Below are the economic and market highlights for the week:
- Retail sales increased 0.40% in October, down from September’s upwardly revised 0.80% print. Higher sales of autos, electronics, and restaurants offset declines for clothing, furniture, and miscellaneous retailers. Ex-autos, sales were up just 0.10%. The control group which excludes a number of items and feeds directly into GDP calculations, fell 0.10%. That was down from September’s 0.70% rise.
- Consumer prices rose 0.20% for the fourth month in a row, bringing the yearly inflation rate up to 2.60% in October. That was higher than September’s 2.40% rate. Core CPI, which excludes volatile food and energy, accelerated to 0.30% for the month, making it the third monthly increase in a row. YOY, core CPI was up 3.30%. Shelter once again was a major contributor to rising prices, up 0.40% in October. That was double its September move.
- Wholesale prices nudged higher in October, rising 0.20%. That was up one-tenth of a percentage point from September. YOY, prices were higher by 2.40%. Excluding food and energy, core PPI rose 0.30%, also one-tenth more than in September. This brought the 12-month rate to 3.10%. A 0.30% increase in services accounted for most of the increase, offsetting a drop in food and energy prices.
Post Election Rally Fizzles
Bulls tapped the brakes on the post-election rally this week as core economic headwinds came back to the forefront. The week started off strong with the Dow Jones Industrial Average rising above 44K for the first time ever and the S&P 500 and Nasdaq Composite scoring new highs as investors remained optimistic for lower taxes and deregulation on a decisive Republican win. However, markets were unable to continue to rally even as Republicans secured the trifecta by taking the House. The culprit? Inflation data. Both the CPI and PPI reports showed inflation moving higher in October, up for the fourth and third consecutive months, respectively. Core prices also came in well above the Fed’s 2.00% target level, throwing a potential wrench in the administration’s plans for a domestic first policy that relies on tariffs. Tariffs are likely to lead to higher prices for goods and services based on evidence from Trump’s first administration. Markets are currently pricing in a 55% chance of a rate cut in December, suggesting the inflation data tempered markets’ expectations for just how aggressive the Fed may be in 2025. In Dallas on Thursday, Fed Chair Jerome Powell said the central bank is in no rush to lower interest rates as economic growth remains strong and inflation remains above its target rate. He went on to say, the pace of rate cuts “is not preset”. According to Fed watchers, Powell’s comments could be a signal that the Fed will change its interest rate projections at its December FOMC meeting. Powell’s hedging and this week’s data was a reminder for investors that the administration’s policies may clash with economic reality – despite the promises made on the campaign trail.
The Week Ahead
Key reports include S&P Flash PMIs, existing home sales, and housing starts.
Kind of a Big Dill: National Pickle Day
Yesterday was National Pickle Day. The holiday that many people have not heard about has been celebrated since 1949 thanks to encouragement from Pickle Packers International, an association based in Washington, D.C. that serves the pickle industry. According to the Department of Agriculture, the average American eats around 9 pounds of pickles per year. That unbelievable statistic is a bit hard to swallow so we fact-checked. Pickle Packers International writes on their website at ilovepickles.com that Americans consume more than 2.5 billion pounds of pickles each year – that’s 20 billion pickles!
The history of pickles dates back to around 2030 B.C. when cucumbers from their native India were pickled in the Tigris Valley in salty brine to preserve them. The word pickle comes from the Dutch pekel or northern German pókel, meaning salt or brine, two very important ingredients in the pickling process. Pickles can be sweet, sour, salty, hot or a combination of the above depending on which types of spices are used in the process, such as mustard seeds, bay leaf, cinnamon, coriander seeds, dill, black peppercorns, chili peppers, ginger, and/or garlic. There’s apparently a Kool-Aid soaked pickle known as a Koolickle that originated in Mississippi. In Minnesota, pickle dogs are honey ham slices coated with cream cheese and wrapped around a dill pickle spear. That sounds dill-icious.
Pickles have found their way into history, literature and sports. Smithsonian magazine wrote that America got its name from a pickle dealer named Amerigo Vespucci. Vespucci was an Italian ship chandler in the 1400s who outfitted merchants and explorers, including Christopher Columbus, with pickled foods. His pickled vegetables allowed seafarers and travelers to take longer voyages without succumbing to scurvy. Historian Felipe Fernandez-Armesto wrote about Amerigo in his book, Amerigo: The Man Who Gave His Name to America. The phrase “in a pickle” was first introduced by Shakespeare in his play, The Tempest, to refer to someone in a difficult position in 1611. The quotes read, “How cam’st thou in this pickle?” and “I have been in such a pickle!” Many athletes drink pickle juice to help relieve cramps. Pickle Packer International writes that good pickles have an audible crunch at 10 paces that can be measured using a device called the “Audible Crunch Meter.” Pickles that can be heard at only one pace are known as “denture dills.”
There is no doubt that pickles have a place in our palates. Grocery aisles offer numerous pickle flavored chips, jelly beans, hard seltzers, beef jerky, popcorn, and nuts to name a few. There are cocktails made with Best Maid Pickle Sour Beer, such as a Pickle-ada, that combine pickle beer with lime juice and spices. For those looking for something stronger, there’s the pickleback, which is shot of whiskey followed by a shot of pickle juice. Some might call that a dill breaker. Some chefs have suggested using pickle juice as a brine for your Thanksgiving turkey. In a pickle about what to send someone for a birthday or for the holidays? You can choose from a myriad of “pickle of the month” gifts.
Around the world, nearly every country and every type of cuisine has its own beloved version of a pickle. The English create sweet pickles with vinegar, sugar, and spiced syrup. The French serve tiny, spiced cornichons with heavy pâtés and pungent cheeses. Beyond cucumbers, nearly any fruit, vegetable, or edible item can be pickled such as carrots, cauliflower, radishes, onions, green beans, and asparagus. Russians pickle tomatoes, among other things. Koreans use cabbage to make kimchi, the Japanese pickle plums and daikon, and Italians pickle eggplants and peppers. Eastern Europeans use cabbage to make sauerkraut. In summary, pickles and pickled food are kind of a big dill.