ππ¦ Inflation Yet to be Tamed
Welcome to the Sunday Primer,
Inflation is down slightly from the June peak of 9% but September data matched the August figure of 8.2% on the back of food and shelter. Read more on that below.
On a side note, did anyone get a chance to buy the $100 Elon Musk fragrance βBurnt Hairβ?
- Humphrey, Rickie & Tim
Market Report
The big news this week was that inflation is still going up. CPI rose to a 40-year high in September as the cost of shelter, food, and medical care increased. This CPI report will pose a tough challenge for Joe Biden and the Democrats as Republicans will surely use record inflation against them in the midterms next month.
Elevated inflation also means that the Federal Reserve will need to go even further with rate hikes, but will it help? A large driver of inflation hasnβt been demand side, but rather supply side. OPEC+ recently announced oil production cuts and the Russia-Ukraine war continues to disrupt the supply of commodities like wheat. However, the Fed wonβt slow down. In their own words, βthe cost of taking too little action to bring down inflation likely outweighed the cost of taking too much actionβ.
Forecast Ahead
Housing Market updates (Throughout Week)
This week weβll get homebuilder sentiment numbers as well as September housing starts and building permit data. Housing data is expected to continue weakening as mortgage rates climb higher and unaffordability worsens.
China Economic Data (Monday, October 17th)
Weβll also get a growth update from China, the worldβs second-largest economy. Chinaβs GDP is expected to grow 3.8% over the previous quarter, rebounding from a 2.6% decline in Q2. The Chinese economy slowed during the beginning of the year as Covid lockdowns brought everything to a standstill. Regardless, China is expected to grow its GDP by 5.5% in 2022.
Corporate Earnings (Throughout Week)
October 17th - Bank of America (BAC), Charles Schwab (SCHW), Bank of New York Mellon (BK)
October 18th - Goldman Sachs (GS), Johnson & Johnson (JNJ), Lockheed Martin (LMT), Hasbro (HAS), Silvergate Capital (SI), Albertsons (ACI), State Street Corp (STT), Netflix (NFLX), United Airlines (UAL), J.B. Hunt Transport (JBHT), Interactive Brokers (IBKR)
October 19th - Abbott (ABT), ASML Holding (ASML), Ally Financial (ALLY), Nasdaq (NDAQ), Procter & Gamble (PG), Tesla (TSLA), Lam Research (LRCX), Knight-Swift Transportation (KNX), Equifax (EFX)
October 20th - American Airlines (AAL), AT&T (T), Blackstone (BX), Snap (SNAP), Whirlpool (WHR), Boston Beer (SAM)
October 21st - Verizon (VZ), American Express (AXP)
What We Read Last Week
Kroger Wants to Merge with Albertsons to Create U.S. Grocery Giant (Bloomberg)
CPI Breakdown: Where Prices Rose the Most in September (Bloomberg)
The Regulators of Facebook, Google, and Amazon Also Invest in the Companiesβ Stocks (WSJ)
Company Documents Show Metaβs Flagship Metaverse Falling Short (WSJ)