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This week has been … exhausting.
The force of Hurricane Helene continues to be felt in South Carolina, North Carolina, Georgia and Virginia and, as of late Friday night (October 4), nearly 700k people remained without power. While the overall impact on the national economy is thought to be rather small, the regional economy is sure to be affected for the near future. This means considerable distortion in weekly jobless claims numbers, as has been the case with previous disasters.
While the cost of rebounding from the storm may be a mild headwind to the national economy, the US dodged a potentially major one in the form of the port strike, which came to a swift conclusion shortly after commencing. Nobody wanted to poke the inflation bear right after it’d been “tamed” and a long port strike might have done just that.
This week is the one year anniversary of the October 7th attack of Israeli citizens by US-designated terrorist group Hamas. It’s also the one year anniversary of Hezbollah’s decision on October 8th to get in on the fun and start hurling rockets, drones and precision-guided missiles from Lebanon towards Israel’s northern towns. To date, the interplay between Hamas, Hezbollah, Houthis, Iran and Israel — while dramatic and deadly — has done little to actually move markets.
Things might be changing on that front. Israel recently took out Hezbollah’s leader Hassan Nasrallah, a man whose C.V. included endless examples of international terrorism, including involvement in the death of over 200 American marines in Lebanon in the early ‘80s. Iran retaliated by sending 180-200 ballistic missiles towards Israel earlier this week.
All of this has sparked a lot of hand-wringing in DC, Europe and elsewhere about what comes next. Will Israel attack Iran’s nuclear facilities? More importantly for the money pushers out there, will it attack Iran’s oil fields? What effect would that have on the price at the pump?
We mean, let’s be real here, people: if there was one lesson from S3 of Industry on Max, it’s that money is everything and nobody … and we mean absolutely nobody … wants higher gas prices at the pump damaging Fall travel plans and Jerome POW-ell’s next inflation reading. Warmongers and capitalists took delight in the geopolitical volatility, as reflected here ⬇️ …
… and here ⬇️:
President Biden’s administration spent the week sending mixed messages about what Israel should do next: one minute they indicated that Israel would retaliate; the next they emphasized de-escalation. Former President Trump criticized President Biden and implied that Israel should go after Iran’s nuclear program. Vice-President Harris keeps threading a needle so that both Michigan and Pennsylvania like her. There’s an election in a month, in case you forgot.
Headwinds, headwinds, headwinds. All of it sounds scary, right? You wouldn’t know from some of the other data. The S&P 500 closed up this week. Likewise the Dow Jones Industrial Average and the Nasdaq Composite.
The US added 254k jobs in September, according to the US Bureau of Labor Statistics’ nonfarm payrolls report. That easily topped the 140k consensus. The BLS also revised July and August figures upward by a combined 72k jobs.
But:
In any event:
LOLOLOL. For those of you who are chart illiterate, this ⬇️ reflects that the market went from a 68% chance of a 25bps decrease vs. 32% chance of 50bps decrease to a 97.4% chance of a 25bps decrease vs. 0% chance of 50bps decrease, with the delta representing those who think the Fed might actually even keep rates steady. Man, markets are fickle AF.
Oh no, lower than before but still higher for longer…?
What might that do to bankruptcy statistics?