Many questions

Parsing through government economic data is not everyone’s idea of a dream job, but it’s even more challenging when so much backlogged data arrives in a torrent. Making matters worse, much of the recently released information is so old that its usefulness is suspect. 

Take retail sales for September, which rose 0.2%, below the 0.4% expected and the 0.6% in August. (The October retail sales report was due on November 14, and there is no make-up date for its release yet). The so-called control group of sales, which excludes more volatile categories like autos, gas, building materials, and restaurants, actually fell 0.1%. After strong sales growth in July and August, it would not be unusual for them to cool, but when combined with weaker and more timely November consumer sentiment from the Conference Board, it begins to look like the consumer is losing steam. They seem to remain concerned about inflation and the jobs market, reducing plans to buy big-ticket items like cars, homes and major appliances. Adding to the uncertainty surrounding the consumer, new weekly jobless claims for the week ending November 22 fell to their lowest level since April, even as the number of those already receiving claims continued to edge higher.

After Federal Reserve Chair Powell surprised the markets by casting doubt on a December fed funds rate cut, recent mixed economic data and mixed signals from Fed speakers revived those odds. Add in the fact that apparently the selection process for the next Fed chair has landed on Kevin Hassett, White House National Economic Council Director and a close ally of the president, and it’s easier to understand that the fed funds rate is biased lower. Over the last week, the market has moved from a 30% to an 80% chance of a rate cut.