Consumer confidence:
- September consumer confidence index fell to 103, lower than the expected 105 and down from 108 in August.
- Consumer expectations also fell by 10 points to 73, reaching a five-month low.
Housing market:
- New home sales in August dropped by 8.7% month-over-month, worse than expected.
- S&P Case-Shiller home price index for July showed a 1.1% increase year-over-year and a 0.6% increase month-over-month.
- Despite higher mortgage rates, housing prices continue to rise due to smaller down payments and help from parents.
Interest rates and impact on economy:
- The impact of higher interest rates on the economy has been delayed because most consumers already have mortgages at lower rates.
- Corporations with locked-in low-interest rate debt are not feeling the effects yet, as their net interest expenses remain low.
PCE inflation data:
- PCE is the preferred measure of inflation for the Fed.
- The upcoming PCE data for September is expected to show a year-over-year growth of 3.2% in personal consumption and expenditures.
- This data will likely determine market sentiment and could potentially lead to further stock market selloffs if it indicates higher inflation.
Potential government shutdown:
- If there is a government shutdown before September ends, key economic data such as jobs reports, inflation data, and GDP data may be delayed or unavailable for analysis by the Fed.
Rate hike probability:
- Currently, there is a 74% chance that there will be no rate hike in November and only a 25% chance of a 25 basis point hike.
- The decision will depend on various factors including economic data (which may be affected by potential government shutdown) and market conditions.
Debt Ceiling Shutdowns:
- There have been 14 debt ceiling related shutdowns in modern history.
- Eight of those took place during President Reagan's administration, most lasting a day or two.
- Some notable shutdowns include one in 1981 over a barbecue event and another in 2018 over immigration issues.
Impact of Government Shutdown on Investor Behavior:
- It is hard to scare people who have experienced government shutdowns before into liquidating their portfolios.
- Past episodes show that these shutdowns often result from disagreements between political parties and eventually get resolved.
- Investors are less likely to be swayed by government shutdowns as a reason to sell off investments.
Risks to the Economy:
- The US economy faces various hazards such as a potential auto worker strike, monthly government shutdown, resumption of student loan payments, and rising oil prices.
- While each hazard individually may not cause significant harm, the convergence of multiple risks could create turbulence for an already cooling economy.
- Consumers may feel the impact due to diminished savings, inflation pressure, student loans, and fuel prices.
Leading Economic Indicators:
- Leading economic indicators show a consecutive decline for 17 months since the mid-'90s. This trend has only been seen during the Global Financial Crisis (GFC) previously.
- The declining trend suggests potential challenges for the economy ahead but does not necessarily indicate an immediate crash.
Impact on Household Debt Service Ratio:
- The household debt service ratio shows that debt payment as a percentage of disposable personal income has increased by 10% from its lows since Q4 2007.
- This indicates that consumers are less leveraged and sensitive to interest rates compared to 15 years ago.
- However, factors such as higher borrowing costs and prices may affect affordability for typical American households.
Implications for iPhone Sales:
- The new iPhone release has generated significant interest and sales are expected to be strong.
- Analysts believe that the new iPhone is selling well or better than previous models.
- The impact of interest rates on the cost of purchasing a new phone remains unclear.
Dumb Money Movie Review:
- The "Dumb Money" movie focuses on the events surrounding the meme stock craze and government shutdowns.
- Some viewers found the emphasis on regular people using Robinhood and buying meme stocks engaging, while others felt it overshadowed other aspects of the story.
- Performances by certain actors were praised, but some characters were perceived as underutilized or wasted in their roles.
Market Performance since Fed Rate Hikes:
- Since the first rate hike in March 2022, various market indices have shown mixed performance.
- The Nasdaq 100 is up 5%, S&P 500 is flat, Dow Jones is slightly down, and Russell 2000 is down more significantly.
- These performances suggest ongoing uncertainty and potential further downside.
Analysis of Recovery Slope from Bear Market Lows:
- A comparison of recovery slopes from bear market lows shows that the current rally remains below average.
- This indicates that the pace of recovery has been slower compared to historical patterns.
Median Total Returns by Market Cap Deciles:
- Median total returns for stocks across different market cap deciles show lower returns since the Fed started raising rates.
- Only top two deciles have seen positive returns, while all other deciles have experienced losses during this period.
Potential Opportunities in Bonds:
- Bonds may present opportunities despite expectations of rising rates.
- Buying bonds with reasonable durations could provide stability even if rates continue to rise.
Stocks Worth Watching: Target Corporation:
- Target's decision to close nine stores due to theft and crime raises concerns about the company's operations.
- While this does not necessarily make it an attractive investment, some may consider monitoring its performance for potential opportunities.
Stocks Worth Watching: Dollar General Corporation:
- Dollar General faces challenges due to increased pressure on low-end consumers and macro headwinds.
- The stock has experienced a significant decline but may present opportunities for those willing to take risks.
Stocks Worth Watching: Nike Inc.:
- Nike's chart shows a significant decline, round-tripping the pandemic gains.
- Despite being cheaper than its historical valuation, the stock remains expensive relative to other stocks in the market.