Aug’s core inflation (ex food/energy) was up +0.3%, higher than expected. Energy prices drove more than 50% of the gain in Aug. 2- and 10-yr UST yields are up, and the pre-market look is negative/flat for US equities. Folks are recalibrating bets for the Fed, especially Nov and Dec odds. Most likely the Fed would have liked to see another 0.2% figure, so we’ll probably hear more data-dependency language next week. Also, transport CPI is looking hot, which could keep inflation running hotter for longer. It was driving recent declines in inflation, but now has had a reversal given higher insurance and maintenance/repair expenses.
Both American and Spirit Airlines joined friends Alaska and Southwest by cutting their summer profit forecast due to higher costs, such as energy and labor costs. Also, they didn’t have the same capacity constraints as last summer, so with more supply came less pricing power. Airlines don’t report until mid-Oct, but obviously they’re telling you right now what to expect… Yet in the latest inflation numbers, we can see that airline fares are up for the first time since March. So, maybe they do have some untapped power…
Mortgage demand stalled at 1996 levels, down -27% y/y. Refinances are down -31% y/y due to higher rates. Higher rates are dampening activity.
It looks like you might be better off with chicken soup than OTC oral cold/allergy medicines. The FDA says their main ingredient, phenylephrine, doesn’t actually work to counter nasal congestion. If they remove the ingredient from the market, then the makers will have to pull their product off shelves and reformulate. It sounds like the ingredient might work in spray versions, but those weren’t tested. So, stay tuned.
That’s what BP’s board has today, now that their CEO is out because he didn’t disclose naughty company relationships. It’s the 5th search in 16 years, with the last 3 guys leaving abruptly. The good news is that they have a deep bench to choose from, as well as experienced outsiders.
That’s what the Chinese government is flagging for reasons to ban iPhones for gov-related customers. It’s not lost on us that this is happening after Apple’s latest product reveals. Seems like someone wants to rain on the parade…
Just in time for Halloween, Deutsche Bank is working on some spooky oversight– testing AI tools to try to detect misconduct from the tone of traders’ phone conversations. Imagine the unlucky person who has to listen to all the false positives.