📈 Stocks lock in gains on the week while interest rates fall after recent surge.
Social Security Spike: Social Security recipients will receive a 3.2% bump in their monthly checks next year, thanks to the cost-of-living adjustment (COLA). This means that next year, the average recipient can expect a little over $50 more per month. While this COLA is smaller than last year’s, it indicates that inflation is slowing.
Global Oil Turmoil: The unexpected attack by Hamas on Israel could potentially lead to wider destabilization in the region, with likely far-reaching consequences for the global economy.
Looking ahead, economists will closely monitor three key factors:
US oil sanctions on Iran.
The tightening of these sanctions by the US could potentially constrict the global oil market and offer advantages to Russia.
The Strait of Hormuz.
The Strait acts as a supply super-highway, connecting oil-producing countries in the Persian Gulf to refineries worldwide. Any disruption in the Strait would send ripples through the global energy market.
The breadth of the conflict.
The impact of this conflict on global oil markets may hinge on Israel's response in the coming weeks.
While it goes without saying that recent developments have already had a horrific humanitarian impact, if this conflict continues to escalate, it could have a dramatic impact on global markets and US companies, subsequently impacting the economy and stock market.
👀 What to Be on the Lookout for This Week
Be on the lookout for the release of these economic reports:
Monday: Empire State Manufacturing Index
Tuesday: Retail Sales
Wednesday: 30-year Mortgage Rate, Building Permits
Thursday: Initial Jobless Claims
The following companies will be reporting earnings:
Monday: Charles Schwab
Tuesday: Albertsons, Bank of America, Goldman Sachs, Johnson & Johnson
Wednesday: Morgan Stanley, Procter & Gamble, Tesla, Netflix
Thursday: AT&T, Blackstone
Friday: American Express
📰 In Other News
No More Junk Fees? The Federal Trade Commission has officially proposed a ban on “junk/hidden fees” — fees that are added to a bill just before checkout. Examples of junk fees include high “service charges” at ticket venues or the “resort fee” added by hotels at check-in. If the bill passes, companies will be required to disclose the full price of products or services upfront.
This proposal follows California’s lead, where Governor Gavin Newsom has already signed a law that prohibits companies from “offering a price for a good or service that does not include all mandatory fees or charges other than taxes or fees imposed by a government on the transaction.”
So Long Self-Checkout: Last year, inventory shrinkage — i.e. stolen or damaged items — cost retailers like Walmart, Costco, Kroger, and Amazon a staggering $112 billion. Industry insiders attribute a significant portion of this increase in theft to self-checkout systems. Losses in stores with self-checkout options can be up to 60% more than in stores with cashiers. Many major retailers are now reassessing the value of self-checkout kiosks, especially since they require employee supervision anyway.
Big Pharma’s (Begrudging) Price Negotiations: Several major pharma companies have agreed to participate in the recently proposed Medicare price negotiation program, even as they sue to repeal the plan.
This program would let Medicare negotiate discounts of up to 60% on many popular drugs. However, these price discounts likely won’t be realized until 2026, assuming that drugmakers don’t beat the bill in court before that happens.
😐 September Inflation Stays Steady at 3.7%
September’s Consumer Price Index (CPI) rose 0.4% on a monthly basis, keeping its annual rate steady at 3.7%. This was slightly above analyst’s expectations of 3.6% and remained unchanged from August’s annual reading.
“Core” inflation — which excludes the more volatile prices of food and gas — came in at 4.1% on an annual basis and 0.3% on a monthly basis from August. This marks a slight decrease from the 4.3% reported in August, aligning with analyst expectations.
Given its reputation for stability, core inflation is the metric most closely monitored by the Federal Reserve.
What’s Fueling Inflation?
The CPI is a tool used to measure price changes for a wide variety of goods and services. Prices for different items fluctuate constantly. For instance, the cost of an airline ticket may decrease in one month, while the cost of food may increase. The CPI attempts to consolidate these price changes across various categories and present them as a single figure.
In September, the primary driver behind the monthly increase in all-items CPI was the rising cost of shelter, accounting for more than half of the overall increase. An increase in the gasoline index also contributed to the monthly rise in all items.
Prices for various goods and services rose more modestly compared to the month prior. Used automobile and truck prices, along with medical care services, continued to decline.
Breaking It Down
At 4.1%, core inflation’s current annual reading marks a significant decrease from this time last year. Nevertheless, it’s still nearly double the Fed’s target rate of 2%. This suggests that the central bank may not be out of the woods quite yet when it comes to controlling the inflation that has surged over the past year.
With that said, most economists believe this latest inflation reading is unlikely to prompt an immediate change in the Federal Reserve’s stance. Right now, Wall Street is factoring in a 90% chance the Fed will leave interest rates unchanged at their next meeting. But the possibility remains that the Fed may decide to raise rates later in the year. The central bank’s position will continue to change as new data is released.
Ultimately, for retail investors, learning and implementing sound investing practices tends to be a far more valuable use of your time than trying to anticipate the Fed’s moves.
💔 Inflation Is Squeezing Gen Z’s Dating Life
Rising Cost of Living
After a year of surging inflation, consumers across America are adjusting to a higher cost of living. For younger generations with less spending power, this has unfortunately meant cutting back on romantic endeavors.
