Markets attempt to rise, but enthusiasm is lacking

Dow was off 28, decliners over advancers 4-3 & NAZ slid back crawled up 9.  The MLP index stayed in the 209s & the REIT index fell 2+ to the 343s.  Junk bond funds were a little lower & Treasuries saw buying, reducing yields.  Oil dropped 2+ to the 87s gold was off 6 to 1679 (more on both below).

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Federal Reserve officials have been surprised at the pace of inflation & indicated at their last meeting that they expect higher interest rates to remain in place until prices come down, according to minutes from the central bank's Sep meeting.  In discussions leading up to a 0.75 percentage point rate hike, policymakers noted that inflation is especially taking its toll on lower-income Americans.  They reiterated rate hikes are likely to continue & higher rates prevail until the problem is showing signs of resolving.  “Participants judged that the Committee needed to move to, and then maintain, a more restrictive policy stance in order to meet the Committee’s legislative mandate to promote maximum employment and price stability,” the summary stated.  Officials further noted that with inflation “showing little sign so far of abating … they had raised their assessment of the path of the federal funds rate that would likely be needed to achieve the Committee’s goals.”  Traders saw little evidence that a pivot to a softer monetary stance was on the horizon.  “Several participants underlined the need to maintain a restrictive stance for as long as necessary, with a couple of these participants stressing that historical experience demonstrated the danger of prematurely ending periods of tight monetary policy designed to bring down inflation,” the minutes continued.  The meeting happened ahead of a recent flow of data showing that inflation pressures do remain elevated, though not at the pace they were earlier this year.  The Fed's preferred inflation gauge of consumer price expenditures rose 6.2% from a year ago – 4.9% excluding food & energy – in Aug, according to data last week that was well above the central bank's 2% target.

Fed officials expect higher rates to stay in place, meeting minutes show

PepsiCo (PEP), a Dividend Aristocrat, hiked its forecast for the year as higher prices helped lift the snack & beverage maker's revenue for Q3.  For the qtr revenue rose 9% from a year ago to $21.97B, topping expectations.  The increase came despite volume declines in some of the company's units, including its Frito-Lay North America division.   CEO Ramon Laguarta said the summer helped drive impulse purchases, which have a higher price per liter.  “The consumer is still very healthy in terms of our particular category,” Laguarta added. “Our brands are being stretched to higher price points and the consumers are following us.”  Adjusted EPS was $1.97 vs $1.84 expected.  For 2022, the company now projects organic revenue growth of 12%, up from 10%.  It expects core constant currency EPS growth of 10%, up from 8%.  The stock was up 6.80 (4%).
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PepsiCo hikes forecast after higher pricing helps boost revenue

The threat of soaring inflation is leaving many retirees concerned about their finances, according to a survey released by Goldman Sachs Asset Management.  The majority of retirees surveyed cited inflation as their greatest concern (71%), followed by future healthcare (51%), potential reductions in future Social Security benefits (46%) & running out of money (44%).  Each of those percentages has increased since Goldman's last retirement survey in 2021.  "A clear theme from our findings is retirement income uncertainty," said Mike Moran, Senior Pension Strategist at Goldman Sachs Asset Management.  "We believe this uncertainty is changing retiree behavior in hopes of preserving their savings for longer, including a surge in interest for part-time work in retirement and lower overall spending."  About 51% of currently retired respondents reported living on less than 50% of their pre-retirement annual income, including 29% who report living on 40% or less.  Only 25% of retirees surveyed generate what many estimate as the amount needed to maintain their standard of living — 70% or more.  Among surveyed retirees, 42% are spending less in retirement than anticipated, compared to 31% who are spending what they expected & 22% who are spending more.  About 56% of retirees surveyed reported retiring earlier than planned, with 48% citing the change being due to reasons out of their control.

Inflation top concern among retirees managing finances, survey shows

Gold futures settled with a loss, as a rise in Treasury yields & strength in the $ prompted prices to give back most of their gain from a day earlier.  The precious metal is influenced by bond yields & any messaging on interest rates & the attempt to rein in inflation from the Federal Reserve & the $ has also been impacted by the Fed & interest rates.  The producer price index reading coming in higher than expected due to services rather than durables was not a good sign for the consumer price index data tomorrow.  Gold for Dec fell $8 (0.5%) to settle at $1677.

Gold, silver prices end lower as PPI reading ‘validates’ aggressive Fed interest-rate hikes

Oil futures fell for a 3rd session in a row, with US prices settling at their lowest since Oct 4.  Prices declined as continued fears over future demand serve to cap the recent rebound.  Continued concerns about future global demand & the bleak economic outlook from the IMF are raising the possibility that supply issues will be less of an issue than demand destruction.  In a report today, the OPEC cut its estimate for growth in global oil demand.  US benchmark West Texas Intermediate crude for Nov fell $2.08 (2.3%) to settle at $87.27 a barrel.

Oil futures post a third consecutive session decline

The producer price index gives forwarding looking inflation & tomorrow's consumer price index gives yesterday's.  That's simple.  But either way, the outlook remains dreary as shown by trading this week.

Dow Jones Industrials