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New York CNN store —
The Fed has spoken.
As we discussed yesterday, the Fed’s 75 basis point move was essentially a foregone conclusion. And the central bank delivered by announcing it would raise interest rates by another three-quarters of a percentage point — its fourth straight move of this magnitude since it made serious attempts to tame inflation this spring.
So what did we learn from Chairman Jay Powell’s closely watched speech?
A few highlights:
Markets initially soared when the Fed released its monetary policy decision, which included a fresh rant that’s considered ambiguous in the shaky world of Fed monitoring: “In determining the pace of future increases in the target range, the committee will consider the cumulative Tightening of monetary policy, taking into account the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.”
Traders seemed to read it like this: Don’t worry folks, the worst is almost over…
But the party was short-lived.
Powell took the stage and poured with statements like:
“In my view it is very premature to think or talk about pausing our rate hike. We still have a long way to go.”
The Dow ended the day down more than 500 points, or 1.6%. The S&P 500 was down 2.5% and the Nasdaq was down 3.4%.
BIG PICTURE
The Fed is working with data that has painted a bleak picture of the health of the economy over the past few months. On the one hand, the housing market is cooling off noticeably, but higher borrowing costs have not affected inflation so far. Part of the inflation problem, according to the Fed, is that the labor market is a little too strong, which is putting upward pressure on wages, fueling demand.
look ahead: On Friday, analysts will be poring over the government’s October jobs report, which is set to show the economy added another 200,000 jobs in October – down from the previous month but still at an all-time high. That could reassure the Fed that there is scope to continue raising rates without triggering a recession.
CVS and Walgreens have tentatively agreed to pay a combined $10 billion to resolve state and local government lawsuits alleging the retailers mishandled opioid pain reliever prescriptions.
US states, cities and counties have filed more than 3,000 lawsuits against opioid manufacturers, distributors and pharmacies, accusing them of downplaying the risk of addiction and failing to prevent pills from being diverted for illegal use.
It’s time for another installment of the ever-popular Nightcap Nosh. Let’s dive in.
HARD TURKEY
To the surprise of absolutely no one, Thanksgiving is going to be a lot more expensive this year. A market research company puts the premium at 13.5% compared to the previous year.
Food inflation is no joke: Extreme weather, highly contagious bird flu and the war in Ukraine have pushed food prices even higher, particularly on Thanksgiving pillars. Prices for Turkey vary by region, but in some cases are up more than 40% year-on-year. Potatoes are up 18%. Butter: 27%.
That may mean a cut for some families. Maybe consider a potluck? Or focus on the sides, because honestly, who needs the stress of cooking a whole turkey? According to Bloomberg, some cash-strapped Gen Zers are opting for soup, salad and pizza, and I wholeheartedly support them.
One side you might want to add: guacamole.
Yes indeed. There is an oversupply of avocados in America, which has caused wholesale prices to drop sharply. After peaking in late June, wholesale prices for a pack of avocados are down 67%. At the store level, prices are down about 2.6% year-on-year.
Whatever you choose to serve, remember the true meaning of the holiday — excessive indulging and arguing with your relatives about politics.
SMALL GIFTS
Not many people know this, but Starbucks is now the official arbiter of the seasons. Fall now starts in August, because that’s when Pumpkin Spice arrives. Winter starts right after Halloween, because that’s when the holiday mugs arrive. Don’t yell at me, I don’t make the rules…
Anyway, as of Thursday, it’s festive cup season that Starbucks fans seem to be looking forward to. Here’s what the Bux had to say about them: “We’ve always talked about the mugs as small gifts, and we hope they feel like a celebratory gift for our customers and store partners.”
If someone at Starbucks had consulted me, I would have said maybe the better gift would be – like – free coffee or something. But what do I know?