The Profit Margin: November 18, 2024
Statistic of the Week
Is “friendflation” dampening your social life? Thirty-seven percent of Americans surveyed said that they are not spending as much time with their friends because the economic cost of socializing has become prohibitive. Forty-four percent of the Gen Z cohort surveyed said that they have chosen saving money over going out to socialize, as have 38% of Millennials and 23% of Baby Boomers. The average annual cost for an American to maintain friendships is $5,184. This figure also includes special occasions like weddings, birthdays, and trips.
Global Perspective
Most of the inflation concern over the past week centered on the U.S. However, those in Argentina received some good news. The Argentinian year-over-year inflation rate fell to 193% in September, the first recording below 200% since November 2021. The monthly increase was 2.7%.
Market Moving Events
Tuesday: Housing Starts, Building Permits
Thursday: Jobless Claims, Existing Home Sales, Leading Economic Indicators
Friday: Consumer Sentiment
Commentary
Markets started the week off on a strong note but quickly reversed course. There were three major concerns: (1) the stubbornly high inflation rate, (2) changing expectations over Fed policy, and (3) possible delays in implementing the incoming Trump administration’s tax and economic policy initiatives. All three major indices finished in the red for the week. The DJIA, which had its first ever close above 44,000, fell 1.24%.1 The S&P 500 hit a record on Monday, only to finish the week down 2.08%.2 And the tech-heavy Nasdaq faired the worst, dropping 3.15%.3 Interest rates moved higher as bond prices declined. The 10-year Treasury finished Friday with a yield of 4.44%, up 0.13% from the week prior.4
Inflation continues to remain stickier than anyone would like. Both the CPI (chart right) and PPI reports showed that inflation, while having cooled, remains persistent and is complicating policy for the Federal Reserve. Beyond inflation, the economy is performing remarkably well. This caused Chair Powell to note, “The economy is not sending any signals that we need to be in a hurry to lower rates.”5 Investors, anxious to see further rate cuts, did not appreciate this sentiment, which contributed to last week’s selloff. (We should note that a further 0.25% rate cut is still expected in the month of December). The week ahead is notably light on economic data releases. Mortgage rates are above 7% for the first time since July,6 further reinforcing the weakness we have seen in residential investment. In addition, several Fed Governors will be speaking and Nvidia will report its earnings.
Chart of the Week
The Consumer Price Index year-over-year reading ticked up for the first time since March. The CPI showed inflation rising to a rate of 2.6% in October, up from 2.4% in September. The core year-over-year rate, excluding food and energy, stands at 3.3%.
Source Materials
Market Moving Events:
MarketWatch.com
Chart of the Week:
Clearnomics, Bureau of Labor Statistics, The Economist
Statistic of the Week:
USA Today
Global Perspective:
The Economist
Commentary:
1. Bloomberg, The Economist
2. Bloomberg, Barron’s
3. Bloomberg
4. MarketWatch.com
5. Investor’s Business Daily
6. Investor’s Business Daily