This post continues the analysis of the Fed Funds Rate’s behavior during the positive inflation surges between 1951 and 2024.2 Specifically, we look at the inflation of the 1960s.
From a photo by Giorgio Trovato on Unsplash
Much of the information in this report comes from the monthly emails I receive from John Bateman. He does public outreach for NOAA and in particular NCEI. I could find the same information and more on the NCEI website but John Bateman produces a good summary so I use it or most of it. I also add additional information from NCEI or other NOAA websites. At the end of the article, I provide links that will get you to the full reports and much additional information. This month NCEI which is based in North Carolina had a lot of computer problems so the email from John Bateman is combined U.S. and World and not as complete as usual.
| My comments if any are in boxes like this one. |
| This is the temperature trend for the month of September in North America. It covers a larger geographical area than just CONUS but I find it easier to read. It looks like the September temperature was a record. |
| The temperature for the world, land and ocean did not hit a new record. |
| The temperature for the world, (land only) also did not hit a new record. Notice that land temperatures increase faster than land and ocean as water takes more energy. |
Short Range Forecast Discussion
NWS Weather Prediction Center College Park MD
Sat Oct 26 2024
Valid 12Z Sat Oct 26 2024 – 12Z Mon Oct 28 2024..Showers and thunderstorms over parts of the Lower Mississippi/Ohio
Valleys on Saturday……Rain and higher elevation snow over parts of the Northeast Sunday
night……Rain moves into the Pacific Northwest and light snow over the higher
elevations of the Cascades and Northern Intermountain Region…A front extending from the Northeast Coast to the Mid-Atlantic and then
westward to the Southern Plains moves eastward over the Atlantic while the
western end of the boundary lingers over the Gulf Coast States through
Monday. In the wake of the front, scattered light rain will develop over
parts of the Northeast through Saturday night. Along the southern edge of
the boundary, scattered showers and thunderstorms will develop over parts
of the Lower Mississippi/Ohio Valleys through Saturday evening. Light rain
will develop over parts of the Carolinas early Sunday through early Monday
morning. Furthermore, onshore flow off the Atlantic will create scattered
rain over parts of Florida through Saturday afternoon/evening.Meanwhile, a front will move onshore over the Pacific Northwest Saturday
morning, moving inland to the Northern Plains and the Great Basin by
Monday. The storm will produce rain over parts of the Pacific Northwest
through Monday. The rain will move into Northern California late Saturday
evening and continue into Sunday evening. Additionally, overnight Sunday,
light snow will develop over the highest elevations of the Cascades and
the Northern Intermountain Region.Elsewhere, a front will move southward out of Central Canada on Sunday
morning, advancing into the Northeast by Sunday evening, producing
scattered rain and snow over the higher elevations of the Northeast
through Sunday night.
*Stock data, cryptocurrency, and commodity prices at the market closing
S&P 500 closed up slightly, ending a three-day losing streak. Major indexes logged weekly losses overall. Treasury yields rose. Uncertainty remains over the Federal Reserve’s next move on interest rates. November US jobs report due next Friday. Tight presidential election a week later. Earnings reports from “Magnificent Seven” tech companies next week from Alphabet, Meta, Microsoft, Apple, and Amazon. Capital One and Discover merger is expected to be completed in early 2025, subject to approvals.. Apple was downgraded by KeyBanc from Sector Weight to Underweight, citing concerns over iPhone sales and upgrades.
New orders for manufactured durable goods in September 2024 was down 2.1% year-over-year. Manufacturing remains in a recession in the US. Although durable goods import data is not available for September, durable goods imports has averaged growth of $25 billion per month in 2024 – while domestic produced durable goods have been declining at the rate of $5 billion per month in 2024. So the bottom line is that Americans are buying durable goods – just not from US manufacturers. Having said that, the number one exporter in the US is Boeing who is having issues with quality as well as a strike.
