“Someone’s sitting in the shade today because someone planted a tree a long time ago.”
-Warren Buffett
Here’s what you need to know this week:
- Stocks rise due to a light (delayed) inflation report
- A likely rate cut comes later today
Better Late Than Never
Stocks continued their relentless march upwards last week as we received good news on multiple fronts. Stocks dipped and then rebounded on news of thawing tensions in the trade war (more on that in a moment) and then leapt higher on the release of September Consumer Price Index (CPI) report on Friday. The September CPI report was originally slated to release on October 15th but was delayed due to the government shutdown.
Despite the delay, the report delivered good news. Annualized inflation printed at 3.0%, a 0.1% increase from August but also 0.1% lower than analysts expected[1]. “Core” inflation (inflation less food and energy) also came in at 3%:
This (relatively) light inflation report all but confirms that the Federal Reserve will reduce interest rates at their next meeting. Speaking of:
Fed Day
The Federal Open Market Committee (FOMC) will conclude discussions this afternoon at 1:00 PM CT and investors overwhelmingly expect them to announce a new interest rate cut. As of writing, the bond market is assigning a 99.9% probability that the Fed will reduce rates by 25 basis points (0.25%)[2]. The path from here is murkier: the longer the government shutdown goes on, the less economic data we’ll have to go on, and as a result the Fed will be less informed. This uncertainty places extra emphasis on Fed Chairman Jerome Powell’s press conference this afternoon, and analysts will closely parse his comments for clues as to the Fed’s thinking.
In other news, it appears that there has been major progress in the trade war. Top US and Chinese trade negotiators announced a preliminary consensus on multiple topics over the weekend, teeing up a potential final deal later this week. President Trump has already announced deals with Malaysia, Cambodia, Thailand and Vietnam as part of his expansive trade trip to Asia, and is expected to finally meet with Chinese President Xi Jinping to cap off the trip[3]. Both sides have hinted that this meeting will deliver a sweeping new trade deal, and markets have risen to record highs this week in response. If a deal is struck, markets are likely to continue their march higher.
What Else
- Hurricane Melissa continues to swell in the Caribbean and is now larger than Hurricane Katrina in 2005
- Food and medicine have been delivered into Gaza as a part of the ceasefire with Israel
- Ukrainian and European officials will meet in the coming days to discuss a potential ceasefire plan with Russia
- LSU fired coach Brian Kelly less than 24 hours after losing to Texas A&M
- The
- The LA Dodgers took a 2-1 series lead over the Blue Jays in the World Series after a record-breaking 18 inning game
What We’re Reading
Strange red lights known as “jellyfish sprites” were spotted in the sky in rural New Zealand this week. These sprites are thought to be electrical discharges from large storms and typically are only visible for a few seconds. A group of astronomers visiting New Zealand were planning on photographing the Milky Way due to New Zealand’s low level of light pollution and ended up snapping some amazing photos of these red sprites as well as the heavens. Click below to see photos and videos of the strange phenomenon:
What’s Happening Downtown
The Bricktown Ballpark is hosting Curse of the Comet this Thursday and Friday. This event transforms the Comet’s ballpark into a giant haunted house and is open to adventurers of all ages. Click below to learn more and to purchase tickets:
To read more from our blog, click here
Written by: Kane Ogle, CFP®
Steve Beck, Kane Ogle, CFP®, Amber Eduvigen, CFP®, Cale Olbert, CFP®, Brett Valentine, CFP®, Brandon Ingerson, Bill Daniel, Sam Postich, Jenni Hess