According to a 2022 survey by LendingTree, 20% of respondents reported going on fewer dates because of inflation. Moreover, 3 in 4 surveyed believed dating would be less challenging if they had more money.
Meeting new people on dates can be anxiety-inducing in itself. But when you add on the financial strain of going out, it may become tempting to give up dating altogether.
Cost of a Date
For today’s young adults, going out on just one or two dates per month can be financially straining — a cost that needs to be factored into their budget.
According to Moneygeek, the average cost of a traditional 'dinner and a movie' date in 2023 is around $159. If you have two of these dates in a month, you're already spending over $300 on dating alone. Even opting for a more budget-friendly outing, like grabbing a few drinks, can still run you close to $50.
What’s more, those figures are just the national averages. In major metros — where most young adults tend to live — the cost of dating is much higher. For example, in New York, Los Angeles, and Miami, a dinner and a movie date can cost $230, $207, and $192, respectively. This includes appetizers, entrees, and desserts for both people, two cocktails each, and movie tickets. With prices like these, it’s clear why going on multiple dates can quickly become expensive. And the unfortunate reality is that most of these dates will not lead to a meaningful connection.
That being said, the cost of dating does not necessarily have to be so high. The tab can be reduced by cutting back on cocktails or desserts. Many meaningful connections are made over fun, free activities instead. For instance, walking in the park, exploring a new neighborhood, or visiting a farmers market can make for romantic dates, too.
Still, while those may be viable options, there's an undeniable social pressure to not come across as thrifty when planning the date.
Younger generations aren’t abandoning dating altogether. Instead, they’re investing more time and effort into friendships and socializing in non-romantic social settings.
For Gen Z, the prevailing idea is that, if money is going to be spent on food and drinks, it’s better to do so with people whose company they already enjoy — instead of spending it on someone you may never see again.
Ultimately, Gen Z's shift in priorities could not only give them a budgetary advantage, but also lead them to meet someone special anyway. Spending more time with friends and expanding one's social circle could lead to love accidentally — even if it means not going on as many 'official’ dates.
📦 Shippers Are Extending Discounts for the Holidays
Unwrapping Shipping Discounts
It’s common for shipping prices to rise in lockstep with package volumes, especially during the holiday season. However, so far this year, many major shippers have reportedly been extending discounts and other forms of cost savings. This could provide some much-needed pricing relief for consumers planning to ship packages around the country this fall.
UPS and FedEx typically impose surcharges during the holiday season, which spans from Thanksgiving to mid-January. However, it appears both companies have been curbing extra charges this year. The US Postal Service won’t be imposing the annual holiday surcharge this year either. Typically, USPS adds an extra $0.25 to $6.25 per parcel, depending on the package.
With that said, these discounts are limited to the holiday season. Both FedEx and UPS raised general rates by 6.9% this year and both companies are planning for a 5.9% price hike next year.
ShipMatrix, a logistical consulting firm, estimates that major shipping companies will deliver an average of 82 million packages per day during the peak holiday season. This is down from 90 million parcels per day last year. The decrease in demand is part of the reason why shippers are limiting surcharges.
FedEx and UPS will still be imposing surcharges, but with a caveat. These added costs — which typically range from $1.35 to $7.50 a package — will go into effect only after demand hits a certain threshold. This year, ShipMatrix estimates that only half as many packages will be hit with surcharges compared to last year’s numbers.
In addition to shipping fewer packages, there is also increased competition in the logistics space. UPS and FedEx have dominated the industry until now. But the supply restraints of the past few years have paved the way for other shipping companies like DHL, OnTrac, and Amazon Shipping to gain ground.
Experiences Over Goods
A decrease in holiday surcharges can be considered a small win for US consumers. However, a decline in demand to ship packages also paints a broader picture of the US economy.
Slowing demand to ship packages could be a sign that consumer spending is slowing, as people reel in their online shopping. However, this does not align with August’s consumer spending data, which showed a monthly increase of 0.4%. If consumers were actually spending more money in August, why did the number of shipped packages decrease?
One answer could be that people are choosing to spend their cash on experiences, instead of goods. According to the recent earnings reports released, sales of airline and concert tickets have been on the uptick. These numbers indicate that consumers are still spending money — just not necessarily on shippable goods.
Either way, while shipping prices are rising overall, shoppers may see some slight but much-needed relief this holiday season.
Millennials are ahead in retirement savings compared to Gen X and Baby Boomers, thanks to an increase in default 401(k) plans. Automatic enrollments have contributed to earlier and more significant savings.
Working remotely full-time can reduce carbon emissions by 54%. However, working remotely just one day per week only cuts emissions by 2%.
A new rule change will allow electric vehicle buyers to claim their $7,500 federal tax credit up-front, getting a discount at the dealership rather than waiting until next tax season. This change is set to go into effect next year.
Americans could start buying less food as weight-loss drugs like Ozempic become more popular. This news was sparked by Walmart, who uncovered the trend after mining the company’s internal pharmacy and grocery data.
Generative AI is even shaking up the pizza business now too. Domino’s and Microsoft joined forces to enhance the former’s ordering and delivery process, using AI to improve personalization and simplification.