EconCurrents

• The Dow closed down 306 points or 0.70%,
• Nasdaq closed down 428 points or 2.24%,
• S&P 500 closed down 79 points or 1.32%,
• Gold $2,568 down $4.70 or 0.19%,
• WTI crude oil settled at $67 down $1.71 or 2.49%,
• 10-year U.S. Treasury 4.441 up 0.021 points or 0.475%,
• USD index $106.90 up $0.42 or 0.39%,
• Bitcoin $91,327 up $1,624 or 4.58%, (24 Hours), (New Bitcoin Historic high 93,383)
• Baker Hughes Rig Count: U.S. -1 584 Canada -7 to 200
  U.S. Rig Count is down 1 from last week to 584 with oil rigs down 1 to 478, gas rigs down 1 to 101 and miscellaneous rigs up 1 to 5.

*Stock data, cryptocurrency, and commodity prices at the market closing

Today’s Highlights

US stocks experienced significant declines on Friday, leading to steep weekly losses as investors processed Federal Reserve Chair Jerome Powell’s indication that the central bank is not rushing to implement interest rate cuts. The major indexes all fell sharply. Powell’s hawkish comments dampened market sentiment, erasing much of the initial optimism surrounding President-elect Donald Trump’s policy agenda. The S&P 500 has already retraced about one-third of its post-election gains. For the week the S&P 500 lost over 2%, the Dow shed 1.2%, and the Nasdaq logged a 3.2% decline. Traders are now reassessing expectations for rate cuts. The probability of a December rate cut has fallen to 62%, down from 72% the previous day. The January rate cut odds decreased to 74% from 81%. Adding to the hawkish tone, retail sales data released Friday showed continued strength in consumer spending. Investors are also closely watching Trump’s transition plans, including potential cabinet appointments that could impact certain sectors.

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Click here to read our current Economic Forecast – November 2024 Economic Forecast: Our Index Marginally Declines – We Are Stuck With The Crappy Economy We Have Seen So Far This Year

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Today’s Economic Releases Compiled by Steven Hansen, Publisher:

The latest Survey of Professional Forecasters conducted by the Federal Reserve Bank of Philadelphia indicates an improved near-term outlook for the U.S. economy compared to three months ago. The economy is predicted to expand at an annual rate of 2.2% in Q4 2024 and 1.9% in Q1 2025, up from previous estimates of 1.7% for both quarters. Real GDP growth is expected to be 2.7% in 2024 and 2.2% in 2025 on an annual-average basis. The unemployment rate forecast remains largely unchanged from the previous survey. Projections show the unemployment rate increasing from 4.0% in 2024 to 4.3% in 2025, then decreasing to 4.1% in 2027. Job gains are expected to continue at a steady pace. Forecasters project monthly job gains of 208,400 in 2024 and 134,100 in 2025. These projections suggest a more optimistic view of economic growth in the near term, with stable labor market conditions expected to persist.

	Real GDP (%)		Unemployment Rate (%)		Payrolls (000s/month)
	Previous	New	Previous	New	Previous	New
Quarterly data:
2024:Q4	1.7	2.2	4.3	4.2	125.4	138.8
2025:Q1	1.7	1.9	4.3	4.2	128.7	123.7
2025:Q2	1.8	1.8	4.3	4.3	116.2	117.2
2025:Q3	2.2	2.2	4.3	4.2	145.8	114.2
2025:Q4	N.A.	2.0	N.A.	4.3	N.A.	128.2
Annual data (projections are based on annual-average levels):
2024	2.6	2.7	4.1	4.0	210.1	208.4
2025	1.9	2.2	4.3	4.3	130.0	134.1
2026	2.3	2.1	4.2	4.2	N.A.	N.A.
2027	2.0	2.1	4.2	4.1	N.A.	N.A.

Advance estimates of unadjusted U.S. retail and food services sales for October 2024 were up 4.6% from October 2023 (3.3% inflation adjusted). This was a broad based increase across all sectors of retail sales.

