We will be giving some macro economic market updates on a weekly basis. No equity recommendations will be given in this commentary, and we encourage you to contact us if you have questions regarding any observations.
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This weeks issue: Inflation, Interest rates, Core inflation, Gasoline prices, Financial markets, Small cap stocks, Xi in U.S., China U.S. relations, Geopolitics, Sentiment on China, Energy consumption, Emissions targets, Coal consumption, Wind turbines, Solar energy, Fertilizer stocks, Fertilizer producers, Food shortages, Nutrien stock, Mosaic stock, Israel Chemicals stock, Producers of nitrogen and potash fertilizers, Ukraine and Russia, Interest rates, 2025 interest rates.
Prices hit the brakes.
October’s inflation numbers were released on Tuesday morning by the U.S. Bureau of Labor Statistics and the release reflected flat prices in October.
October’s CPI came in at 0.0% versus an estimate of 0.1% pointing to incremental progress in the Federal Reserve’s effort to get prices under control. Cheaper gasoline prices took the edge off U.S. inflation slowing the annual rate of inflation down to 3.2% from 3.7% in September. However, the core inflation rate rose 0.2% in October falling to 4% over the last year. This suggests some stickiness to inflation as the core inflation rate has remained near 4% for the last few months well above the FEDs 2% target. Many economists use the core inflation rate rather than the headline rate as they believe it is a predictor of future inflation trends.
This soft headline inflation data could push the FED to leave rates alone at their December meeting. The FED’s next decision and last of the year is due December 13th. The FED has raised interest rates 4 times in 2023 but has not changed its policy rate over the last 2 meetings.
Markets took this announcement quite positively on Tuesday as investors piled back into equities: