October 13, 2022

Hello everyone,

The CPI number is out – 0.4% inflation increase in September. An 8.2% increase in September relative to a year earlier. Food, energy, and housing costs all ticked higher. The Dow sank 500 points on the news and has since rallied 600 and then closed at 800 higher on a historic one-day turnaround. Go figure! I did tell you that volatility would be the order of the day with the CPI coming out. Expect more of the same until the next CPI figure comes out.

So, that means that the economy is still buoyant, and people are spending. It all comes back to Economics 101–supply and demand. The supply and demand imbalance led inflation to increase starting in early 2021, following years of low inflation. Covid-19 lockdowns, stimulus funds, and other factors combined to crimp global supply lines, alter Americans’ consumption of goods and services, and fuel a surge in job openings and wages. The war in Ukraine also created supply bottlenecks and raised global prices of commodities such as oil and food. It’s been a convergence of factors that have been unprecedented and highly complex. Inflation is on the rise across global economies. Global inflation is expected to rise to 8.8% in 2022 from 4.7% in 2021 but decline to 6.5% in 2023 and to 4.1% by 2024, according to the International Monetary Fund.

So, what does the Fed do in November?

Expect a .75% rate hike.

The Fed will do whatever it has to do, to bring down inflation.

Next on the market’s radar are bank earnings.

My thoughts and prayers are with all the people who are dealing with floods in NSW, VIC, and TAS. Having your home swamped by floodwater is heartbreaking and traumatic. I hope friends and family rally to help others who are in need.

There is lots of noise in America about the mid-term elections. Once they are over, the market could breathe a sigh of relief. We shall see.

Black Friday sales are on - record-breaking deals are being offered. Have you done your Christmas shopping? Or bought your latest want (not need) item?

Happy Thursday or Friday, wherever you may be.

Cheers,
Jacque

Change your thoughts and you change your world.

-- Norman Vincent Peale

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