Industrial production (IP) decreased 0.3% year-over-year in October 2024. According to the Federal Reserve, the Boeing strike slowed IP growth by an estimated 0.3 percentage point in September and 0.2 percentage point in October – whilst Hurricane Milton and the lingering effects of Hurricane Helene together reduced October IP growth 0.1 percentage point. For the components of IP, note that growth in manufacturing was down 0.3% year-over-year, mining was down 1.5% year-over-year, and utility growth was up 1.5% year-over-year.  Capacity utilization moved down to 77.1 percent in October, a rate that is 2.6 percentage points below its long-run (1972–2023) average. My position remains that manufacturing is in a recession.

Imported prices rose to 0.8% in October 2024 (2.3% excluding fuels). Export prices contracted 0.1%. Notice that the import prices less fuel rate of increase has been steadily growing (black line on the graph below) – and that is now growing into a major source of inflation into the economy. Almost 30% of consumer goods are imported.

The New York Fed’s Empire State Manufacturing Survey‘s headline general business conditions index shot up forty-three points to 31.2, its highest reading in nearly three years. New orders and shipments rose substantially. Delivery times were slightly longer, while supply availability was somewhat lower. Remember this is a survey, and I will not conceded that manufacturing has magically jumped to the highest level in three years from a negative number one month ago. Really do not like surveys.

Here is a summary of headlines we are reading today:

• Why Musk Supports Trump’s Plan to Axe EV Tax Credits
• U.S. Rig Count Sees Small Drop
• Space Junk: The Unseen Crisis Threatening Earth’s Ecosystems
• Bearish Sentiment Is Dominating Oil Markets
• Carbon Credit Dispute Overshadows Early Progress at COP29
• Libya’s Fragile Peace Is Under Threat Again
• The Strong Dollar Is Back and Weighing on Oil Prices
• Dow closes 300 points lower Friday as rate worries hinder postelection rally: Live updates
• Palantir jumps 9% to a record after announcing move to Nasdaq
• Super Micro faces deadline to keep Nasdaq listing after 85% plunge in stock
• Processed food stocks fall as investors brace for increased scrutiny under Trump, RFK Jr.
• Bitcoin rises over 16% in a week on hopes of crypto-friendly U.S. policy: CNBC Crypto World
• Consumers Are Drowning In Debt As Hordes Of Businesses Fail All Over The US
• Investors are bracing for higher-for-even-longer interest rates
• Treasury yields finish mixed as spike in rates sparks buying demand

Click on the “Read More” below to access these, other headlines, and the associated news summaries moving the markets today.

• The Dow closed down 207 points or 0.47%,
• Nasdaq closed down 123 points or 0.64%,
• S&P 500 closed down 36 points or 0.60%,
• Gold $2,573 down $13.10 or 0.52%,
• WTI crude oil settled at $69 up $0.13 or 0.19%,
• 10-year U.S. Treasury 4.445 down 0.006 points or 0.135%,
• USD index $106.90 up $0.42 or 0.39%,
• Bitcoin $87,800 down $1,624 or 1.85%, (24 Hours)

*Stock data, cryptocurrency, and commodity prices at the market closing

Today’s Highlights

The US stock market experienced a downturn as the post-election rally lost momentum. Federal Reserve Chair Jerome Powell’s comments were a primary driver of market sentiment. He emphasized that the central bank is not in a “hurry” to lower interest rates and the US economy remains strong. The Fed will be “watching carefully” to ensure inflation stays within an acceptable range. Republican party maintained its House majority, creating a “trifecta” of political control that could facilitate President-elect Trump’s economic agenda. This agenda caused Tesla to drop over 5% after reports suggested eliminating the $7,500 EV tax credit. In addition, Moderna and Novavax declined after reports of Robert F. Kennedy Jr. potentially leading the Department of Health and Human Service.