University of Michigan Consumer Sentiment lifted for the third consecutive month, inching up to its highest reading since April 2024. Surveys of Consumers Director Joanne Hsu opinion:
Sentiment is now more than 40% above the June 2022 trough. This month’s increase was primarily due to modest improvements in buying conditions for durables, in part due to easing interest rates. The upcoming election looms large over consumer expectations. Overall, the share of consumers expecting a Harris presidency fell from 63% last month to 57% in October. Sentiment of Republicans, who believe that a Trump presidency would be better for the economy, rose 8% on growing confidence that their preferred candidate would be the next president. In contrast, sentiment declined 1% for Democrats. As usual, Independents remain in between, with a 4% gain in sentiment this month. Regardless of the eventual winner, a sizable share of consumers will likely update their economic expectations based on the results of the election.
Here is a summary of headlines we are reading today:
Click on the “Read More” below to access these, other headlines, and the associated news summaries moving the markets today.
Short Range Forecast Discussion
NWS Weather Prediction Center College Park MD
Fri Oct 25 2024
Valid 12Z Fri Oct 25 2024 – 12Z Sun Oct 27 2024…Showers and thunderstorms over parts of the Middle Mississippi/ Ohio
Valleys……Rain over parts of the Northeast…
…Rain moves into the Pacific Northwest…
A wave of low pressure over the Middle Mississippi Valley will move
northeastward off the Northeast Coast by Saturday evening. The system will
produce showers and thunderstorms over parts of the Middle
Mississippi/Ohio Valleys through Friday evening. The system will also
create rain over parts of the Great Lakes through Saturday afternoon.
Overnight Friday, scattered rain will develop over parts of the Northeast
through early Sunday morning. Moreover, scattered rain will develop along
the front over the Southern Mid-Atlantic from Saturday evening into
Sunday. Rain will also grow over parts of the Lower Mississippi Valley
from early Saturday into Sunday.Meanwhile, a front will move onshore over the Pacific Northwest Friday
night and inland through Sunday morning. The storm will produce rain over
parts of the Pacific Northwest late Friday night. The rain will continue
to inch farther inland on Saturday, moving into Northern California late
Saturday night and continuing into Sunday.Elsewhere, onshore flow off the Atlantic will trigger scattered rain over
parts of Florida from Saturday afternoon into Sunday.
*Stock data, cryptocurrency, and commodity prices at the market closing
The Nasdaq Composite gained, led by Tesla’s strong performance. The S&P 500 closed up while the Dow Jones Industrial Average fell extending losses from the previous day. Tesla reported its biggest quarterly profit in over a year. Tesla shares surged more than 20%, its best day in over a decade. CEO Elon Musk forecasted 20% to 30% EV sales growth next year. The company grew adjusted EBITDA margins for the first time in over a year. IBM shares fell over 6% following a third-quarter revenue miss. Boeing shares sagged around 1% after striking workers rejected a pay deal.
Sales of new single-family houses in September 2024 were up 6.3% above September 2023. The median sales price of new houses sold in September 2024 was $426,300. The average sales price was $501,000. The seasonally-adjusted estimate of new houses for sale at the end of September was 470,000. This represents a supply of 7.6 months at the current sales rate. New home construction is one of the bright spots in the economy.
The Chicago Fed National Activity Index (CFNAI ) three-month moving average, CFNAI-MA3, decreased to –0.19 in September from –0.14 in August. A zero value for the CFNAI has been associated with the national economy expanding at its historical trend (average) rate of growth; negative values with below-average growth (in standard deviation units); and positive values with above-average growth. The CFNAI is my favorite coincident indicator, and shows a continuing weak economy.
Kansas Fed manufacturing activity declined modestly in October 2024. The month-over-month composite index was -4, up from -8 in September. Manufacturing remains in a recession in the US.
