Caveat emptor
– Latin for ‘buyer beware’: the buyer’s responsibility to do due diligence before purchasing a good or service.
I’m happy to report that the inflation rate (over the last quarter) for my favorite breakfast cereals is 0%.
I buy these online, though.
The difference between the online and in-store price can be enormous, at least here in my neck of the woods (neck of the city).
Kellogg’s All Bran: $4.98 online vs. $8.49 in-store (+70%).
McCann’s Steel Cut Oatmeal: $6.98 vs. $13 in-store (+86%).
The Federal Reserve has signalled that a series of disappointing inflation readings are likely to mean US borrowing costs remain higher for longer. The Federal Reserve bank held interest rates at 5.25 per cent to 5.5 per cent, a 23-year high that has been in place since the summer of 2023.
– Reporting from the Financial Times
So – six months to go to the 2024 general election here in the United States.
Will a convicted felon be on the ballot for President of the United States?
Will the Fed have started to cut interest rates by then?
Will the Israeli hostages be free— and the war in Gaza be over?
What about the war in Ukraine? (I don’t think so).
Will the highly pathogenic bird flu virus A(H5N1) have mutated and become a threat to humans?
Another month, another burst of better-than-expected job gains. Employers added 303,000 jobs in March on a seasonally adjusted basis, the Labor Department reported on Friday, and the unemployment rate fell to 3.8 percent, from 3.9 percent in February. Expectations of a recession among experts, once widespread, are now increasingly rare.
– Talmon Joseph Smith writing for the NY Times
I scrolled through a bunch of crypto stamps listed on my regular online stamp marketplaces last night.
Should I buy some? Just one, for fun?
They go for $15 to $50— or more, each.
They may be worth a lot more 5 to 10 years from now.
Hmm. No, I decided. Not yet, anyway. (I don’t own any cryptocurrency, either).
Crypto stamps are valid for postage, but they are really aimed at collectors— collectors of digital works of art, or of the collector’s interests (digital comics, video clips, tweets, emails).
The buyer gets a physical stamp, as well as a digital version of it, that has a non-fungible token (NFT) associated with it. (NFT: a unique cryptographic token that exists on a blockchain, and that cannot be replicated.)
The S&P 500’s (.SPX) forward price-to-earnings ratio— a commonly used metric to value stocks— rose to 20.4 times this week, a level last reached in February 2022, according to LSEG Datastream. That puts it far above the index’s historic average of 15.7.
It isn’t unusual for valuations to climb along with stock prices, and equities can stay expensive for a long time before returning to more moderate levels. Still, some investors believe the index’s growing multiple has made buying into the broad market a less enticing proposition. The S&P 500 has surged 21% since late October, making new record highs along the way.
It briefly crossed the 5,000 level at the end of Thursday’s session, before closing just below the mark.
– Lewis Krauskopf reporting for Reuters
The classic example of a soft landing is the monetary tightening conducted under Alan Greenspan in the mid-1990s. In early 1994, the economy was approaching its third year of recovery following the 1990-91 recession. By February 1994, the unemployment rate was falling rapidly, down from 7.8% to 6.6%. CPI inflation sat at 2.8%, and the federal funds rate sat at around 3%. With the economy growing and unemployment shrinking rapidly, the Fed was concerned about a potential pick-up of inflation and decided to raise rates preemptively. During 1994, the Fed raised rates seven times, doubling the federal funds rate from 3% to 6%. It then cut its key interest rate, the federal funds rate, three times in 1995 when it saw the economy softening more than required to keep inflation from rising.
– Sam Boocker and David Wessel writing for Brookings.edu, Sept. 14, 2023
They all turned out to be wrong— those economists and money managers that opined a year ago that we would have a recession here in the United States by now.
The year is almost out, and jobs are still being added to the economy.
Seattle is reportedly dead last on a list of large cities for spending on holiday gifts, per person. (The city’s 10.25% sales tax and relatively few shopping malls are given the blame.)
Nevertheless— I trust that the the profits from retailers had moved from the red to the black by this Black Friday.
The US economy added 336,000 new jobs to payrolls in September: about double what analysts had expected.
The stock market fell at first (the Fed may have to keep hiking interest rates), but by the early afternoon, the stock market decided that the initial sell-off was overdone, and by the end of trading the Dow Jones Industrial Index was up by 288 points (0.87%).
The estimated $1.55 billion Mega Millions jackpot for the Tuesday night drawing is one of the largest in U.S. history.
The odds to win the big prize is about 1 in 302.6 million.
Yes, you could buy 10 tickets and make it 1 in 30.26 million, but you would still be much more likely to be killed by an asteroid (1 in 1.6 million).
Update Tue 8/8: The largest jackpot in Mega Millions history, worth an estimated $1.58 billion, was secured in Florida on Tuesday night.
The winning ticketholder can choose between the massive $1.58 billion jackpot paid in annual payments or a one-time cash option worth an estimated $783.3 million.
The winning numbers were 13, 19, 20, 32, 33, and the gold Mega ball 14.
– From the New York Post.
The Federal Reserve raised the federal funds rate by a quarter percent today, to a range of 5.0-5.25%.
From the Wall Street Journal: Powell didn’t rule out another rate rise at the central bank’s September meeting, but he emphasized how much the central bank had already done along with the amount of time it can take for monetary policy to cool inflation. “We’ve come a long way. Inflation repeatedly has proved stronger than we and other forecasters have expected, and at some point that may change,” Powell said. “We have to be ready to follow the data, and given how far we’ve come, we can afford to be a little patient, as well as resolute, as we let this unfold.” Fed officials have been concerned that underlying price pressures may prove more persistent as a solid labor market allows workers to bargain for higher pay, making it harder to get inflation down further.