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Click here to read our current Economic Forecast – November 2024 Economic Forecast: Our Index Marginally Declines – We Are Stuck With The Crappy Economy We Have Seen So Far This Year

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Today’s Economic Releases Compiled by Steven Hansen, Publisher:

Following the growth of the Consumer Price Index yesterday, the Producer Price Index (PPI) grew from 1.9% year-over-year to 2.4% in October 2024. The services portion of the PPI grew from 3.3% to 3.5% year-over-year and the goods portion of the PPI grew from -1.2% to 0.2% year-over-year. The PPI less food and energy grew from 3.0% to 3.1% year-over-year. Historically, I have defended the various inflation indices but their understatement of inflation is becoming persistent. I believed in 2024, it was a political decision to understate inflation but for now I will go with the historical rationale:

Several factors contribute to the possibility that official inflation statistics understate true inflation:

1. Methodological changes: The Bureau of Labor Statistics (BLS) has made significant changes to CPI calculation methods over the years, which some critics argue have led to lower reported inflation rates 1 3.
2. Substitution bias: The CPI’s fixed basket approach may not fully account for consumers substituting between goods when prices change, potentially understating inflation 3.
3. Quality adjustments: The use of “hedonic adjustments” to account for product improvements may artificially lower reported inflation 4.
4. Exclusion of asset prices: The CPI does not include asset inflation, such as rising stock or real estate prices, which can significantly impact overall cost of living 4.
5. Subjective weighting: The relative importance of items in the CPI basket can be adjusted, potentially hiding sharp price increases in essential goods 4

Evidence of Understatement:

1. Alternative calculations: Some economists, using different methodologies, have estimated significantly higher inflation rates than official figures. For example, in 2006, while the official CPI showed a 2.2% increase, alternative estimates ranged from 5.3% to 8.2% 5.
2. Historical comparisons: Calculations using older CPI formulas suggest that current inflation rates could be nearly double the officially reported figures 2
3. Divergence from personal experience: Many consumers report experiencing higher price increases than official statistics indicate, suggesting a potential disconnect between CPI and real-world inflation 4

If inflation is indeed understated, there could be several significant consequences:

1. Monetary policy: Central banks may make suboptimal decisions regarding interest rates and monetary stimulus based on inaccurate inflation data 4
2. Government spending: Many government payments, such as Social Security, are tied to CPI. Lower reported inflation could result in reduced payments to citizens 5
3. Investment returns: Investors may experience lower real returns than expected if true inflation is higher than reported 5
4. Economic planning: Inaccurate inflation data can make financial planning more difficult for individuals and businesses 4

In the week ending November 9, the advance figure for seasonally adjusted unemployment initial claims 4-week moving average was 221,000, a decrease of 6,250 from the previous week’s unrevised average of 227,250. This data shows no signs of an economic slowdown.

In a speech today, Federal Reserve Chair Jerome Powell provided an overview of the current state of the U.S. economy and the Fed’s monetary policy stance. A summary of his speech: The U.S. economy has shown remarkable resilience and growth: GDP grew by over 3% last year and is expanding at a 2.5% rate this year. Consumer spending remains strong. Business investment has accelerated. The labor market is in solid condition, with unemployment at 4.1%. Significant strides have been made in controlling inflation: Total PCE prices rose 2.3% over the 12 months ending in October. Core PCE prices increased by 2.8%. Inflation is moving closer to the Fed’s 2% goal, though not there yet. The Fed is carefully adjusting its policy stance. We recently lowered the policy interest rate by 1/4 percentage point. We are moving towards a more neutral policy setting. Will assess incoming data, evolving outlook, and balance of risks for future decisions. Not in a hurry to lower rates due to current economic strength. Powell expressed confidence in maintaining economic strength while bringing inflation down to 2%. The Fed remains committed to its dual mandate of maximum employment and price stability, aiming to achieve these goals without causing a significant rise in unemployment.

Here is a summary of headlines we are reading today:

• 3 Critical Challenges in the Transition to Net-Zero
• Trump’s Second Term Could Present Challenges and Opportunities for the Caucasus
• Oil Jumps on Fuel Inventory Draws
• Rubio’s Vision: A Pragmatic Approach to American Foreign Policy
• Germany Warns Import Terminals to Refuse Deliveries of Russian LNG
• Powell says the Fed doesn’t need to be ‘in a hurry’ to reduce interest rates
• Here’s the deflation breakdown for October 2024 — in one chart
• Dow drops 200 points as postelection rally sputters, Fed Chair Powell signals caution on rate cuts: Live updates
• Greenlight’s David Einhorn says the markets are broken and getting worse
• Wholesale prices rose 0.2% in October, in line with expectations
• The House just voted ‘yes’ on a bill that would increase Social Security checks for some pensioners
• 2-year Treasury yield jumps after the close, with Powell patient about rate cuts

Click on the “Read More” below to access these, other headlines, and the associated news summaries moving the markets today.

