Latest Inflation Numbers and Discussion

One thing to keep in mind, as inflation cools and the interest rate stays the same, that means the real rate of interest is rising. This 50 basis points cut in the nominal rate only offsets some of that decline.
An excellent point
 
The almost zero percent interest rates of the last decade were not normal and not good for the country.
Indeed. IMHO, the very low mortgage rates are responsible for speculation in the housing market that has resulted in high home prices. I know people who bought one or two condos or a vacation property to rent out via AirBnB. Would the numbers work out at 5 or 6% interest? I suspect not.
 
CPI release for September https://www.bls.gov/news.release/pdf/cpi.pdf

0.2 for the month, 2.4 for last 12 months.
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And for a different view, here is the CPI-W that the 2.5% SS COLA is based on:

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Just so there's no confusion, the social security COLA = arithmetic mean CPI-W 3Q2024/arithmetic mean CPI-W 3Q2023. That's why it is 2.5% rather than 2.6%
 
The CPI was .1% higher on both headline and core numbers.
 
September PCE was released this morning. This is the Fed’s preferred gauge if inflation. Month over month came in at 0.2% and core PCE 2.7%. Personal incomes grew 0.3% while spending rose 0.5%, both nominal. See the news release here

The quarterly employment cost index was also released today, another important Fed measure. Both compensation and total employment cost rose 0.8% for the quarter, and compensation cost rose 3.9% for the past 12 months. Release here

Both numbers are still a bit higher than what would be consistent with a 2% inflation, but the are in line with a 2%-3% inflation range.
 
Nominal GDP growth is now close to or below 5%. The Fed funds rate has to come down from these levels, by 1.5%-2%. I would be surprised if this didn’t happen over the next 6 months.
 
September PCE was released this morning. This is the Fed’s preferred gauge if inflation. Month over month came in at 0.2% and core PCE 2.7%. Personal incomes grew 0.3% while spending rose 0.5%, both nominal. See the news release here

The quarterly employment cost index was also released today, another important Fed measure. Both compensation and total employment cost rose 0.8% for the quarter, and compensation cost rose 3.9% for the past 12 months. Release here

Both numbers are still a bit higher than what would be consistent with a 2% inflation, but the are in line with a 2%-3% inflation range.
Is that what spooked the equity markets this morning?
 
I think some of the earnings reports disappointed. MSFT was down 5.5% because it gave tepid guidance.

There were one or two other disappointments.
 
I think some of the earnings reports disappointed. MSFT was down 5.5% because it gave tepid guidance.

There were one or two other disappointments.
October is often a negative month and it looks like the markets are really trying to erase the mid-month gains, ha ha.
 
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