In the week ending October 19, the advance figure for seasonally adjusted initial unemployment claims 4-week moving average was 238,500, an increase of 2,000 from the previous week’s revised average. The previous week’s average was revised up by 250 from 236,250 to 236,500. There is no sign of a recession in this data.
Here is a summary of headlines we are reading today:
Click on the “Read More” below to access these, other headlines, and the associated news summaries moving the markets today.
Short Range Forecast Discussion
NWS Weather Prediction Center College Park MD
Thu Oct 24 2024
Valid 12Z Thu Oct 24 2024 – 12Z Sat Oct 26 2024…Pleasant weather continues across most of the country through the end
of the week……Well above-average temperatures continue over the Central and Southern
U.S…A quiet and relatively uneventful fall weather pattern will continue to be
in place across the continental U.S. through the end of the week, with
high pressure keeping mainly sunny skies in place across the Central and
Eastern U.S. and the warm conditions continuing across the Plains and
southern tier states. A cold front approaching the East Coast will herald
the arrival of more autumnal temperatures for Thursday with highs falling
10 to 20 degrees for many areas from the Mid-Atlantic to the Northeast
compared to Wednesday. Even warmer conditions are likely for the central
and southern Plains to close out the work week, with highs running up to
20 degrees above normal for late October, with the potential for
additional record highs.In terms of precipitation prospects, scattered showers and thunderstorms
are likely for the Midwest states ahead of the next cold front dropping
south across the Northern Plains on Thursday and into Thursday night. A
more concentrated corridor of heavier rainfall is expected from eastern
Iowa to northern Illinois on Thursday, with the potential for a few strong
thunderstorms in the warm sector of the surface low. There may also be a
few showers in easterly flow across the Florida Peninsula. Out West, some
showers and high elevation snow are expected from eastern Idaho to Wyoming
and southern Montana with a shortwave upper trough moving through the
region. Looking ahead to Friday, onshore flow ahead of a Pacific cold
front will lead to light to moderate rain developing across western Oregon
and Washington, but not considered an atmospheric river event.The combination of very warm conditions, dry grounds, and increased winds
across the Central Plains will raise the potential for wildfires, based on
the SPC fire weather outlook on Thursday. There may also be some fire
weather concerns across portions of the Mid-Atlantic and the Northeast on
Thursday in the wake of a dry cold front, with dry conditions and gusty
winds developing.
*Stock data, cryptocurrency, and commodity prices at the market closing
Stocks slumped, with major indexes falling: The 10-year Treasury yield rose to 4.24%, reaching levels not seen since July. Doubts about potential Federal Reserve rate cuts weighed on investors. Interest rate volatility hit its highest level since December 2023. Busy earnings day, highlighted by Boeing and Tesla reports. Tesla (TSLA) earnings due at 5:30 pm EST, with focus on the cheaper EV model Robotaxi . Boeing (BA) reported a large quarterly loss – what a surprise :). McDonald’s (MCD) stock fell over 5% after its Quarter Pounder burgers were linked to an E. coli outbreak. Several big tech names lagged: Meta down over 3%. Amazon down over 2.5%. Nvidia down over 2.5%.
Total existing-home sales fell 3.5% year-over-year in September 2024. The median existing-home price was $404,500, up 3.0% from one year ago. Existing home sales has been declining all this year (see blue line in the graph below). NAR Chief Economist Lawrence Yun stated:
Home sales have been essentially stuck at around a four-million-unit pace for the past 12 months, but factors usually associated with higher home sales are developing,” said . “There are more inventory choices for consumers, lower mortgage rates than a year ago and continued job additions to the economy. Perhaps, some consumers are hesitating about moving forward with a major expenditure like purchasing a home before the upcoming election. Moderating home price increases are welcome news for home buyers. With wage growth now outpacing home price appreciation, housing affordability will improve.
