Inflation comes in right on the screws, but lest we lose track that with this reading, the YoY inflation rate is higher than it was a month ago, with food and shelter remaining sticky. Airfare and used car prices were in the category of larger risers this month. Initial reaction was lower yields as odds increased for a December rate cut, but yields ended up mixed on the day. The 2Y is 4.29% and the 10Y is 4.45%. Stocks were mostly flat with the S&P up slightly and Nasdaq lower, Bitcoin of course was higher.
The NY Fed quarterly report on consumer and household debt was out and the conclusion drawn by NY Fed researchers is that while debt levels are at all time highs, the debt to income levels have been falling and deliquency rates all are indicating these debt values are manageable
.
In Fedspeak, Lorie Logan, cited risks around fully acheiving their dual mandate goals as:
"But I am paying particular attention to three that, in my view, pose the largest potential challenges for monetary policy in the months ahead.One, unexpectedly strong demand or negative supply shocks could keep inflation above the FOMC’s 2 percent goal. Two, tightening financial conditions could trigger a rapid deterioration in the labor market. Or, three, financial conditions could ease too much if the neutral interest rate, the theoretical level that would neither slow nor accelerate the economy, proves to be higher than expected."
To me two of Logan's three concerns point to risk around higher inflation, not lower.
In politics you have Team DOGE, whose actual status and ability to do anything within the government remain a bit vague as Trump continues to round out his appointments. Howard Lutnick, the Cantor Fitzgerald CEO is a name that is rumored to be in the mix now for Treasury Secretary. Lutnick is apparently fond of crypto as Cantor acts as custodian for Tether's UST portfolio. And Republicans officially retained control of the House.
We'll get PPI and more Fedspeak, including Powell on the day ahead.
XTOD: My only crypto take is that if you don’t find some of it incredible you’re not paying attention, and if you don’t find most of it absurd you’re not paying attention, and you could say the same thing about most new industries.
XTOD: The idea that Trump's program -- cumulatively bashing the Fed, raising tariffs, sending workers home, bloating budget deficits -- the idea that it is a highly inflationary program generates about as much consensus among people who follow economics as any proposition I can remember in the past 40 years. @CNN @KateBolduan https://youtu.be/vUpudX_cFoo?si=HTJDKTf9OGEI191V via
@YouTube
XTOD: The FBI seized the Cell Phone and other Electronic Devices of Polymarket CEO Shayne Coplan today, during a Search Warrant on his Home in New York City. Coplan was not Arrested during the Raid, with a Source close to him calling it “Grand Political Theater at its Worst.”
XTOD: The business community is giddy with excitement about the @realDonaldTrump
administration. I am hearing this from everyone, including from people who didn’t vote for Trump.
Business confidence is a self-fulfilling prophecy. Business leaders are becoming more confident about the country and the economy. This means they will be making more investments in our future which will drive the economy and the stock market, reducing the cost of capital and bolstering confidence further, catalyzing more investment and more growth in a self-reinforcing, virtuous cycle.
Merger and acquisition activity is about to explode as there are an enormous number of deals that have been deferred pending a more favorable regulatory environment for transactions. M&A will drive efficiency, greater profitability and growth. It will also enable the return of capital to investors who will seek to redeploy their profits and proceeds in new investment opportunities.
The DOGE and deregulation will drive government efficiency and make America a vastly better and lower-risk place to do business efficiently and effectively.
I am also hearing about non-US companies that are desperate to immediately create a presence on U.S. soil. They are frightened to be locked out of the most important economy in the world. They will build factories and make new investments here to avoid the risk of tariffs and because they don’t have a better place to invest capital.
China’s economy is in trouble. Europe’s is a mess. The U.S. has now become by far the best country for investment.
Growth is about to explode.
XTOD: The irony of ‘work-life balance’ is that you spend all your work time thinking about life and all your life thinking about work.
https://x.com/morganhousel/status/1856759876405346314
https://x.com/LHSummers/status/1856724321684570115
https://x.com/BillAckman/status/1856534377196343466
https://x.com/sentdefender/status/1856802476118479129
https://x.com/GregoryMcKeown/status/1856741061693247630
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