Inflation report roils markets, housing activity continues to be weak, Norway offers a glimpse into the EV future.
September 19, 2022 | FIRESIDE CHARTS
Last Tuesday’s CPI reading of +.1% month over month sent shockwaves through the market as forecasters hoped for a -.1% decrease month over month buoyed by big declines in oil prices. Despite an inflation report with few bright spots, many leading inflation indicators still point to decreases ahead. Investors’ longer-term inflation expectations still look anchored and close to the Fed’s target range. Despite surging mortgage payments new home listings remain stubbornly low keeping reported prices relatively high. Norway’s massive adoption of electric vehicles has yet to decrease their fossil fuel usage.
1.Investors continue to expect lower inflation in the near future but the recent expectations may have fueled the strong reaction to CPI as investors were caught off guard:
2. Core CPI represented the big miss on Tuesday’s report:
BLS.gov data via WSJ Daily Shot 9/14
3. Housing had by far the largest contribution to core inflation increases:
Via WSJ Dail Shot 9.14
4. Housing inflation may lag actual prices as turnover is required to get a nice price and median rents look to have stopped increasing:
5. Wages are arguably the most important driver of longer-term inflation and their growth is still elevated but has potentially peaked:
Data sourced from Atlanta Fed. Wage Growth Tracker – Federal Reserve Bank of Atlanta (atlantafed.org)
6. Home prices remain stubbornly high despite sky rocketing mortgage payments as new listings continue to fall:
7. And remain at historically low levels:
Trading economics July 1997 to July 2022 total active home listings in the US
8. If the fed can continue hiking rates after the recent yield curve inversion it will be relatively unprecedented:
Via WSJ Daily Shot 9.12
9.Almost every new car sold in Norway is an electric one, but they have yet to consume less overall oil:
Via UBS Wealth Management
10. Fed-Ex recent earnings announcement has markets spooked given how economically sensitive their business is, but they are no longer the third largest package carrier in the US:
Disclosure: The charts and infographics contained in this blog are typically based on data obtained from 3rd parties and are believed to be accurate. The commentary included is the opinion of the author and subject to change at any time. Any reference to specific securities or investments are for illustrative purposes only and are not intended as investment advice nor are they a recommendation to take any action. Individual securities mentioned may be held in client accounts. Past performance is no guarantee of future results.