Posted on 10/27/2023 2:41:11 PM PDT by CFW
Renewed selling on fears of a recession dragged the Dow Jones Industrial Average lower on Friday and pushed the S&P 500 into correction territory.
The 30-stock Dow fell 366.71 points, or 1.12% to close at 32,417.59. The S&P 500 slipped 0.48% to finish the session at 4,117.37, closing 10.3% lower from this year's peak on July 31. The Dow was pressured by declines in JPMorgan Chase after CEO Jamie Dimon said he planned to sell 1 million shares next year.
The Nasdaq Composite held 0.38% higher to 12,643.01, thanks to shares of Amazon. Amazon added more than 6% after the e-commerce giant trounced analysts' expectations for revenue and earnings in the third quarter. Other megacap tech stocks such as Microsoft followed Amazon shares higher.
(Excerpt) Read more at cnbc.com ...
Also, Gold went over $2000 oz. today indicating that some are moving their funds to gold's "safe haven". If you remember what happened approximately fifteen years ago, investment demand for gold spiked and continued to rise, and gold doubled in value between 2007 and 2011.
In economic numbers released today,
The University of Michigan consumer sentiment for the US was revised higher to 63.8 in October of 2023 from a preliminary reading of 63. Still, the result marked a sharp retreat from the 68.1 from the previous month to the lowest level since May. The gauge measuring consumer expectations fell by 9.9% to 59.3, largely due to deteriorating expectations over business conditions and worries over consumers’ own personal finances. To a lesser degree, the decline was also attributed to the implications of negative current events domestically and abroad. In the meantime, the gauge measuring current economic conditions eased by 0.7% to 70.6.
Personal income in the United States increased by 0.3% from a month earlier in September 2023, following a 0.4% rise in August and slightly below market consensus of 0.4%. Compensation for employees increased by 0.4% (vs 0.5% in August), driven by higher wages and salaries (0.4% vs. 0.5%) and other associated costs (0.4%, the same rate as in August). Moreover, personal income receipts from assets recorded a 0.5% advance (vs. 0.5%), with personal interest income rising at a solid 1%, and personal dividend income increasing 0.1%. Rental income for individuals and proprietors' income both rose by 0.7% and 0.4%, respectively. Conversely, personal current transfer receipts fell by 0.1%, a fourth consecutive period of decline.
Core PCE prices in the US, which exclude food and energy, increased by 0.3% from the previous month in September of 2023, the most in 4 months, aligning with market estimates and accelerating from the 0.1% increase from the earlier month. The annual rate, regarded as the Federal Reserve’s preferred measure of inflation, eased slightly to 3.7%, the lowest since May 2021, but held sharply above the central bank's target of 2%. Also, the headline gauge rose 0.4% month-over-month, the same as in August and above market forecasts of 0.3%. The annual PCE rate was 3.4%, the same as an upwardly revised 3.4% in the previous month and in line with forecasts.
Personal spending in the United States rose by 0.7% from a month earlier in September 2023, following a 0.4% increase in August and beating the market consensus of a 0.5% advance. Spending on services saw a substantial increase of $96.2 billion, or 0.8%, while spending on goods also rose by $42.5 billion, or 0.7%. Among services, spending was up for other services, particularly international travel; housing and utilities, mainly housing expenses; health care, dominated by hospitals and nursing homes; and transportation, primarily air transportation. Within the goods category, other nondurable goods, led by prescription drugs, and motor vehicles and parts, primarily new motor vehicles, were the main contributors to the increase.
The personal consumption expenditure price index in the US rose 0.4% month-over-month in September 2023, the same as in August and above market forecasts of 0.3%. Prices for goods increased 0.2% and prices for services rose 0.5%. Food edged up 0.3% and energy surged 1.7%. The annual PCE rate was 3.4%, the same as a downwardly revised 3.4% in the previous month and in line with forecasts. Meanwhile, annual core PCE inflation which excludes food and energy, slowed to 3.7%, the lowest reading since May 2021, matching forecasts of 3.7% and after a downwardly revised 3.8% in August. The monthly rate rose to a four-month high of 0.3% from 0.1% in August, in line with expectations. PCE inflation is the Fed's preferred inflation metric, and September figures showed that inflationary pressures continue to slowly moderate although the rates remain above the central bank target of 2%.
