Morning Report: Headline CPI comes in hot

Posted on December 12, 2023 by Brent Nyitray

Vital Statistics:

Stocks are lower this morning after the Consumer Price Index report. Bonds and MBS are down.

The Consumer Price Index came in slightly above expectations, rising 0.1% on a month-over-month basis. The Street was looking for a 0% increase. The core rate, which excludes food and energy, rose 0.3%, in line with expectations. Falling energy prices helped offset increases in shelter and the index for used cars. The majority of the increase (70%) in the core rate was driven by shelter.

The report probably doesn’t move the needle for the FOMC meeting, which starts today. The expectation is that the Fed will maintain rates at current levels, however a lot of attention will be focused on the dot plot and economic projections within the report.

The Fed Funds futures are now roughly a 60 / 40 bet against a rate cut in March.

The CFPB is suing Wells Fargo and other banks over pricing concessions. The practice of concessions to save a deal has been going on forever in mortgage banking, but the regulators would like to end the practice entirely. “As long as pricing exceptions exist, pricing disparities exist,” said Ken Perry, founder of a Washington-based compliance firm for the mortgage industry. “They’re the easiest way to discriminate against a client.”

Small Business Optimism decreased 0.1% in November, according to the NFIB. Like many non-governmental economic reports, the NFIB Small Business Optimism index doesn’t comport with the official narrative of 5%+ growth in Q3. Optimism remained well below the long-term all year, while a net 17% of firms reported sales declines. Inventory boost might have boosted Q3 numbers, but the lack of follow-through in sales makes it look like Q4 might be weak. The number of firms raising prices fell again to a net positive 25%, which is below the peak of 60% earlier this year.

The Senate has introduced legislation which would ban hedge funds from owning single-family rentals. The report is concerned that 577,000 homes in the US are owned by institutional investors. Of course there are 144 million homes in the US, so as a percent, this isn’t much. It certainly isn’t enough to affect the market.

Filed under: Economy |

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23 Responses

  1. jnc4p's avatar
    jnc4p, on December 12, 2023 at 9:56 am said:

    Some interesting quotes on what a possible second Trump term would look like:

    “Trump Reassures His Loyalists That He’ll Do Better Next Time
    By Shawn McCreesh
    …

    But even among the die-hards, the never-not-Trumpers around me, there is an undercurrent of concern. What true right-wingers feel, and will sometimes say, especially when they’re liquored up, but almost never on the record, is that Trump has often been a flake and a disappointment. Many feel frustrated by how, Supreme Court aside, he squandered his time in office, allowing his administration to be hijacked by the go-go globalists from Goldman Sachs and his skinny son-in-law. Bannon got kicked aside pretty quick. As some in the room see it, Trump never went far enough but instead got rolled by the deep state, then screwed up COVID and lost reelection. So while the MSM panics about a coming Trump dictatorship, the fear in this room is the very inverse of that. What if we get him to the finish line and he fumbles like last time?

    Perhaps Trump senses this. It struck me how much he seemed to want the room to understand he has patched things up with Bannon, that they’re back to where they began, ready to rip the face off the Establishment for real this time. Trump kept pointing from the stage down at Bannon and cooing. “You don’t mind if I go off teleprompter, Steve? … Remember, Steve? … Steve was there! … Steve! Steve! … Bannon, should we do it?””

    https://nymag.com/intelligencer/2023/12/trump-reassures-his-loyalists-that-hell-do-better-next-time.html

    This looks like a hot mess:

    “George Santos earning so much on Cameo, he picks up tab for political pals while hanging with Rep. Lauren Boebert in NYC
    By Social Links for Ian Mohr
    Published Dec. 10, 2023, 5:31 p.m. ET”

    https://pagesix.com/2023/12/10/gossip/george-santos-with-rep-lauren-boebert-at-late-night-nyc-bash/

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  2. jnc4p's avatar
    jnc4p, on December 12, 2023 at 9:57 am said:

