📈The Good, The bad, The Ugly.
Will it get better before it gets worse?
Good afternoon friends and investors.
Sorry for the later post today; humans run this newsletter.
In other news, the personal saving rate in October was at 2.3%. The lowest level since 2.1% in July.
Wage growth has cooled in recent months but remains above the pandemic pace, indicating that spending could reach a limit.
Highlights:
PCE index report (good)
More unemployment numbers (good, but not good)
Binance to the resuce
Mortgage demand is rising
S&P 500
The market rebounded this week after Fed Chairman Powell said the federal reserve was thinking about slowing the pace of interest rate hikes.
Not only that, but another inflation indicator, the PCE (Personal Consumption Expenditure), fell below expected. So, again, giving the fed another reason to cool off on the hikes.
This doesn’t necessarily mean that the bottom is in. Instead, investors are just looking for any reason for the fed to change the trajectory of interest rates, which is short-term bullish.
Many media outlets still say that a brutal recession is coming in 2023.
Conflicting Numbers, Yet Again.
The personal consumption expenditure index report came in this week. It measures a complete picture of consumer prices and how much they’ve changed over time.
It rose 6% in October, down from September’s 6.3%.
“Given this inflation data, the Fed should be comfortable with a downshift in the pace of rate hikes at the upcoming meeting,” said the chief economist for LPL Financial.
The only problem is the job market…
The US labor market added 263,000 jobs in November, higher than expectations, and is holding firm near the previous three months of data.
The Jobless rate rose slightly to 3.7% but is still at historically low levels.
Low unemployment and wage gains are helping fuel consumer spending, which is the main engine pressuring inflation.
The layoffs across the broader economy are primarily focused in the tech sector, which is the most vulnerable to interest rate hikes.
Other businesses are quickly scooping up laid-off workers as job openings remain well above pre-pandemic levels, even in sectors such as real estate.
Other firms are hesitant to lay off employees because they found it challenging to rehire as the economy recovered from the pandemic shutdown.
Binance to the Rescue!
The largest crypto exchange in the world, Binance, is allocating another billion dollars for its industry recovery fund.
Increasing the fund to a total of two billion.
The recovery fund will be used to “buy distressed crypto assets and support the industry,” Binance CEO Changpeng Zhao said.
The crypto market has seen several exchanges go out of business this year since the massive decline in asset prices.
Including BlockFi, the most recent firm to file for Chapter 11 bankruptcy.
Mortgage Demand is Rising
Mortgage demand rose last week, but the numbers are still far below their previous year's.
Mortgage applications to purchase a home rose 3% for the week but are still down 41% from a year ago.
Refinance applications were up 2% this week but are still down massively (86%) from the same week one year ago.
The mortgage rates are dropping slightly compared to last month’s high, but they are still twice what they were at the start of the year.
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