Inflation Appearing Transient?
Core inflation came in at 3.6%, below expectations of 3.7%, and perhaps more importantly, is no higher than last month. Inflation doves are hoping that this is budding evidence that inflation will be transient.
US Stocks were up this week again, continuing the rally that started early in the month. Growth stocks outperformed as infrastructure debate, earnings reports, and inflation dominated headlines.
A Framework for a Deal
Infrastructure took center stage as the White House announced a framework for the $1.8T “Build Back Better” (BBB) social infrastructure bill.
- The hope was that with a framework in place, a vote could be held on the $1.2T bipartisan infrastructure bill that already passed in the Senate.
- That did not happen. Now lawmakers will likely have to wait for the legislative text of the BBB before the House is willing to move, which could take weeks.
What is in a Name
Earnings season continues with over half of companies reported. 82% have reported positive surprises on earnings, while 76% have positively surprised on revenue.
- Not beating expectations this week were Facebook (FB), Apple (AAPL), and Amazon (AMZN). These were rare misses these market heavyweights.
- Facebook announced it is changing its name to Meta, with a new ticker MVRS (standing for metaverse). The goal is to reflect the company’s broad array of offerings (and perhaps de-emphasize the Facebook app which is under scrutiny).
- The scramble is on now to rename FAANG (although nobody cared that Google changed its name to Alphabet… the G stayed).
Inflation Unchanged
Amongst the economics highlights this week was the PCE inflation figure on Friday.
- Core inflation came in at 3.6%, below expectations of 3.7%, and in line with last month.
- Inflation bears pointed to the still high levels and risk of a pricing squeeze as we enter the holiday season, while inflation doves pointed to the flat month-on-month result as evidence of transience.
- Only time will tell which camp was holding the right crystal ball.
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