Activate: Feast Mode
November 17, 2023
Dear Fellow Butterballs,
As we all prepare to strap into that Thanksgiving table, I wanted to share some financial news to spice up your holiday feast. Forget about turkey-induced tryptophan; let’s talk about the market’s twists and turns that might leave you more awake than Aunt Edna’s coffee!
So, while you’re passing the stuffing, consider this: Stocks might be lower, but Mortgage Bonds are on a triumphant rally, clearing new technical levels faster than Grandma can set the table. And as oil prices drop, we’re looking at inflation doing the limbo, moving lower and lower.
In the spirit of giving (and gobbling), Former Fed Vice Chair Roger Ferguson thinks the Fed is putting away the hiking boots and donning cutting-edge style in the second half of 2024. History says we might see rate cuts around May 2024, just in time for spring showers and monetary policy flowers. However, I made the call this past May that inflation would be making significant strides, but boy, oh boy, was I wrong. As always, taken with a grain of salt, please!
Another serving you say: The Fed has been on a diet, doing quantitative tightening (“QT”) since June 2022. They’ve shed over 1.5 trillion, roughly the equivalent of all the leftovers in your fridge from last year’s feast.
Initial Jobless Claims rose, signaling a steady increase in layoffs. It’s like the employment pie is shrinking, and everyone’s fighting for a smaller slice. Don’t worry; we’ve got bond-friendly news to balance it out. Import prices are falling, and the Philly Fed is so negative it’s practically positive—clearly, manufacturing is in a turkey trot.
But the real star of the show? Inflation. The October Producer Price Index (PPI) report came in cooler than the mashed potatoes at your in-laws’. Year-over-year, producer inflation fell from 2.2% to 1.3%, like a deflating Macy’s Day Parade balloon.
And, speaking of parades, the market is doing its own dance after the recent CPI report. Odds of a rate hike in January? A mere 2% as likely as finding a black Friday deal on a unicorn.
In conclusion, as you pass the gravy boat, remember the market might be on a rollercoaster, but at least it’s not as bumpy as Uncle Norm’s mashed potatoes.
Happy Thanksgiving, and may your investments be as diverse as your dessert choices!