuses him of misappropriating FTX.com customers’ deposits and using those to pay expenses and debts of Alameda Research, his crypto hedge fund. Mr. Bankman-Fried is charged as well with defrauding the U.S. and violating campaign finance rules for conspiring with others to make illegal political contributions. The SEC alleged in its lawsuit that Mr. Bankman-Fried diverted customer funds from the start of his cryptocurrency exchange to support his hedge fund, Alameda Research, and to make venture investments, real-estate purchases and political donations. The arrest charges are the latest bombshells in a case that has transfixed Wall Street and Washington. FTX, one of the largest crypto exchanges in the world, filed for bankruptcy last month after it ran out of cash and rival Binance walked away from a shotgun merger.
3. Fed Raises Rate by 0.5 Percentage Point, Signals More Increases Likely — the Federal Reserve approved an interest-rate increase of 0.5 percentage point and signaled plans to keep raising rates at its next few meetings to combat high inflation. At a news conference, Fed Chair Jerome Powell suggested the central bank would strongly consider dialing down the size of rate rises to a more traditional quarter-percentage-point increment at its next meeting on Jan. 31-Feb. 1. Given how high the Fed raised rates this year, “it’s now not so important how fast we go,” Mr. Powell said. Most officials penciled in plans to raise the rate to between 5% and 5.5% next year, with the median projection implying a further 0.75 percentage point in rate rises. In September, they anticipated lifting it to around 4.6% by the end of next year.
4. Retail Sales Fall Sharply as Shoppers Feel Inflation’s Pinch — Retail sales fell more than expected in November, suggesting that while inflation has started to cool off consumers are still feeling the burden of higher prices, pointing to an inauspicious start to the holiday season.
Retail sales last month fell 0.6% to $689.4 billion, a starker decline than the 0.2% decrease economists had been expecting, according to new data from the Census Bureau. This was the biggest drop in nearly a year, which bodes poorly for retailers as they gear up for the last leg of the holiday season. Excluding autos, sales were down 0.2%, and excluding both auto and fuel sales fell 0.2%. In October, retail sales rose 1.3%.
5. S&P 50O Index Secular Bull Market Roadmap Stat from 1929 to Present — table below shows the S&P500 Index returns from 1929 to present courtesy of BofA Research. Note that currently, the S&p500 is in a Bear Market within a Secular Bull.

In addition, from 1951 to present, probability of market gain from a down year is approximately 74%. See the figures posted below.

The week ahead — Economic data from Econoday.com:

This entry was posted on Monday, December 19th, 2022 at 4:54 pm and is filed under Weekly Summary. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.