To The Moon

The consumer price index (CPI) inflation report that caused US market to stir on Tue, 12 Nov 2024 has come and went.

True to form, the October 2024 data was mostly in lined with market consensus.

Is that a good thing ?

CPI October 2024.

Headline inflation.

• MoM : came in at 0.2% vs analysts’ forecast of 0.2% vs September data of 0.2%. Status quo.

• Annual: came in at 2.6% vs analysts’ forecast of 2.6% vs September data of 2.4%. Up by +0.2%. (see above)

Core inflation.

• MoM : came in at 0.3% vs analysts’ forecast of 0.3% vs September data of 0.3%. Status quo.

• Annual: came in at 3.3% vs analysts’ forecast of 3.3% vs September data of 3.3%. Status quo. (see above)

CPI Components.

Below are the main CPI components that keep inflation elevated, longer than expected.

• Shelter. Index that carries about 33% (one-third) weighting in the broader index, climbed another 0.4% in October, double its September move and up 4.9% annually. Shelter component remains a major impediment in getting inflation all the way back.

• Electricity. Although energy costs have been declining in recent months and flat in October, on a YoY basis, it still came in at 4.5%

• Food. On a monthly basis, food index increased 0.2%. On a year-over-year basis, it was up 2.1%.

US Market on Wednesday.

US market drifted to a mixed finish after the latest inflation update.

US stocks failed to build on early-session momentum and last week's election-fueled rally continues to fade. 

By the time market called it a day:

• DJIA: +0.11% (+47.21 to 43,958.19.

• S&P 500: +0.02% (+1.39 to 5,985.38)

• Nasdaq: -0.26% (-50.68 to 19,230.72).

Inflation & US Interest Rate.

Overall inflation report showed that underlying inflation continues to run a little warmer last month.

Fortunately, it did not change expectations that the Fed would deliver a third interest rate cut of -0.25% come December, against the backdrop of a softening labour market.

CME Fedwatch Tool - December.

The latest CME Fedwatch tool for December 2024 is already reflecting the high probability that US central bank will cut interest rate by a further -0.25%. (see above)

Fed’s PCE Forecast.

Morningstar, Chief US economist Preston Caldwell predicts the Fed’s preferred measure of inflation, the Personal Consumption Expenditures (PCE) Index, will come close to its target later this month on 27 Nov 2024.

This is because the PCE Index uses much of the same source data as CPI, but data is weighted differently.

October Forecasts:

• Economists expected monthly inflation to range from 0.2% to 0.26% increase.

• Annual inflation was forecasted to rise to 2.8%, after increasing 2.7% in each of the prior 2 months.

$Walt Disney(DIS)$ - Thursday Bright Spark ?

Disney reported its quarterly earnings on Thu, 14 Nov 2024 morning.

Shares popped more than 9% after the company’s fiscal 4th-quarter results beat analysts’ estimates.

Earnings details, according to LSEG:

• Earnings per share adjusted (EPS) : came in at $1.14 per share vs $1.10 expected.

• Revenue: $22.57 billion vs analysts’ consensus of $22.45 billion.

Is this the reprieve that has been eluding Walt Disney ever since its stock price peaked on 25 Mar 2024 ?

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