Consumer prices this past week fell more than expected. October inflation was 3.2%—essentially flat. Lower gasoline prices helped, and higher shelter costs hurt. But digging deeper into the report provides some interesting—even strange—details.
Start with food prices, which rose 0.3% in October. Certain food items stuck out. The price of uncooked beef roasts increased 4.1% from September, while pork chops rose 3.5%. According to Department of Agriculture reports, cattle and hog inventories have been declining recently. Meanwhile, prices for apples dropped a whopping 7.9%.
Food wasn’t the only funky result. Prices of laundry equipment slid 5%, while photographic equipment and supplies grew 6.8%. Women’s outerwear fell 5.9%. But wrapping the coat will cost more, as stationery, stationery supplies, and gift-wrap prices rose 3.5%. And tickets for sporting events jumped 3.6%. “These are things that could be affected by seasonal factors,” says Raymond James’ chief economist Eugenio Aleman, noting that the National Hockey League began its regular season on Oct. 10, and the National Basketball Association, on Oct. 24.
Most items aren’t heavily weighted in the total report, says Aleman. “There are some that are so small in the overall CPI that basically it’s probably not affecting much of the direction of overall core CPI,” he says. Still, when it comes to inflation perception, as opposed to reality, consumers may differ with the economists.
Write to Angela Palumbo at [email protected]
Last Week
Markets
The House and Senate passed a bill to temporarily fund the government into the new year. Left out: aid to Israel and Ukraine. The October consumer price index came in lower than expected, at 3.2% for the year (essentially flat for October), sending Treasury yields down and stocks up. Jobless claims rose. It was a big week: the
Dow Jones Industrial Average
was up 1.94%, the
S&P 500
gained 2.24%, and the
Nasdaq Composite
rose 2.37%.
Companies
President Biden and China President Xi Jinping met in San Francisco and discussed a range of issues.
Boeing
won a $52 billion order from the Emirates for its 777X Widebody planes, and China weighed lifting its buying freeze on 737 MAX planes. The $771 billion Federal Retirement Thrift Investment Board voted to exclude Chinese and Hong Kong stocks.
Berkshire Hathaway
disclosed selling off stakes in
General Motors
and
Johnson & Johnson.
Microsoft
introduced two new AI chips. The OpenAI board pushed out co-founder and CEO Sam Altman over a lack of candor in his communications.
Deals
Johnson Associates says Wall Street deal bonuses in January could be down an average of 25%…Canadian miner
Teck Resources
agreed to sell 77% of its coal assets to Swiss-based
Glencore
for $6.9 billion in cash; Glencore plans to spin off a coal company in two years. Japanese steel maker
Nippon Steel
retains a 20% stake, South Korea’s Posco 3%…
Alibaba
canceled a spinoff of its cloud-computing business and a listing of its grocery chain.
Write to Robert Teitelman at [email protected]
Next Week
Monday 11/20
The Conference Board releases its Leading Economic Index for October. Consensus estimate is for a 0.6% month-over-month decline. The LEI has fallen for 18 consecutive months. Despite strong GDP growth this year, the Conference Board still expects a shallow recession in first-half 2024.
Tuesday 11/21
Nvidia
reports third-quarter fiscal-2024 results. The poster child for this year’s AI-driven Nasdaq rally of 35% is expected to earn $3.37 a share on sales of $16.2 billion. That would represent 481% year-over-year EPS growth and 173% revenue growth. Shares of the largest semiconductor company by market value are up 237% this year, the best performer in the S&P 500 index.
Wednesday 11/22
The Federal Open Market Committee releases the minutes from its early-November monetary-policy meeting. The FOMC has held the federal-funds rates steady at 5.25%-5.50% since July, and Wall Street is convinced that the Fed is done hiking interest rates for this cycle.
Thursday 11/23
Equity and bond markets are closed in observance of Thanksgiving.
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