Dow went up 134, advancers over decliners about 3-1 & NAZ rose 78. The MLP index was up 1 to the 246s & the REIT index added 1 to the 337s. Junk bond funds fluctuated & Treasuries were heavily purchased on safety concerns. Oil slid back to the 85s & gold added 9 to 1873 (more on both below).
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
Americans are bracing for high inflation to stick around over the next few years, according to a key Federal Reserve Bank of New York survey. The median expectation is that the inflation rate will be up 3.7% one year from now, according to the New York Federal Reserve's Survey of Consumer Expectations, down from a high of 7.1% recorded in Jun 2022. That marks a slight increase from the 3.6% recorded last month. Consumers also anticipate that inflation will remain high in the coming years, estimating that it will hover around 3%3 years from now, up from Aug's 2.8% & fall slightly to 2.8% 5 years from now. That remains above the Fed's 2% target, indicating that sticky inflation could be here to stay. By comparison, central bank policymakers projected in their latest economic forecasts that inflation will fall to 2.2% by 2025 & eventually settle around 2% in 2026. Americans expect the cost of food to rise over the next year. However, they predicted the price of necessities like gas, medical care & rent will continue to fall in the year ahead. The survey, which is based on a rotating panel of 1300 households, plays a critical role in determining how Fed policymakers respond to the inflation crisis. That is because actual inflation depends, at least in part, on what consumers think it will be. It is sort of a self-fulfilling prophecy, if everyone expects prices to rise by 3% in the year, that signals to businesses that they can increase prices by at least 3%. Workers, in turn, will want a 3% pay raise to offset the rising costs. Chair Jerome Powell has repeatedly stressed that policymakers are committed to wrangling inflation back to the Fed's 2% target goal. "A strong majority of committee participants expect that it will be appropriate to raise interest rates two or more times by the end of the year," Powell said recently, referring to the Federal Open Market Committee. "Inflation pressures continue to run high, and the process of getting inflation back down to 2% has a long way to go."
Americans bracing their wallets for impact after latest inflation survey
PepsiCo (PEP), a Dividend Aritsocrat,raised its annual profit forecast again this year on inflation-related cost increases & resilient demand, saying it is now "well-positioned to
adapt and execute in a dynamic consumer environment with trusted
brands." The company said average prices went up 11% over the 3rd qtr while organic volume fell 2.5%. The company also predicts 2023 core EPS of $7.54 compared
with its previous estimate of $7.47. PEP estimated core EPS of $7.20 when it provided its annual forecast for the first
time in Feb. PEP also reported a 6.7% pop in 3rd-qtr net revenue growth, propelling the year-to-date increase to 8.9%. "We
believe that our businesses can continue to perform well in the coming
years with category growth normalizing, as we have made numerous
investments in our brands, manufacturing capacity, go-to-market systems,
supply chain, technology, and people, to execute against our strategic
framework and modernize our company," Ramon Laguarta said. Meanwhile, the North American Frito-Lay unit reported a 7% spike in organic revenue as volumes fell marginally. The stock was up 34¢.
If you would like to learn more about PEP, click on this link:
club.ino.com/trend/analysis/stock/PEP _aid=CD3289&a_bid=6aeoso5b6f7
PepsiCo raises profit outlook on higher prices
Conflict in the Middle East may create new risks to the global economic outlook, leaving central bankers facing renewed inflationary pressures even as they continue to deal with the economic fallout of the COVID pandemic & Russia's invasion of Ukraine a year ago. Iran-backed Hamas terrorists struck Israel over the weekend, killing at least 700 in the deadliest attacks the country has experienced in decades. Israel's gov has launched airstrikes on the Hamas-controlled Gaza Strip & is mobilizing military reservists in preparation for a response, while Hezbollah, an Iran-backed terror proxy based in Lebanon, has expressed support for Hamas & remains a threat on Israel's northern border. The prospect of broader conflict in the Middle East could add to the global instability sparked by Russia's invasion of Ukraine nearly 20 months ago, disrupting supply chains and dragging down economic confidence around the world. The impact would depend on the duration and intensity of the conflict, as well as whether it spreads to other parts of the region, which is home to major oil producers like Iran & Saudi Arabia plus major shipping lanes that run through chokepoints at the Strait of Hormuz, Bab-el-Mandeb, & Suez Canal. "The conflict poses a risk of higher oil prices, & risks to both inflation & the growth outlook," said Karim Basta, chief economist at Ill Capital Management. Higher oil prices in particular could dim economic confidence with resurgent inflation in energy prices paid by consumers at the pump. Those risks could leave the Fed in a bind as it considers whether to raise interest rates one more time this year& weighs how long to keep rates elevated.
US facing potential economic impacts from Israel war
Gold futures rose as the U.S. dollar weakened. The most active gold contract for Dec rose $11 0.6%, to close at $1875 per ounce. Unrest in the Middle East also supported gold. Economic data released were mixed. The National Federation of Independent Business said that its small-business optimism index fell to 90.8 in September from 91.3 in Aug. The Commerce Dept reported that US wholesale inventories slipped 0.1% in Aug from the revised Jul level. Investors are looking forward to the Federal Reserve's Sep monetary policy meeting minutes, due tomorrow, for some clues to the future policy, as well as the U.S. Consumer Prices Index (CPI) data, due on Thursday.
Gold rises on weak U.S. dollar
Oil futures declined, easing back after a more than 4% rally a day earlier as traders continued to assess the impact of the Israel-Gaza war on crude supplies in the Middle East. Despite the easing of prices, the markets remain unsettled by the situation in Israel, which could still lead to further instability & push the price of the barrel back to levels not seen since last year. From the perspective of oil traders, the big question mark lies over the potential involvement of Iran & how such a development could affect the supply of crude and drive an escalation in prices. Nov West Texas Intermediate crude shed 41¢ (0.5%) to settle at $85.97 a barrel.
Oil settles lower as traders continue to assess risks to Middle East supplies
Buying in the AM did not last with the Dow finishing 150 below its midday highs. Numerous problems persist - strikes, inflation, high inflation, funding the federal budget in the new year etc.
Dow Jones Industrials
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