M Notes: Mon, 9-23

LAST WEEK:

Markets:  Buoyed by the Fed cutting their interest rate, Markets went up last week. 

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

Fed Balance Sheet:  $7.109 Trillion (last week… down -$ 6 Billion).  Reminder: their balance sheet was closer to $4 Trillion before the Pandemic.  

Fed Meeting:  It wasn’t going to be a question of if the Fed’s Open Market Committee would lower their interest rate, but by how much.  It was either going to be a ¼ point or a ½ point reduction.  In seeking to “recalibrate” their interest rate, the Fed lowered it a ½ point.  There are two more Fed meetings this year.  The expectation is they will continue lowering their rate at least ¼ point at each meeting.  

Housing:   Existing home sales were down -2.5% in August and were down -4.2% Y/Y.  Housing Starts were up +9.6% in August and were up +3.9% Y/Y.   

Industrial production:  It was up +0.8% in August, higher than the consensus of +0.2%.  

Jobless claims:  The weekly number came in at 219,000.  The four-week average came in at 228,000.

National Debt:  $35.127 Trillion (last week… up +$19 Billion).  

Retail sales:  They were up +0.1% in August and were up +2.1% Y/Y.

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THIS WEEK:

Focus of the week:  Inflation.   The metric the Federal Reserve watches the most is the Personal Consumption & Expenditures Index.   The August PCE is expected to go up a tick of +0.1%, and drop from +2.5% down to +2.3% Y/Y.  The PCE updates come out early on Friday morning.  Remember that while Inflation has come down from +7.0% (June 2022), the impact on prices is cumulative.  That’s why we are seeing higher prices be sticky at the grocery store.   

Calendar:   New home sales (Wed); durable goods orders, the final read on Q2 GDP, jobless claims (Thu); and the PCE (Fri).