Archive for October 2022

As you watch the 118th baseball World Series, rooting for the right team is critical. The 60-year-old Houston Astros won their only World Series in 2017. That year the S&P 500 rose 21.6%. The Philadelphia Phillies, the oldest continuously run, single-name, single-city, franchise in American sports, have two WS victories. In 1980, the S&P 500…

The Friday File: While headline inflation is up 8.2% Y-o-Y and down from 9% in June, candy and chewing gum inflation is skyrocketing. Its currently running at 13.1% Y-o-Y, its highest rate since at least 12/98. Moreover, it’s rising increasingly quickly. The culprit, numerous droughts hurting sugar-beet production in northern US states. Skittles are up…

While real GDP grew at an impressive, annualized rate of 2.6% in 22Q3, the details were uninspiring. Net exports were the main growth driver, adding 2.77 points to GDP, government spending also helped adding 0.42 of a point. Inventories were less negative contracting by just 0.70. Most troublingly consumer spending at 70% of GDP added…

The problem facing the Fed is that monetary policy works with long and variable lags. The IMF reports that rate changes have peak impact on GDP after a year, but on inflation after 3-4 years. Other recent research pegs peak inflation impact in developed nations at 2-4 years. This suggests that Fed difficulties are just…

From 11/03 through 2/20, M2, a money stock measure including cash, checking and savings accounts, and money market funds grew 5.9%/year. Between 3/20 and 2/22, the worst of Covid-19, it grew 18.2%/year, three times as quickly, and peaked at 26.9% growth/year in 2/21. Now, M2 is growing by 2.6%/year and has been steadily falling since…

The Strategic Petroleum Reserve, established in the 1970s to protect against unexpected oil supply reductions, was filled slightly beyond capacity on 12/27/09 when it held 726.6 million barrels across all four storage sites along the Gulf of Mexico. For most of the last decade the SPR held 700 million barrels, but inventory had fallen to…

The Friday File: In 1951, global cameras sales totaled a million. By 1980, that number had risen to 15 million, by 1990 sales topped 30 million and by the late 90s sales approached 40 million. Then digital cameras appeared and in 2010 sales hit 121 million. Then cell phones appeared and killed standalone cameras. In…

Great Britain, the world’s sixth biggest economy, faces continued turmoil with the resignation of Prime Minister Truss. She assumed the job 44 days ago, making her the shortest-serving British PM, breaking the record of George Canning who died after 119 days in office. Her replacement faces bond vigilantes ready to punish, a lack of fiscal…

With 30-year mortgage rates steadily climbing and now at 7%, it’s unsurprising the NAHB Housing Market Index fell to 38 in October, the 10th straight monthly decline, and outside of Covid, its worst level since 8/12. First-time mortgage applications are down 38.3% Y-o-Y and refi is down 85.9% Y-o-Y. Lastly, single-family starts are off 18.5%…

While Beijing was to release its GDP data today, it’s been postponed indefinitely. Hours before that announcement, China’s top planning agency said growth had “rebounded significantly” and remained “outstanding”. A raft of other economic data was also suddenly and indefinitely postponed. These delays are all you need to know about the current condition of the…