Stocks are higher this morning despite problems at Nvidia. Bonds and MBS are flat.
More trouble in the tech space. Nvidia’s CEO admits to an affair with a Chinese spy and Coreweave debt is around 16%.
The week ahead will be dominated by the consumer price index on Tuesday and the Producer Price Index on Friday. Markets will be closed on Wednesday for the Veteran’s Day holiday. We will also get existing home sales and NFIB Small Business Optimism.
Consumer sentiment picked up in November, according to the University of Michigan Consumer Sentiment Survey. Lower and middle-income consumers saw an improvement in mood, while wealthier investors were bruised by the tech sell-off in the stock market. Year-ahead inflation expectations declined from 4.7% to 4.3% while longer-term expectations declined from 3.5% to 3.4%. “Moreover, consumers’ comments revealed growing anxiety over a possible AI bubble. AI worries, however, were dwarfed by cost of living concerns, which continue to be at the forefront of consumers’ minds across the population. About 57% spontaneously mentioned that their living standards have been eroded by high prices, the highest seen since May and up from 46% in February, just prior to the Iran conflict.
San Francisco Fed President Mary Daly said that higher rates are likely needed to beat inflation. “My expectation is we’re going to have to tighten policy further. Exactly when and how much is still to be decided because we just have to take all the variables that are coming in,” Daly told CNBC’s Steve Liesman during a live interview. “More is likely to be needed, and certainly … I’m prepared to do that if that’s what the economy calls for.”
“They see that they can get jobs, they continue to spend. They’re not out of the game, but they are on a treadmill of high inflation,” she said. “This has been high for too long, almost six years, and we’re really starting to feel the burden of that spread everywhere.”
“The job market remains stable and solid, but not booming, and you see real wages falling because those wages are not really keeping up with inflation,” Daly said. “I think that’s the crux of this. Good news on the jobs front, not so clear that Americans are going to gain ground in the labor market.”
