Equity futures are popping higher after U.S. inflation data out this morning showed CPI (y/y) coming in lower than expected at 7.7% vs 7.9%, and down from the prior print of 8.2%. Today’s CPI print is expected to factor into the Fed’s December 14 rate (hike) decision where current expectations peg the increase at 50 bps. U.S. inflation peaked at 9.1% in June this year, a high not seen in over 4 decades. However, since then, the pace has slowed with consecutive readings in July, August, and September when annualized inflation came in at 8.5%, 8.3%, and 8.2% respectively. The positive print is showing continued moderation, a welcome sign for those looking for any data to support a possible shift in tone from the Fed.
Deal – no deal. It was a risk-off day for investors yesterday as a runoff in crypto assets sent equity markets lower. Shortly after Binance announced it agreed to acquire FTX, a rival cryptocurrency exchange, the company backed out, saying that FTX’s liquidity issues were beyond their control and could not help. Even before Binance announced its withdrawal, FTX CEO shared with investors that the company needed a cash infusion to avoid bankruptcy to close the gap on an apparent $8 billion shortfall. Popular cryptocurrencies bitcoin and etherium continued their decline yesterday, plunging 16% and 17% respectively with bitcoin trading below $16,000, the first time since November 2020. However, despite the uncertainty, both digital assets are trading up this morning.
With some battles left to be won, the Republicans find themselves limping toward House control after disappointing midterm elections that saw their expected wave of wins evaporate and left a path for Democrats to keep the Senate. The result was all the more surprising because concerns about stubborn inflation and crime had been the dominant theme before the vote. But yet again polls failed to capture the mood of an uneasy electorate that wasn’t just preoccupied with the economy and the price of gas at the pump. The results send a mixed message from voters, who are not just worried about the slowing economy but also about the health of the country’s democracy.
We are sure that housing was part of the conversation during midterms with mortgages rates continuing to rise in the U.S. with 30-year fixed at 7.14%, the highest in almost 20 years. The overall measure of applications, which includes refinancing, is down to the weakest level since 1997, while an index of refinancing activity fell to a 22-year low. The housing market is one of the most sensitive areas of the economy to changes in interest rates, and the hawkish Fed in 2022 has led to deterioration in real estate.
Does talk of stocks and bonds leave you feeling overwhelmed? You're not alone. A recent Maru Public Opinion poll showed a majority of Canadians lack confidence in their understanding of investments. While 70% reported having a "thorough understanding" or knowing a "good deal" about proper personal financial management, only 10% felt confident in their knowledge of stocks and bonds. With our public schools offering little in the way of financial literacy for students, the statistics don't surprise us. But don't be discouraged, financial publications such as The Launch Pad and working with a seasoned wealth advisor can help close the information gap, build confidence, and ease any angst.
Yeezys without the Ye. Adidas said it would begin selling the highly sought-after shoe based on Yeezy designs, but under its own branding, as early as next year, as the company disclosed they “own all the IP” related to the shoe thereby allowing them to reproduce them at their discretion. The termination of its partnership with the controversial artist is expected to cost Adidas over $500 million in revenue. While the original yeezy shoe were must-have items for many young and old, it remains to be seen how the new shoe will do without the fanfare in an already crowded sneakers market.
Diversion: This is what experience can do.