Is the S&P 500 really entering a new bull market? Today's video challenges this idea, highlighting how small caps, usually the leaders in a new bull phase, have lagged significantly. Tune in for an alternative perspective on current market trends.
The 30-year mortgage has hit 8% for the first time since 2000. Rising mortgage rates, along with increased interest on auto loans and credit card debt, shift money that consumers might otherwise spend on discretionary items to debt service. Over time, these higher interest rates are likely to slow economic activity. The big question is, will the economy merely slow down, or could we be heading toward a recession?
In the recent economic data release, the Department of Labor highlighted a steadfast count of initial unemployment claims at 209K, reflecting the continuing tightness in the labor market. This announcement came hand in hand with a subtle decline in the four-week moving average of claims by 3K, instilling a sense of stability amidst customary weekly fluctuations. Concurrently, inflation, as depicted by the Consumer Price Index (CPI), edged up by 0.4% month-over-month and 3.7% annually, slightly outpacing the forecasted 0.3% and 3.6%. This nudging upward trend underscores the entrenched nature of inflation, marking a critical juncture for the Federal Reserve as it navigates the delicate balance of curbing inflationary pressures while fostering economic growth. With a historical lens focused on the 1970s inflation saga, the anticipation builds around the Fed's strategy in the upcoming November or December meeting, potentially heralding another rate hike in response to the evolving economic tableau.
The Bureau of Labor Statistics unveiled the September Producer Price Index (PPI) today, casting light on the inflation landscape at the wholesale level. The PPI ascended by 0.5%, overshooting the projected 0.3% rise, with the upswing chiefly propelled by escalating costs of food and energy products. On a year-over-year basis, the unadjusted PPI climbed by 2.2%, illustrating a discernible trend over the past four months. This trajectory insinuates that wholesale inflation is on a reacceleration path, potentially foreshadowing upcoming ascents in consumer prices as heightened production costs typically trickle down to consumers.
The yield curve has been sounding the alarm bells for over a year, pointing to an upcoming recession. Though we can't predict the future with absolute certainty, historical patterns suggest we may be on the cusp of an economic downturn. The inversion of the yield curve—a long-standing harbinger of recessions—paired with other economic indicators, forms a cautionary tale worth heeding. Below, we'll delve into the data, revisiting patterns from the past 40 years and the troubling echoes we see in today's market.
This week served up a mixed bag of employment data, leaving analysts and investors with a lot to chew on. On Wednesday, ADP reported a mere 89,000 new jobs in September—well below Dow Jones predictions and marking the third month of diminishing growth. Fast forward to Friday, and the Bureau of Labor Statistics told a different story. A whopping 336,000 jobs were added in September, crushing both average gains over the last year and Dow Jones expectations.