    Brent, this may be of interest:

    “Lina Khan’s Rough Year When a liberal star took over the FTC, she was expected to break up big business. Instead, critics say, she’s broken the agency.
    By Ankush Khardori,”

    https://nymag.com/intelligencer/2023/12/lina-khans-rough-year-running-the-federal-trade-commission.html

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  4. Let the mutherfuker burn!'s avatar
    Let the mutherfuker burn!, on December 12, 2023 at 1:29 pm said:

    Fascinating insight into the fracture point in the Republican Party.

    https://x.com/jdvance1/status/1734574417827569995?s=46&t=vSGsUlnc4rLxcUf7zfUiHg

    Also, dayum

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  5. Let the mutherfuker burn!'s avatar
    Let the mutherfuker burn!, on December 12, 2023 at 1:33 pm said:

    lol! These people hate you and have no fear of you.

    https://x.com/repthomasmassie/status/1734557133272662526?s=46&t=vSGsUlnc4rLxcUf7zfUiHg

    It also proves that Jan 6 was a lazy man’s riot because if they truly thought it was an insurrection there is no way they would defy the base on stuff like this.

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  6. Let the mutherfuker burn!'s avatar
    Let the mutherfuker burn!, on December 12, 2023 at 6:43 pm said:

    What right wing pundits don’t understand, and hence their surprise by Clinton’s words, is that this is mainstream Democratic thinking, its conventional wisdom among Democrats (and a portion of the center right) – a Known, Known.

    https://x.com/westernlensman/status/1734686897614520582?s=46&t=vSGsUlnc4rLxcUf7zfUiHg

    This, among some other things, is irreconcilable. There is no coming back from this in my opinion, it only continues to escalate.

    In a sincerity, how is this resolvable peacefully?

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  7. jnc4p's avatar
    jnc4p, on December 13, 2023 at 10:43 am said:

    “And you may ask yourself, “Well, how did I get here?””

    “Why This Math Professor Objects to Diversity Statements

    What happens when the noble goal of social justice is invoked in ways that corrupt rather than improve?
    By Conor Friedersdorf
    …
    When did he first fret about the political environment in American universities? Looking back, he recalls steady growth in three broad trends that he began to notice sometime in the early 2000s. “Initially, as an American professor, you were in good standing if you taught well, did reasonable research, and were a good colleague, which was demonstrated by your willingness to do committee work,” he recalled. “The first trend I noticed was that to count as a ‘good citizen,’ you were increasingly expected to contribute, so to speak, to the betterment of humanity at large.”

    In particular, he recalled the National Science Foundation introducing a requirement starting in 1997 to describe the “broader impacts” of research proposals and how that changed the experience of participating as an expert on panels convened to judge grant applications. In a few cases, applicants he knew as “excellent mathematicians” and “pretty decent individuals” would describe their research objectives with care, knowledge, and enthusiasm, whereas in the mandatory “broader impact” section, they would have “nothing better to say than that they plan to write joint papers with women and supervise female graduate students,” something that outraged some members of the panel.

    “I understood the outrage, of course, but for me it was an indication that this perhaps well-intended requirement was in fact ill-advised, as it pushed otherwise decent people to behave in a silly, sometimes obnoxious manner,” he reflected. “It also appeared that the university and college policies in hiring, and to some extent promotions and merit raises, were increasingly motivated by the desire to effect some positive social changes, in the form of a contribution to DEI.””

    https://www.theatlantic.com/ideas/archive/2023/12/professor-american-academia-parallels-soviet-union/676305/

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  9. Brent Nyitray's avatar
    Brent Nyitray, on December 13, 2023 at 11:04 am said:

    Nate Silver on the schism between liberals and leftists.

    https://www.natesilver.net/p/why-liberalism-and-leftism-are-increasingly?utm_source=profile&utm_medium=reader2

    I agree that we are breaking down into 3 camps.

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