Three Things to Watch
- The U.S. consumer has been one of the biggest strengths this year, and consumer spending accounts for roughly two-thirds of the economy. This week will bring retail sales for September amid higher energy prices and interest rates and weaker consumer sentiment (down three consecutive months according to the University of Michigan survey last week). Retail sales are expected to advance 0.3% from the previous month and a more modest 0.1%, excluding autos/parts dealers and gas. Investors will also pay close attention to comments from bank executives about borrowers’ ability to service loans and credit cards. Bank of America and several regional banks report earnings this week, giving ample opportunity for such insight.
- The Fed will soon enter its self-imposed blackout period, with the next FOMC meeting looming at the end of the month. Before that, the Beige Book of Regional Economic Conditions will be released on Wednesday, and Fed Chairman Jerome Powell will give an important speech on Thursday. Fed speakers have generally indicated no interest rate move at the next meeting even though inflation remains too high. They cite monetary policy’s cumulative and lagged effects and tightening financial conditions through dollar strength and higher bond yields.
- Investors will also keep a close eye on developments in the Middle East. It is too early to understand the ramifications of the intensifying conflict between Israel and Hamas. Still, these events have yet to generate an outsized reaction in the markets. Oil prices have increased, and Treasuries have benefited from a flight to quality in the days following the terrorist attacks on Israel. But the moves have been generally muted.
Three Things to Know
- In 1759, Arthur Guinness signed a 9,000-year lease on the St. James’s Gate Brewery in Dublin, Ireland, for an annual rent of £45. This was risky for Guinness, as his landlord, the Archbishop of Dublin, switched from the Church of Ireland to Catholicism just a few years later. Though this could have caused problems for Guinness, the lease stood in good faith, and the St. James’s Gate Brewery has been in continuous use since then. (Source: coalitionbrewing.com)
- The average interest rate on U.S. credit cards currently stands at 21%, the highest rate ever. (Source: @charliebilello on X)
- At the same time, searches for “Can’t pay credit card” hit all-time highs. (Source @gromepowburner on X)
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.