Stocks were off slightly, down by 0.25% in the US. Outside the US, equities increased by 0.24%. Stocks sold off on Wednesday on the inflation news (see below) and on a weak 30-year treasury auction but recovered most of the loss on Thursday and Friday.
Inflation was up by 6.2% in October, that was the biggest one-year increase since 1990 and the fifth month in a row that inflation broke 5%. For the month, prices were up by 0.9%. Home prices were up by 16% in the third quarter compared to one year ago.
The Fed has been buying $120 billion in bonds each month, they have announced they will cut that amount by $15 billion a month. That means it will take eight months to put an end to the bond buying. And in the meantime, the Fed will be adding another $420 billion to its balance sheet. This, while inflation continues to accelerate. The Fed seems to be way behind the curve on this.
US stocks were up by 2.3% and international equities by 1.23%. As expected, the Fed said it would begin its unwind of its bond buying program but said interest rates would remain the same. Covid numbers continue to improve and to top it off, Pfizer announced it has developed an anti-viral that was 89% effective, topping the recent drug that Merck is bring to market (50%).
The October jobs report was excellent. The economy added 531,000 jobs, the biggest gain in three months. August and September numbers were revised up by 235,000. The current economy trails the pre-Covid total job number by 4.2 million. The unemployment rate fell to 4.6% from 4.8% and the participation rate remained steady at 61.6%. On the negative side, US worker productivity fell at an annualized rate of 5%, the largest quarterly decrease since 1981.
Jack Hough’s column in this week’s Barron’s is titled “Weird Finance”, and talks about NFTs, cryptos and more of the craziness that zero percent interest rates and money everywhere has unleashed. Somewhere down the line, if people ask “what were they thinking?”, this article might be a good place to start.
Tesla’s market cap increased by over $300 billion during the last week of October. On Tuesday, Avis went up in price, at its high, by 217% on Tuesday, but would close 35% off that number. Two examples of some of the mania in this market.