• The Dow closed up 47 points or 0.11%,
• Nasdaq closed down 51 points or 0.26%,
• S&P 500 closed up 11 points or 0.02%,
• Gold $2,581 down $25.10 or 0.96%,
• WTI crude oil settled at $68 down $0.05 or 0.01%,
• 10-year U.S. Treasury 4.447 up 0.016 points or 0.361%,
• USD index $106.49 up $0.47 or 0.44%,
• Bitcoin $89,652 up $1,345 or 0.15%, (24 Hours) , (New Bitcoin Historic high 93,184)

*Stock data, cryptocurrency, and commodity prices at the market closing

Today’s Highlights

U.S. stocks closed mixed on Wednesday as investors digested the latest consumer inflation data which some think supports the Federal Reserve’s anticipated rate cut in December (over 80% of traders expecting a reduction according to the CME FedWatch tool). Bitcoin briefly reached a new record high above $93,000 in the cryptocurrency market before retreating slightly. The market’s reaction reflects ongoing considerations about inflation, economic growth, and future Federal Reserve policy decisions. Neel Kashkari, president of the Minneapolis Fed, emphasized that inflation data remains crucial for the central bank’s future decisions.

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Click here to read our current Economic Forecast – November 2024 Economic Forecast: Our Index Marginally Declines – We Are Stuck With The Crappy Economy We Have Seen So Far This Year

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Today’s Economic Releases Compiled by Steven Hansen, Publisher:

Gee, what a surprise – in October 2024 the Consumer Price Index (CPI-U) year-over-year growth increased from 2.4% to 2.6%. The CPI-U less food and energy was little changed at 3.3%. As I continue to advise readers – there is significant upward pressures on inflation, and my position is that the Federal Reserve was premature in lowering the federal funds rate.

U.S. household debt balances increased by $147 billion (0.8%) in the third quarter of 2024. The growth was spread across various loan products: Mortgages were up $75 billion, Credit cards up $24 billion, and auto loans up $18 billion. Despite the growth in absolute debt balances, the debt-to-income ratio remains lower than pre-pandemic levels: Current ratio is 82% of disposable personal income. Pre-pandemic ratio (2019) was 86% of disposable personal income.This suggests that debt balances have increased but have not outpaced income growth. Delinquency rates have risen over the past two years, returning to approximately pre-pandemic levels. However, credit card and auto loan delinquencies have exceeded pre-pandemic levels. Here too, I have been reminding readers that inflation adjusted credit growth is well below historical levels. What this tells me is that Americans have become more conservative in their spending habits.

Here is a summary of headlines we are reading today:

• Deepwater Discoveries Set to Reshape Africa’s Energy Landscape
• How War Has Reshaped Ukraine’s Iron Ore Trade
• India’s Adani Group Plans $10B Investment in American Energy
• Russia Considers Lifting Gasoline Export Ban
• Suncor Lifts Dividend as Soaring Output and Refining Drive Strong Profit
• AMD to lay off 4% of workforce, or about 1,000 employees
• Dogecoin soars after Trump taps Elon Musk for department of government efficiency: CNBC Crypto World
• Here’s the inflation breakdown for October 2024 — in one chart
• OPEC+ Faces Double Trouble: China Demand Weakness And Trump’s Policies
• 10-, 30-year Treasury yields end at 4-month highs as investors weigh inflation risks
• As bitcoin trades above $90,000, is now the time to buy?

Click on the “Read More” below to access these, other headlines, and the associated news summaries moving the markets today.