Has a loooong way to go get. Oil is going to pop another $10+ bucks is the short term too.
Apparently the rise in GDP is inflation. If I sold widget × two years ago for $11, and sell it in November of 2023 for $22, it does not mean my output has doubled?!.
I posted about this in another thread on FR today.
I watch Bloomberg TV’s Wall Street show that comes on at 6am EST every day.
It’s liberal but not sickening so, all the guests they have on from Wall Street are less than 60, most less than 50 years old.
None of them are old enough to remember the last time we had sustained inflation with rapidly rising interest rates, they have no idea what to say or do about it.
It their mind it’s inconceivable that someone like Paul Voelker would raise interest rates 500 basis points in one day.
The 2023 version of high interest rates and inflation is much worse today than in the 1970s, when the full effect of this catastrophe hits, it will cause severe problems in the economy and society in general.
Does there exist a metric for “real” (versus “nominal”) productivity (if so, what is it called)?
Perhaps you’re right, I think the rise in GDP is due to not just inflation but the vicious cycle that happens during times of inflation.
Instead of putting off a year to make a big purchase, people assume because of inflation it’s cheaper to buy today versus waiting because the item will much more expensive in 6 months or more.
When this cycle ends, it will be very ugly.
inflation good!
I was barely old enough to comprehend the 70s and early 80s. Rationing of gas and sky high interest rates. The family across the street from us I think lost their home because they had a balloon mortgage that was maturing. They couldn’t qualify for a refinance.
“None of them are old enough to remember the last time we had sustained inflation with rapidly rising interest rates, they have no idea what to say or do about it.”
That’s true. They are truly shocked at the interest rates and can’t believe the Fed hasn’t yet “pivoted”. Free money has been available for so long now that they can’t understand why interest rates continue to rise.
In addition, there are so many young people who are used to the stock market constantly going up so they put their rent money in a Robinhood account and expect it will increase by 20% before the rent is due next month. These “investors” have never experienced a down market.
Volcker type increases may be the only thing that will crush inflation expectations. A lot of collateral damage with that but stout medicine might be needed.
October.
Think 1987.
Think 1929.
If this October could only be an election year. Memories are short.
“They couldn’t qualify for a refinance.”
I think that is why the home purchasing numbers have not gone down as much as some would think they would with interest rates being higher than usual. Home buyers are thinking that interest rates will go back down to 3% or so next year and they can just refinance at that time. They don’t consider the thought that the same bank they are currently using may have tightened lending requirements by that time and they may not qualify.
Whheeeeeee heeeee!
Says Briben.
unless something weird happens, something terrible and good
unfortunately lots of dope for the regular folk so it doesn't hurt too bad
until it's time to pay the piper
let the markets do what they do and get on with it
but that (probably) won't happen
massive amount of interference manipulation grift and propaganda
good to be a saver these days, I guess
prepare for the worst, hope for the best
on the other hand, get ready for more QE and a big bounce back next week
buy buy buy!
I was so depressed I almost jumped . . off the front porch. Sure it’s six inches off the ground but I could’ve sprained an ankle . . maybe.
i remember negative amortization mortgages
the principal went up every month
Beware November...
All you have to do is use core inflation [extracting the rise in costs of things you actually buy] and then economic growth is more than healthy. Printing free money works. Voila!
if you pay close attention to what Paul Volker did it was to monetize existing debt. He printed a lot of money but raised interest rates to the stars to curtail new debt.
“Prices Rise More Than Expected as Inflation’s Grip on Economy Persists”
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