We skipped the light fandango Turned cartwheels ‘cross the floor I was feeling kinda seasick The crowd called out for more The room was humming harder As the ceiling flew away When we called out for another drink The waiter brought a tray And so it was that later As the miller told his tale That her face, at first just ghostly Turned a whiter shade of pale
– From ‘A Whiter Shade of Pale’, song by the English rock band Procol Harum that was issued as their debut record on 12 May 1967.
10.58 pm, Washington DC
From the New York Times:
The legislation passed the Senate by a vote of 63-36, ensuring the federal government will not run out of money to pay its bills on Monday. It now goes to President Biden to be signed.
If you’re not afraid yet, you should be.
-Catherine Rampell, writing in the Washington Post about the latest debt-ceiling increase showdown in Washington (Treasury Secretary Janet Yellen raised the alarm earlier this week, saying the U.S. government could be out of options to pay its bills by June 1)
Apparently it was not enough that the Republican Party had pushed t**** and his now-convicted seditionist supporters on us for four years.
Now the House Republicans and Speaker Kevin McCarthy want military veterans, social security recipients— and really every American in some way— to pay for the previous Republican administration’s tax cuts.
Here are some scenarios that that will likely play out if the United States indeed defaults on its debt (as reported by Catherine Rampell in the Washington Post): 1. U.S. Treasurys get downgraded — as does virtually every other asset on earth. 2. Interest rates rise further for U.S. consumers, businesses and the government. 3. Global investors likely would sell U.S. dollar-denominated assets as confidence in them evaporates; the dollar might lose value in foreign-exchange markets. 4. Stock markets plummet. 5. Companies holding Treasurys suffer hits to both revenue and balance sheets. 6. There might be a scramble to close out trades that people would otherwise hold. 7. Some of the infrastructure underpinning large parts of the financial system (called “central counterparty clearinghouses”) could essentially get overwhelmed and go down.
“We feel like we’re getting closer or maybe even there.”
-Federal Reserve Bank Chairman Jerome Powell today, on whether more federal-fund rate increases are in the offing
The Federal Reserve Bank increased the federal-funds rate by another 0.25% today.
(So another message to the consumer to stop borrowing money, and to stop buying stuff that is not really needed.
The average credit card interest rate is now 24.25%, according to Forbes Advisor’s weekly credit card rates report. Inflation here in the States is now at about 5%.)
From the Wall Street Journal: With the latest increase, the Fed has raised its benchmark federal-funds rate by a cumulative 5 percentage points from near zero in March 2022, the most rapid series of increases since the 1980s. The rate influences other rates throughout the economy, such as on mortgages, credit cards and business loans.
It was a rough week in the US stock market last week, and today went better.
Still, the uncertainty around inflation and a recession in 2023 is not going to be resolved for several more months.
Writes James McIntosh for the Wall Street Journal under a heading ‘Markets History 101: It’s Time to Buy Bonds‘: Even after their big falls, stocks still look very expensive compared to bonds. The optimism that started this year has faded, but investors continue to bet that long-run inflation will come back under control and profit margins will stay high. And many remain wary of bonds, even as yields approach 4% on the 10-year Treasury and are above 5% on six-month bills.
The central lesson of financial history is that, over the long run, U.S. stocks beat bonds. But buying stocks when they are expensive—at 18 times estimated earnings for the next 12 months, they have rarely been pricier outside the dot-com bubble and the post-pandemic boom—is a recipe for substandard returns.
The largest lottery winnings ever is the Powerball payout of US$2.04 billion recorded just last year on Nov. 7, 2022.
As of today, and for tonight’s drawing, the Mega Millions prize is up to $1.35 billion.
From thelotter.com: The biggest jackpots in the world, both starting and awarded, belong to US Powerball and Mega Millions. Both of the lotteries jackpot prizes reset to an estimated US$20 million each time they’re won. This is larger than many lotteries’ biggest payouts! The second-biggest starting prize belongs to Europe’s transnational star: The EuroMillions. The top prize starts at €17 million and can grow with each rollover until it reaches the prize cap.
Update Sat. 1/14: The second largest jackpot in Mega Millions history was sold in Lebanon, Maine (pop. 6,000) at the Hometown Gas & Grill. The winner hasn’t come forward yet.
Fed officials voted unanimously to lift their benchmark federal-funds rate to a range between 3% and 3.25%, a level last seen in early 2008. Nearly all of them expect to raise rates to between 4% and 4.5% by the end of this year, according to new projections released Wednesday, which would call for sizable rate increases at policy meetings in November and December.
– The Wall Street Journal
My shipment of stamps from a seller in South Africa that I had bought in July, arrived today— in a sturdy envelope covered with South African stamps.
(Very ‘meta’ to use stamps to send stamps .. and so much nicer than using a bland computer-generated postage paid label).
‘Goodbye 50, hello 100’
– Financial analyst, commenting on the expected Fed hike rate next week (in basis points)
Inflation was still above 8% in August, and pervasive, found in service sectors as well as consumer goods. Gas prices were down, but not nearly enough to offset the increases everywhere else.
I took the Wall Street Journal’s quick survey to estimate my personal inflation rate. The Bureau of Labor Statistics (BLS) has a CPI basket of 80,000 items which are grouped into categories broad (such as food) and narrow (like bananas).
The BLS revises what it tracks every two years based on the spending habits of volunteers who keep a purchase diary. Everyone’s inflation rate is a little different, of course, because we buy different things and services.