• The Dow closed down 382 points or 0.86%,
• Nasdaq closed down 17 points or 0.09%,
• S&P 500 closed down 17 points or 0.29%,
• Gold $2,607 down $10.80 or 0.41%,
• WTI crude oil settled at $68 up $0.02 or 0.01%,
• 10-year U.S. Treasury 4.429 up 0.121 points or 2.809%,
• USD index $105.91 up $0.37 or 0.34%,
• Bitcoin $89,581 up $2,822 or 3.15%, (24 Hours) , (New Bitcoin Historic high 90,016)

*Stock data, cryptocurrency, and commodity prices at the market closing

Today’s Highlights

The post-election rally in US stocks lost momentum on Tuesday as investors reassessed recent buying and considered the implications of Donald Trump’s potential Cabinet selections. The major stock indices declined. This marked the worst day for both the S&P 500 and Dow Jones since October 31st. Several factors contributed to this pause in the market’s upward trend – Wall Street analysts suggested the post-election surge may be nearing its end, with Bank of America noting investor exposure to US stocks had reached an 11-year high. Policy uncertainty – The market pondered the potential impact of Trump’s likely Cabinet picks, including Marco Rubio as secretary of state, which raised concerns about tougher policies towards China. Inflation worries – There were concerns that Trump’s economic plans could spur inflation. Treasury yields – The 10-year Treasury yield increased by about 12-13 basis points. Some previously strong “Trump trades” also lost momentum with Tesla’s stock turning negative after previous gains. Cryptocurrency-related stocks like Coinbase struggled to maintain their recent increases. Bitcoin, while still trading above $86,000, slowed its pace after nearly reaching $90,000. Investors are now turning their attention to upcoming economic data, particularly Wednesday’s Consumer Price Index report for October, which will be scrutinized for signs of cooling inflation.

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Click here to read our current Economic Forecast – November 2024 Economic Forecast: Our Index Marginally Declines – We Are Stuck With The Crappy Economy We Have Seen So Far This Year

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Today’s Economic Releases Compiled by Steven Hansen, Publisher:

The NFIB Small Business Optimism Index rose by 2.2 points in October to 93.7. This is the 34^th consecutive month below the 50-year average of 98. The Uncertainty Index rose seven points to 110, the highest reading recorded. A seasonally adjusted net negative 20% of small business owners reported higher nominal sales in the past three months, the lowest reading since July 2020. NFIB Chief Economist Bill Dunkelberg stated:

With the election over, small business owners will begin to feel less uncertain about future business conditions. Although optimism is on the rise on Main Street, small business owners are still facing unprecedented economic adversity. Low sales, unfilled jobs openings, and ongoing inflationary pressures continue to challenge our Main Streets, but owners remain hopeful as they head toward the holiday season.

October 2024 Survey of Consumer Expectations shows median one-year-ahead inflation expectations declined by 0.1 percentage point (ppt) to 2.9%, three-year-ahead inflation expectations declined to 2.5 percent, and five-year-ahead inflation expectations rose to 2.8 percent. Labor market expectations improved with households reporting a lower likelihood for higher unemployment, a lower likelihood of job loss, and a higher likelihood of finding a job if they were laid off.

Here is a summary of headlines we are reading today:

• Aethon Eyes $10 Billion Move as Data Demand Grows
• API Presses Trump for Pro-Drill, Pro-LNG Agenda
• Data Center Diplomacy: The New Frontier in AI Geopolitics
• California’s New Fuel Rules Could Raise Gas Prices by $0.50 Per Gallon
• Climate Skeptics See Trump Opportunity to Reverse U.S. Policies
• Demand Concerns Continue to Dominate Oil Markets
• OPEC Oil Production Jumps by 470,000 Bpd as Libyan Output Returns
• Dow falls more than 350 points, retreating from record as postelection rally takes breather: Live updates
• Bitcoin to top $100,000 before year-end, according to bettors on Kalshi
• FAA bans U.S.-Haiti flights for 30 days after Spirit Airlines flight struck by gunfire
• Canada’s Labor Minister ends coast-to-coast port labor turmoil, forcing unions back to work
• Long-Range Ukrainian Drone Strike On Warships In Caspian Sea Worries Kremlin
• 10-year Treasury yield breaks through key resistance levels on way to 5%
• VIX signals stock rally ‘healthy’ for now. Here’s how to use it to spot a bubble.

Click on the “Read More” below to access these, other headlines, and the associated news summaries moving the markets today.