Market Matters

This week we saw a nice bounce, which was started by Fed Chairman Powell’s renomination hearing with the Senate Banking Committee, as Powell was not as bearish as the market was expecting him to be. It seems that the market is consolidating after the steep sell-off we saw at the start the year. The Fed appears to be looking to raise rates in their March meeting, along with several more rate increases this year. Best to be defensive here and not fight the Fed.

 

Initial Jobless Claims

Initial Jobless Claims rose +23k to 230k for the week ending January 8th vs. the prior unrevised print of 207k. This puts the 4-week moving average up another +6k to almost 211k. Continuing claims, which lag a week, fell by -194k to 1.56mln, now the lowest level since June 2, 1973.

 

Producer Price Index (PPI)

The Producer Price Index for December rose a modest +.2% on headline, with the core reading (ex-food/energy) increasing by +.5%. There were also revisions to November’s data with the headline index up +.2% to +1.0%, and the core measure up +.2% to +.9%. Looking back at December’s YoY print, the index remained at a revised up +9.7%, while the core rose to +8.3% from +7.9% (revised from +7.7%). Final demand prices in December for food and energy both fell, down -.6% and -3.3%, respectively. Trade prices rose by +.8%, while transportation and warehousing costs were up +1.7%. Goods prices declined -.4% on the month but was offset by an increase of +.5% in services.

 

Consumer Price Index (CPI)

The Consumer Price Index for December rose by +.5% on headline, bringing the YoY rate to +7.0%. That is now the highest headline inflation price since 1982. Food prices rose +.5%, now up +6.3% YoY, while energy prices fell -.4%, bringing their YoY rate down to +29.3%. Stripping out food and energy prices, core CPI rose +.6%, bringing its YoY rate up to +5.5% and the highest since 1991. Within the data, airfares rose +2.7%, lodging away from home rose +1.2%, and apparel prices rose +1.7%. Auto prices also remained hotter with new car prices up +1.0% and used car prices up another +3.5%. Inflation continues throughout the goods side with core goods CPI up +1.2%, bringing the YoY rate up to +10.7%. While core services did cool a bit, up +.3%, we still see the YoY rate up to +3.7%.

 

Small Business Optimism Index

The NFIB’s Small Business Optimism Index increased by +.5 to 98.9 for December. This is now a 3-month high print, although far from June’s 102.5. According to the report, “inflation is at the highest level since the 1980s and is having an overwhelming impact on owners’ ability to manage their businesses.” Also worth noting, 22% of business owners said inflation was the single most important problem ahead. In addition, the net share of owners expecting better business conditions six months out rose +3.0 points to a negative -35 points. Finally, 49% of owners reported job openings they couldn’t fill.