It’s Friday the 13th, but pre-market futures are not spooked. Major indexes are up double or triple digits at this hour, finishing a challenging week where traders and investors have needed to absorb inflation metrics throughout the past five trading days.
The Dow is currently +56 points, the S&P 500 is +25 and the Nasdaq is +193 currently. While the Dow is down for now six straight trading days, the Nasdaq notched new all-time closing highs just two days ago. Over the past week of trading, only the Nasdaq is in the green; over the past month, the Nasdaq and S&P 500 are positive.
Inflation Prints Flat-to-Higher: CPI, PPI, etc.
Both CPI (retail inflation) and PPI (wholesale inflation) prints for last month came out earlier this week, with the CPI in-line with expectations but the PPI jumping higher. The good news is that this wholesale inflation print higher is fully reflected by a spike in food prices; otherwise, core PPI prints were flat-to-down.
Jobless Claims have moved notably higher, but overall monthly employment numbers still illustrate a positive jobs market. That said, we appear to have arrived at a trough of around +150K new jobs created per month, while retiring Baby Boomers and even some Gen-Xers are putting in a high rate of American leaving the job market. And if we see a downturn in labor from here, we could see effective negative employment rates at some point in the new year.
This is likely the biggest reason the Fed is expected to forge ahead with another 25 basis-point (bps) interest rate cut next week. This would bring the Fed funds rate to 4.25-4.50%, 100 bps lower than the highs we’d endured from July 2023 to September 2024. Many analysts feel the Fed would be comfortable keeping rates hovering somewhere around 4% — a rate hopefully high enough to keep rampant inflation from re-entering the economy without crushing the labor market.
Import/Export Numbers Improve from Last Month
Ahead of today’s opening bell, we see November Import and Export Prices. Headline month-over-month Imports swung to a positive +0.1% from an expected -0.2%, from a downwardly revised +0.1% for October. This is the fourth +0.1% print on Imports for 2024 (with one reporting month to go) and seventh of 11 months in positive territory. Ex-fuel, this number rises to +0.2%.
Year over year, Imports reached +1.3% — the highest reported month of the year since +1.7% back in July. It’s also above the +1.0% analysts were projecting. However, with the specter of aggressive tariffs on the horizon, we may chalk up high Import numbers to pulling forward business from what would have transpired early in the new year.
Exports, typically, are better for the economy with higher monthly figures, and for November we see 0.0% — up from an expected -0.3%. Year over year, Exports rose half a percentage point from expectations to +0.8% — the hottest print since July of this year. Again, we may see a big change of scenery on Exports with the incoming presidential administration. For now, we see positive Export numbers.
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