According to the October 2024 Beige Book, overall economic activity was largely unchanged across most Federal Reserve Districts. Two districts reported modest growth. Manufacturing activity declined in most districts. Banking sector activity was steady to slightly, with mixed loan demand. Consumer spending reports were mixed, with shifts toward less expensive options. Housing market activity has generally held steady, though affordability remains an issue. Commercial real estate markets were mostly flat. The agricultural and energy sectors saw flat to modest declines. Employment increased slightly overall. Worker turnover was low and layoffs remained limited. Hiring focused more on replacement than growth. Worker availability improved in many areas. Wages continued to rise at a modest to moderate pace. The pace of wage increases slowed in some areas. Inflation continued to moderate, with slight to modest price increases in most districts. Some food products saw sharper price increases. Home prices edged up in many areas. Consumers showed increased price sensitivity. Input prices generally rose faster than selling prices, compressing profit margins. Insurance and healthcare costs saw more acute price pressures. Note that the Beige Book is a compilation of anecdotal information from various sources, including business leaders, economists, and market experts – bottom line is that this is unsubstantiated opinion.
Here is a summary of headlines we are reading today:
Click on the “Read More” below to access these, other headlines, and the associated news summaries moving the markets today.
Short Range Forecast Discussion
NWS Weather Prediction Center College Park MD
Wed Oct 23 2024
Valid 12Z Wed Oct 23 2024 – 12Z Fri Oct 25 2024…Very pleasant weather continues across most of the country through the
end of the week……Well above-average temperatures continue over the Central and Eastern
U.S…A quiet and relatively uneventful fall weather pattern will be in place
across the continental U.S. through early Friday, with high pressure
keeping mainly sunny skies in place across the Central and Eastern U.S.
and the very pleasant conditions continuing. Temperatures will once again
be quite mild and feel more like September across much of the East Coast
region on Wednesday ahead of a cold front, which will herald the arrival
of more autumnal temperatures for Thursday with highs falling 10 to 20
degrees for many areas from the Mid-Atlantic to the Northeast. Even
warmer conditions are likely for the central and southern Plains to close
out the work week, with highs running up to 20 degrees above normal for
late October, with the potential for a few record highs.In terms of precipitation prospects, some light showers are possible
across portions of the Great Lakes region and into New England ahead of
the cold front where forcing for ascent will be greatest, and remaining
dry farther to the south given a paucity of moisture and lack of dynamics.
A second area of scattered showers and thunderstorms is likely for the
Midwest states ahead of the next cold front dropping south across the
Northern Plains on Thursday and into Thursday night. There may also be a
few showers in easterly flow across the Florida Peninsula. Out West, some
showers and high elevation snow are expected from eastern Oregon to the
Northern Rockies with a shortwave upper trough moving through the region.The combination of very warm conditions, dry grounds, and increased winds
across the Central Plains will raise the potential for wildfires, based on
the SPC fire weather outlook on Thursday. The same holds true for
portions of southern New England on Wednesday.
*Stock data, cryptocurrency, and commodity prices at the market closing
Investors were processing a recent bond market sell-off and incoming earnings reports. Doubts are growing about the Federal Reserve’s ability to cut rates aggressively or maintain current levels in November. The 10-year Treasury yield stabilized around 4.2% after surpassing this level on Monday for the first time since July. General Motors raised its guidance for the third time this year, with shares closing up over 10%. GE Aerospace and Verizon saw share price declines following mixed Q3 reports. Anticipation is building for Tesla’s earnings report, expected on Wednesday. Gold prices reached another record high as investors sought safety amid geopolitical tensions and the upcoming U.S. presidential election.
Richmond Fed manufacturing activity remained slow in October 2024. The composite manufacturing index increased from −21 in September to −14 in October. Of its three component indexes, shipments increased from −18 to −8, new orders rose from −23 to −17, and employment increased from −22 to −17. Being a negative number shows manufacturing remains in a recession.
Here is a summary of headlines we are reading today:
Click on the “Read More” below to access these, other headlines, and the associated news summaries moving the markets today.