Weekly Well-th Notes

By Presidio Wealth Partners on November 16, 2023

Data-driven insights on the markets and economy

Third Week of November 2023

1. Looking Up

The S&P 500 rallied 1.91% on Tuesday with the release of U.S. inflation data that indicated Fed rate hikes may be over. The S&P 500 and Dow are up 7.2% and 5.4%, respectively, in November. The Nasdaq is up 9.7%, its biggest monthly gain since January. Leading the S&P 500 rally was the tech sector, which had been hardest hit by rate hikes of late; Tesla saw shares increase more than 6%. Bank stocks also saw jumps as investors were hopeful that the economy could skirt a recession.[i]

2. Hope All Around

The 10-year Treasury yield fell to 4.45% Tuesday after the CPI release,[ii] breaching 5% for the first time since July 2007.[iii] Safe-haven buying after concerns that the war in Israel could escalate has dropped the 10-year yield since early October.

3. Cool as a Cucumber

As mentioned, the cool consumer price index (CPI) report left investors hopeful that inflation is easing. CPI was flat in October from September but increased 3.2% year-over-year, both figures beating Wall Street estimates. Core CPI rose 0.2% and 4%, compared to the forecasted 0.3% and 4.1%. Energy prices declined 2.5% for the month, offsetting a 0.3% increase in the food index.[iv] Investors expect this to signal the end of the Fed’s rate hikes.

4. Take Me With You!

Producer price index (PPI) sentiment was congruent with the CPI reading. The Labor Department reported Wednesday that its PPI dropped 0.5% in October from September, indicating easing inflationary pressures. This is the first decline since May and the largest since April 2020. PPI still rose 1.3% year-over-year, down from 2.2% year-over-year in September.[v] This reading also leads investors to believe the Fed may be done with rate hikes for now.

5. Turkey Trot Away

Good news for anyone planning a road trip this Thanksgiving: Gas prices are dropping nationwide. The national average for a gallon of unleaded gas dropped to $3.35 on Tuesday, the lowest since February. Even in California, where prices are some of the highest in the U.S., a gallon of unleaded gas has fallen to $5.06 from $5.64 a month ago and $5.14 last week.[vi] Gas prices are influenced by oil prices, which have been hovering around their lowest levels since July.

6. Open for Business (Still)

The House passed a bill to fund the government through early next year. The bill is expected to pass through both the Senate and President Biden; this must be done before end of day Friday to avoid a government shutdown. This continuing resolution allows funding of parts of the government until January 19, 2024 and others until February 2, 2024. The final House tally was 336 in favor and 95 opposed, with 127 Republicans joining 209 Democrats to pass the bill.[vii] With this resolution, newly elected House Speaker Mike Johnson shows that he is willing to reach across the aisle to pass needed legislation.

7. Making This House a Home

Mortgage demand has reached its highest level in 5 weeks after interest rates moved lower. After a sharp drop the previous week, the average interest rate for 30-year fixed-rate mortgages remained unchanged at 7.61% last week. Mortgage demand rose 2.8% last week. Applications to refinance a home loan increased 2% last week and were 7% higher than the same week one year ago. Applications for a mortgage to purchase a home increased 3% from the previous week and were 12% lower than the same week a year ago.[viii]

8. Physics Legend?

Auldin Maxwell, a British Columbia 15-year-old, set his first Guinness World Record in 2021, stacking 638 Jenga blocks on a base of a single block. He has since broken his own record – not once, but twice. He currently holds the record at 1,840 Jenga blocks stacked on a single block and another record for 900 giant Jenga blocks stacked on a single block. Hallmark has turned his story into the film A World Record Christmas, in which Auldin has a cameo for his on-screen debut.[ix] To recap, at 15 years old, Auldin holds two Guinness World Records, has inspired a film and is a potential physics legend in the making.

[i] Han, Lisa Kailai and Alex Harring, “S&P 500 notches best day since April, Dow leaps nearly 500 points on soft inflation report: Live updates,” CNBC, November 14, 2023, https://www.cnbc.com/2023/11/13/stock-market-today-live-updates.html. Accessed November 15, 2023.

[ii] Pound, Jesse, Lisa Kailai Han and Sophie Kinderlin, “10-year Treasury yield tumbles below 4.5% on cool October inflation report,” CNBC, November 14, 2023, https://www.cnbc.com/2023/11/14/us-treasury-yields-investors-look-to-key-inflation-data.html. Accesses November 15, 2023.

[iii] Ganguly, Sarupya, “U.S. Treasury yields have peaked, say strategists for fourth straight month,” Reuters, November 14, 2023, https://www.reuters.com/markets/rates-bonds/us-treasury-yields-have-peaked-say-strategists-fourth-straight-month-2023-11-14/. Accessed November 15, 2023.

[iv] Cox, Jeff, “Inflation was flat in October from the prior month, core CPI hits two-year low,” CNBC, November 14, 2023, https://www.cnbc.com/2023/11/14/cpi-inflation-report-october-2023.html. Accessed November 15, 2023.

[v] Wiseman, Paul, “US producer prices slide 0.5% in October, biggest drop since 2020,” AP News, November 15, 2023, https://apnews.com/article/inflation-producer-prices-federal-reserve-f1e6dbcf56e45b3bc43022bb0fa94307. Accessed November 15, 2023.

[vi] Lee, Medora, “Over the river and through the woods for under $4. Lower gas cuts Thanksgiving travel cost,” USA Today, November 14, 2023, https://www.usatoday.com/story/money/personalfinance/2023/11/14/gas-prices-drop-thanksgiving-travel-boost/71581945007/. Accessed November 15, 2023.

[vii] Cox, Chelsey, “House passes bill to avoid government shutdown, Senate to vote next,” CNBC, November 14, 2023, https://www.cnbc.com/2023/11/14/house-passes-bill-to-avoid-government-shutdown-senate-to-vote-next.html. Accessed November 15, 2023.

[viii] Olick, Diana, Mortgage demand climbs to the highest level in five weeks after interest rates move lower,” CNBC, November 15, 2023, https://www.cnbc.com/2023/11/15/mortgage-demand-at-highest-level-in-5-weeks-after-interest-rates-fall.html. Accessed November 15, 2023.

[ix] Hooper, Ben, “15-year-old breaks his own Jenga stacking records, inspires Hallmark film,” UPI, November 14, 2023, https://www.upi.com/Odd_News/2023/11/14/Guinness-World-Records-Jenga-stacking-Hallmark-movie/1701699986053/. Accessed November 15, 2023.