The Federal Reserve’s preferred inflation measure*, the PCE (personal consumption expenditures), rose just 0.1% in November and 3.2% on a year over year basis. Economists surveyed by Dow Jones had been expecting respective increases of 0.1% and 3.3% respectively, so inline to slightly better. Keep in mind that this measure does exclude volatile food and energy prices and is considered a “core” inflation measure for those reasons. What is even more reassuring is that on a six-month basis, the core PCE has only increased by 1.9%, further indicating that the Fed has likely achieved their stated goals. Of course, like any true measured response to these types of data points, the Fed has, and will likely continue to reiterate that they are keeping the door open to further increases as needed. In any event, it further bolsters the overall view that this cycle of increases has concluded.
I have always been fascinated and interested in the transportation portions of our economic machine. Not only here in the U.S., but globally as well. There is a lot of information to be had in watching the patterns of supply and demand. This was never more evident than the COVID supply chain issues that impacted everyone, everywhere. A near-term spike in shipping container rates made headlines this week as the dangers in the Red Sea continue to escalate. “With 158 vessels carrying approximately $105 billion in ocean freight being diverted away from the Red Sea amid the risk of continuing Houthis’ attacks, cargo prices are soaring.” A 40-foot container being shipped from Shanghai to the U.K. jumped to $10,000 from $1,900 in a matter of hours this week! It’s a little early to speculate on how this may impact things in the long-term, but it is certainly something to keep an eye on if these issues were to remain prolonged.
As the week wraps up with the Santa Claus rally still intact, we have much to be grateful for. We will have a shortened trading week to close the year, but we will be in the office next week performing many year-end duties. As you spend the next week surrounded by friends, family, and festivities, keep in mind those around us who may be experiencing their own difficulties. Our world is an ever challenging and divisive place right now. It is important to keep an open mind and an open heart. If you are taking some time off, remember to try and RELAX. We all need a good reset from time to time!
Have a wonderful weekend!
*The Fed prefers PCE as an inflation measure over the more widely followed CPI as the former focuses more on what consumers actually spend rather than the latter’s measure of what goods and services cost. Though policymakers watch both measures, they are more concerned with core prices as a longer-run inflation gauge.
Christopher E. Wasson, CFP®
Mosaic Asset Partners, LLC
1122 Kenilworth Drive, Suite 310
Towson, MD 21204
410.821.0089 fax 410.821.5993
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The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra IS or Kestra AS. The material is for informational purposes only. It represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. It is not guaranteed by Kestra IS or Kestra AS for accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security.