Personal Economics 101

The stock market scored an amazing comeback this week, initially selling off on the deteriorating Russia-Ukraine situation, then rallying on optimism that the conflict could have only a minimal impact on the U.S. economy.  The S&P 500 closed the week with a 0.8% gain after falling as much as 5.5%, the Nasdaq Composite increased 1.1% after plunging as much as 7%, the Dow Jones nearly broke even after losing 5.3% midweek, and U.S. West Texas crude oil pulled back after briefly topping $100 per barrel.  The turnaround came after President Biden issued targeted sanctions Thursday afternoon that did not affect Russia's oil and gas exports or block Russia's access to the SWIFT financial system, sparking the rebound that continued into Friday.  At the same time, the shock and uncertainty of a war in Europe could discourage the Federal Reserve from being aggressive about hiking interest rates, which had been weighing on stocks before Russia's invasion. Outlook : Western intel...

U.S. equities finished lower (see below), with the S&P 500 venturing further into correction territory for the first time since mid-2020, as the markets continued to fret over events in Ukraine.  After the movement of Russian troops into some of Ukraine's eastern regions, the country's Ministry of Digital Transformation said a mass cyberattack disabled bank and government websites, prompting further actions from Western governments.  President Biden cut off resources to the two regions and announced further sanctions on Russia, while meetings scheduled between the U.S. and Russia have been tabled. Moreover, Germany halted the certification of the potentially key Nord Stream 2 pipeline.  The markets also continued to grapple with elevated expectations of tighter global monetary policies, while digesting another round of earnings reports. Lowe's Companies rose following its quarterly performance and guidance, while Palo Alto Networks was higher on its report, though TJX...

The Conference Board's  Leading Economic Index  (LEI) for January declined 0.3% month-over-month (m/m), compared to the Bloomberg consensus estimate calling for a 0.2% gain, and following December's negatively-revised 0.7% increase. The LEI was negative m/m for the first time since February 2021, due largely to the negative net contributions from jobless claims, consumer expectations, stock prices, and average workweek, which more than offset positive reads for the interest rate spread and ISM new orders. Existing home sales  jumped unexpectedly by 6.7% m/m in January to an annual rate of 6.5 million units, versus expectations of 6.1 million units, which would have matched December's downwardly-revised rate. Existing home sales were higher in each of the major U.S. regions, while y/y sales were mixed as the Northeast and West saw declines, the South saw a modest increase, and the Midwest was flat. Sales of single-family homes jumped m/m but were down y/y, while purch...

Wholesale inflation in the United States surged again last month, rising 9.7% from a year earlier in a sign that price pressures remain high at all levels of the economy. The Labor Department said Tuesday that its producer price index — which measures inflation before it reaches consumers, or wholesale prices — jumped 1% from December. Excluding volatile food and energy prices, wholesale inflation rose 0.8% from December and 8.3% from January 2021. The Producer Price Index (PPI) showed prices at the wholesale level in January rose 1.0% month-over-month (m/m), above the Bloomberg consensus estimate of a 0.5% gain, and north of December's unrevised 0.2% increase.  The core rate, which excludes food and energy, gained 0.8% m/m, above estimates of a 0.5% rise and above the prior month's unadjusted 0.5% rise. Y/Y, the headline rate was 9.7% higher , the same as the prior month, but higher than projections calling for a 9.1% gain. The core PPI increased 8.3% y/y last month, above est...

The  Consumer Price Index  (CPI) rose 0.6% month-over-month (m/m) in January, above the Bloomberg consensus estimate of a 0.4% increase, and following December's upwardly-revised 0.6% gain. The  core rate , which strips out food and energy, also increased 0.6% m/m, topping forecasts of a 0.5% gain, and matching December's unadjusted rise. Compared to last year, prices were 7.5% higher for the headline rate—the fastest pace since 1982—above estimates of a 7.3% increase and an acceleration from the prior month's 7.0% rise. The core rate was up 6.0% y/y, above projections of a 5.9% increase, and following December's unrevised 5.5% rise. Weekly initial jobless claims  came in at a level of 223,000 for the week ended February 5, versus estimates calling for 230,000, and down from the prior week's upwardly-revised 239,000 level. The  four-week moving average  declined by 2,000 to 253,250, and  continuing claims  for the week ended January 29 was unchang...

February 8, 1971 Opening on Wall Street on this day in 1971, the Nasdaq stock market — originally an acronym for the National Association of Securities Dealers Automated Quotations — was the first fully electronic stock exchange in history. Today it is the second-largest exchange in the world, behind its primary competitor, the New York Stock Exchange (NYSE). Originally used to provide automated quotations about stock prices for investors, the Nasdaq eventually added trading and transactional systems. The completely electronic format was an alternative to the less-efficient structure of traditional marketplaces, which required live traders on an active and chaotic trading floor. In 1992, Nasdaq joined with the London Stock Exchange to form the first intercontinental link between financial markets. Six years later, the Nasdaq exchange was the first in the world to create its own website and begin trading securities online. This cutting-edge model has historically attracted high-tech, gr...

 

From the Daily Signal By Patrick Tyrrell & Anthony Kim If common sense and reports from thousands of employers weren’t enough, a recent National Bureau of Economic Research  paper  found conclusively that paying people not to work during the COVID-19 pandemic was why many of them remained unemployed. That  shouldn’t  come as a surprise to anyone, except that last year, major news reports were saying the opposite was true, before the evidence was in. Leave it to the American media to get something important wrong. By comparing states that discontinued the overly generous unemployment benefit programs early against those who retained the payouts for the life of the program, the National Bureau of Economic Research researchers showed: [I]n states that eliminated [the two pandemic-related expanded unemployment benefits programs] in June 2021, the share of 25-to-54-year-old unemployed workers who found employment rose by about 14.4 percentage points in July and August...