In his podcast addressing the markets today, Louis Navellier offered the following commentary.
The 10-year Treasury bond yield this week declined 80 basis points since late October, while the 2-year Treasury note declined 55 basis points since early November.
As I have said many times, the Fed never fights market rates, so I remain confident that the Federal Open Market Committee (FOMC) will pause after Wednesday’s 0.5% key interest rate hike, since the Fed will finally be in synch with market rates.
Q3 2022 hedge fund letters, conferences and more
Retail In Focus
After the FOMC statement at 2 pm EST today, the next big economic report will be Thursday’s retail sales for November. The main thing with retail sales is that they have to substantially outpace inflation to demonstrate that consumer spending remains healthy.
So if we get a good retail sales report on Thursday, it will help the stock market to finish the week on a strong note.
The Labor Department on Tuesday announced that the Consumer Price Index (CPI) rose only 0.1% in November and 7.1% in the past 12 months. The CPI was lower than economists’ consensus expectation of 0.3% and triggered a massive bond rally that caused Treasury yields to plummet.
The core CPI, excluding food and energy, rose 0.2% in November and 6% in the past 12 months. Energy prices plunged 1.6% in November (as gasoline prices declined 2%), while food prices rose 0.5%.
Used vehicle prices declined 2.9% in November and has fallen 3.3% in the past year, so the 40% inflation in used vehicle prices early this year has been entirely eliminated. The CPI component that remains problematic is owners equivalent rent that rose 0.6% in November, so even though home prices are falling, rental prices remain stubbornly high.
Sam Bankman-Fried Buying Congress
FTX founder Sam Bankman-Fried was scheduled to testify before Congress on Tuesday, but was arrested (to the relief of many members of Congress that accepted money from Sam Bankman-Fried), so the most interesting Congressional testimony will now come from CNBC’s Kevin O’Leary.
The Squawk Box hosts were very condescending when Kevin O’Leary appeared, so it will be interesting how he handles questions in front of Congress today. Since Kevin O’Leary was paid almost $15 million to be a FTX spokesman, he is receiving relentless criticism.
Gensler’s Class Act
Interestingly, Sam Bankman-Fried has appeared before Congress more than SEC Chairman Gary Gensler in the past 12 months. Since Chairman Gensler taught cryptocurrencies at MIT, I am curious if Sam Bankman-Fried was one of his students.
The daughter of the head of MIT’s Economic Department, Caroline Ellison, was the CEO of Alameda Research that apparently sank FTX, but was not a Gensler student, since she attended Stanford. However, Gensler apparently met Caroline Ellison via her father at MIT.
I should add that Caroline Ellison hired the recent former head of SEC Enforcement, Stephanie Avakian, for her defense. The FTX scandal is just beginning, and since Sam Bankman-Fried was the second biggest political donor this year, it will be interesting if he gets any special treatment.
The SEC lawsuit that was filed against Sam Bankman-Fried accuses him of using client funds to buy influence in Congress, since he was the second biggest donor during the mid-term elections after George Soros.
Interestingly, when Sam Bankman-Fried was doing his apology tour after the FTX bankruptcy, he said that the $39 million that he donated to members of Congress was from earnings from Alameda Research.
Some of the members of Congress that accepted money from Sam Bankman-Fried have offered to donate that money to charity, but in fact, if the SEC allegations are true, that money should be returned to the bankruptcy court trustee for client restitution.
When the new leadership of the House takes over in January, Sam Bankman-Fried’s actions to buy influence in Congress will likely be endlessly debated to humiliate some of our elected leaders.
Coffee Beans
A North Carolina woman who heard strange noises coming from outside her home was surprised to learn she was sharing her property with a bear den.
The woman agreed to share her property with the bear – who was discovered to be pregnant – for the winter, and in the meantime, the den will be monitored by the wildlife group Help Asheville Bears to see if the bear gives birth to cubs. Source: UPI. See the full story here.
