Same Picture, Different Data

The BEA handed markets a generally cooperative set of data on Thursday, one session on from a rousing rally triggered by a dovish interpretation of Jerome Powell's remarks at a Brookings event. PCE prices rose 0.3% MoM in October, less than the 0.4% economists expected, while core prices rose just 0.2%, also cooler than forecasts (figure below), and consistent with the favorable CPI report released earlier this month. The figures came on the heels of upward revisions to the price indexes inclu

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7 thoughts on “Same Picture, Different Data

  1. Here’s a blog post by Jon Wolfenbarger. He’s a former Wall Street investment banker. He’s warning that the cards are stacked against equity markets for the foreseeable future and offers charts to back that up.

    It’s a bunch of technical analysis with charts showing the CBOE Volatility Index, or the VIX (VIX), bouncing off a trend line that in the past has shown prior bottoms for that index and peaks in the S&P 500 this year.

    Despite a nearly year-long bear market, the bull/bear ratio reached historically bullish levels at the early 2022 market peak and remains in very bullish territory, he says.

    “This bearish technical setup for the stock market, combined with overly bullish investor sentiment in the face of the Fed hiking rates into a recession, suggests that the stock market is likely to start another major bear market selloff soon,” Wolfenbarger says.

    He sees that recession starting any day now and ending around late 2023 or early 2024.

  2. “the personal saving rate—personal saving as a percentage of disposable personal income—was 2.3 percent (table 1).”

    Add in the surge in credit card balances and you have to wonder about the sustainability of retail activity, no?

    1. Yeah, I guess. But trying to time that is impossible. Americans have ~$3 trillion in headroom on those cards. And outside of the bottom 20% of households (by income), Americans have more than $3.5 trillion in checking account balances and cash versus pre-pandemic levels. Sure, card limits could get slashed and those cash balances have already been run down (the figures are from Q2), but the drop in the savings rate is just like every other 2021/2022 statistic: Distorted by 2020’s distortions. Nobody knows what’s going on or where anything’s headed.

      1. Folks in the states have long opted to live for today. Some by choice, some not. Betting against the consumer has not been a good investment strategy in recent years.

        But how much more debt will consumers gladly add once the post-Covid “relief” spending on hospitality and travel is satiated?

      2. A big part of my Q1 demand crash & earnings reckoning thesis was built on the end of the student debt repayment moratorium happening Jan 1, but that can was kicked 9 months down the road last week. That points to stickier demand and all that comes with it.

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