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Midterm elections in the U.S. have concluded, but perhaps not surprisingly the outcomes have yet to fully be determined. A handful of Senate seats and no fewer than three dozen House seats are still up for grabs. Things are so uncertain, in fact, that we’re not even sure there will be gridlock — Republicans have not taken outright control of the lower chamber of Congress, which was widely expected. This is the first time since 2002 that the party of the White House did not experience big losses in the first midterm election of their administration.
As such, pre-market futures are selling off Wednesday morning, perhaps on the road to break their three-day winning streak. The Dow is -200 points at this hour, while both the S&P 500 and the Nasdaq are both down roughly -25 points. Considering where we’ve come from recently, however, this is far from an emphatic statement about how disappointed the market is over the initial wake of the midterms. The Dow is still up around +3% from last Thursday’s close.
Things like tomorrow’s Consumer Price Index (CPI) now come into focus: with expectations for +7.9% on headline — the first sub-8% print since February, by the way — and +6.5% on core, an in-line read would be true to form of a gentle relaxation of inflation tensions. Nothing worthy of turning the Fed’s head in terms of slowing their roll on inflation rate increases, which is widely expected to to bring about its fourth-straight 75 basis-point (bps) hike in its December 14th meeting.
Tomorrow’s CPI coming down more notably than expected — say, 100 bps on headline or so — might begin to change the conversation, however. Much of the trepidation in the market related to the Fed of late has been an increasing worry that the Fed was going to hike rates too far too fast, and something was going to break before anything could be done about it. But if there was some dovish sentiment in the Fed’s most recent policy statement a week ago, it’s that they are well aware of lagging effects to their actions; they are not interested in breaking things.
Another thing that looks to be coming into focus regarding the Fed is the employment picture, and here we’re seeing some real movement in terms of layoffs: Meta Platforms (META - Free Report) , after another rough earnings season, has decided to lay off 13% of its workforce, amounting to -11K positions. (The statement also came with a rare mea culpa from Facebook founder and Meta CEO Mark Zuckerberg.) Add this with other tech layoffs we’ve seen from Twitter or expect to see elsewhere, and we may be looking at quite a different November jobs report ahead of the next Fed meeting.
Image: Bigstock
Post-Midterms, Plenty of Things Coming into Focus
Wednesday, November 9, 2022
Midterm elections in the U.S. have concluded, but perhaps not surprisingly the outcomes have yet to fully be determined. A handful of Senate seats and no fewer than three dozen House seats are still up for grabs. Things are so uncertain, in fact, that we’re not even sure there will be gridlock — Republicans have not taken outright control of the lower chamber of Congress, which was widely expected. This is the first time since 2002 that the party of the White House did not experience big losses in the first midterm election of their administration.
As such, pre-market futures are selling off Wednesday morning, perhaps on the road to break their three-day winning streak. The Dow is -200 points at this hour, while both the S&P 500 and the Nasdaq are both down roughly -25 points. Considering where we’ve come from recently, however, this is far from an emphatic statement about how disappointed the market is over the initial wake of the midterms. The Dow is still up around +3% from last Thursday’s close.
Things like tomorrow’s Consumer Price Index (CPI) now come into focus: with expectations for +7.9% on headline — the first sub-8% print since February, by the way — and +6.5% on core, an in-line read would be true to form of a gentle relaxation of inflation tensions. Nothing worthy of turning the Fed’s head in terms of slowing their roll on inflation rate increases, which is widely expected to to bring about its fourth-straight 75 basis-point (bps) hike in its December 14th meeting.
Tomorrow’s CPI coming down more notably than expected — say, 100 bps on headline or so — might begin to change the conversation, however. Much of the trepidation in the market related to the Fed of late has been an increasing worry that the Fed was going to hike rates too far too fast, and something was going to break before anything could be done about it. But if there was some dovish sentiment in the Fed’s most recent policy statement a week ago, it’s that they are well aware of lagging effects to their actions; they are not interested in breaking things.
Another thing that looks to be coming into focus regarding the Fed is the employment picture, and here we’re seeing some real movement in terms of layoffs: Meta Platforms (META - Free Report) , after another rough earnings season, has decided to lay off 13% of its workforce, amounting to -11K positions. (The statement also came with a rare mea culpa from Facebook founder and Meta CEO Mark Zuckerberg.) Add this with other tech layoffs we’ve seen from Twitter or expect to see elsewhere, and we may be looking at quite a different November jobs report ahead of the next Fed meeting.
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