M Notes: Mon, 12-23

LAST WEEK:

Markets:  The Fed can giveth, and the Fed can taketh away.    

S&P roller coaster last week:  Up, Down, Down significantly, Down a touch, and Up a lot.

Fed Balance Sheet:  $6.889 Trillion (last week… down -$9 Billion).  Reminder: their balance sheet was closer to $4 Trillion before the Pandemic.  

Fed Meeting:   In their last meeting of the year the FOMC cut their interest rate a ¼ point, as expected.  But they changed their guidance for how many cuts were expected for 2025:  from four, down to two.  Markets responded negatively.  The Dow dropped almost 1,300 points in the final two hours of the Wednesday trading session.  

GDP:  The final read on Q3 GDP came in stronger than expected.  Expectations for the final read was expected to stay at +2.8%.  The actual number came in at +3.1%.  

Housing:  Housing Starts declined -1.8% in November, and were down -14.6% Y/Y.  Existing home sales were up +4.8% in November, and were up +6.1% Y/Y.   

Industrial production:  First, the October number was revised from -0.3% down to -0.4%.  Then the expectation for the November number, which was +0.3%, missed coming in at -0.1%.  

Inflation:  The PCE was only up +0.3% (less than consensus) in November, and ticked up from +2.3% to +2.4% Y/Y.  Two weeks ago:  Consumer Inflation (the Consumer Price Index) increased from 2.6% up to 2.7%, as expected.   Wholesale Inflation (the Producer Price Index) was expected to rise from 2.2% up to 2.6%.  The actual number came in much higher, at 3.0%.  I guess Inflation isn’t over yet.  

Jobless claims:  The weekly number came in at 220,000.  The four-week average came in at 225,000.

National Debt:  $36.105 Trillion (last week… up +$19 Billion).  

Retail sales:  They beat expectations.  The expected number for November was +0.5%, but the actual number came in at +0.7%.  

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THIS WEEK:

Focus of the week:  It’s Christmas week.  Hopefully the Markets will feel festive.

Calendar:   Durable goods orders (Tue); and jobless claims (Thu).    

Holidays:  Market will close early for Christmas Eve on Tuesday, and will be closed Christmas Day on Wednesday.