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New York
CNN Business
—
The Fed has spoken.
As we discussed yesterday, the Fed’s 75 basis point move was basically a foregone conclusion. And the central bank kept its promises, announcing that it would raise interest rates again by three quarters of a percentage point – its fourth consecutive move of this magnitude since it began serious attempts to control inflation this spring.
So what did we learn from President Jay Powell’s closely watched speech?
Some highlights:
Markets first soared when the Fed released its policy decision, which contained new verbiage that, in the wobbly world of Fed oversight, counts as scintillating: “In determining the pace of future increases in target range, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.
Traders seemed to read this as: Don’t worry guys, the worst is almost over…
But the party was short-lived.
Powell took the stage and quickly threw cold water on any hopes Wall Street had for a near-term pivot to monetary easing with statements such as:
“It is very premature in my opinion to think or talk about pausing our rate hike. We have a long way to go.
The Dow ended the day down more than 500 points, or 1.6%. The S&P 500 fell 2.5% and the Nasdaq 3.4%.
BIG PICTURE
The Fed is operating on data that offers a murky view of the economy’s health over the past few months. On the one hand, the housing market is cooling markedly, but the rise in borrowing costs so far has not dampened inflation. According to the Fed, part of the problem with inflation is that the labor market is a bit too strong, putting upward pressure on wages, which is putting pressure on demand.
Anticipate: On Friday, analysts will look at the government’s October jobs report, which is expected to show the economy added another 200,000 jobs in October – down from the previous month, but still at an all-time high. . This may reassure the Fed that it is possible to sustain rate hikes without triggering a recession.
CVS and Walgreens tentatively agreed to pay a $10 billion combined to settle lawsuits brought by states and local governments alleging retailers mishandled opioid painkiller prescriptions.
US states, cities and counties have filed more than 3,000 lawsuits against opioid manufacturers, distributors and pharmacies, accusing them of minimizing the risk of addiction and failing to prevent the diversion of pills for illegal purposes.
It’s the season for another edition of everyone’s favorite Nightcap food. Let’s dig.
HARD TURKEY
To no one’s surprise, Thanksgiving will cost a lot more this year. A market research company awards the bonus to 13.5% compared to last year.
Food inflation is no joke: extreme weather, highly contagious bird flu and the war in Ukraine have pushed food prices even higher, especially on the Thanksgiving mainstays. Turkey prices vary by region, but in some cases they are up more than 40% from last year. Potatoes are up 18%. Butter: 27%.
This may mean discounts for some families. Maybe consider a potluck? Or focus on the sides because honestly, who needs the stress of cooking a whole turkey? According to Bloomberg, some cash-strapped Gen Zers opt for soup, salad and pizza, and I fully support them.
One side you might want to consider adding: guacamole.
Yeah. There is a glut of avocados in America and that triggered a big drop in wholesale prices. After peaking at the end of June, wholesale prices for a carton of avocados have fallen by 67%. At the store level, prices were down about 2.6% from a year ago.
Whatever you decide to serve, remember the true meaning of the holiday – to overindulge and discuss politics with loved ones.
SMALL GIFTS
Few people know it, but Starbucks is now the official arbiter of seasons. Fall now begins in August because that’s when Pumpkin Spice arrives. Winter begins immediately after Halloween, because that’s when the holiday mugs arrive. Don’t yell at me, I don’t make the rules…
Anyway, from Thursday, it’s the season for festive haircuts, which Starbucks fans seem excited for. Here’s what the Bux had to say about them: “We’ve always talked about the cups as little gifts, and we hope they will be a festive gift for our customers and in-store partners.”
If someone at Starbucks HQ had consulted me, I would have said the best gift might be – like – free coffee or something. But what do I know?