By Bill Hornbarger, Chief Investment Officer
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Three Things to Know
- We have a big week on the inflation front. In the U.S., both the Consumer Price Index (CPI) and the Producer Price Index (PPI) will be released, along with import/export prices and the University of Michigan inflation expectations. CPI will be the most closely watched and is expected up 0.3% month over month for both core (ex-food and energy prices) and overall CPI. That would put overall CPI up 3.6% year over year (YoY) and core CPI up 4.1% YoY. Inflation has declined significantly in recent months but remains well above the U.S. Federal Reserve’s (Fed’s) target. The recent surge in energy prices has policymakers concerned that more work needs to be done. Services represent 61% of CPI by weights and remain elevated at 5.4% YoY. This week’s inflation data will help shape the next decision on interest rates, scheduled for November 1.
- Wednesday’s release of the Federal Open Market Committee’s last meeting might offer more insight into how the committee is thinking about future policy decisions. There also will be plenty of Fed speakers on the tapes this week, with 15 separate appearances scheduled. Fed officials have generally been hawkish, indicating more rates are possible and that inflation remains a concern. Expect that narrative to continue this week, although futures indicate that the market believes the Fed is finished with this tightening cycle.
- The third-quarter earnings season will ramp up this week with high profile names such as PepsiCo and JPMorgan. Analysts have pushed revenue and earnings-per-share estimates higher in 10 of the 11 main groups in the S&P 500 Index. Of particular interest will be companies and industries that could be impacted by the recent surge in weight-loss drugs. Particularly impacted will be food and snack manufacturers and restaurant groups.
Three Things to Watch
- Rishi Sunak, the UK Prime Minister, has proposed gradually increasing the legal age for buying cigarettes in England by one year each year, with the ultimate goal of making it illegal for all. The goal is to prevent teenagers who are currently 14 or younger from ever being able to purchase cigarettes in England. (Source: Associated Press)
- Kelvin Kiptum set a world record in the Chicago Marathon on Sunday, October 8, finishing in 2 hours, 35 seconds, shattering the old record by 34 seconds. That is a 4:36/mile pace for 26.2 miles. He is 23 years old and holds the record for three of the top six fastest marathons ever run. (Source: NBC Sports)
- Median monthly home payments in the U.S. rose to an all-time high of $2,839/month. According to Reventure Consulting, the median home payment has now gone from $1,035/month to $2,839/month in just 10 years. Since the pandemic, the median home payment is up ~$1,300/month, an 87% increase. Meanwhile, mortgage rates just hit their highest since 2000, at 7.93%. Housing affordability is now officially at its lowest level in U.S. history. (Source: The Kobeissi Letter)
The above information reflects the current opinion of the author. It is based upon sources and data believed to be accurate and reliable. Opinions and forward-looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security mentioned.