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Ukraine Is Still Under Siege

• It’s easy to be numb to the massive toll inflicted on both life and property in Ukraine not only because for most of us the conflict seems a world away but also because the scale of Vladimir Putin’s eight month long onslaught is nearly unfathomable.  What would you do if your home was besieged by missile strikes?  Can you even imagine?

• Our Support Ukraine page has been refreshed with additional links to useful information on ways you can help and learn more about the ongoing conflict.  

You are welcome to join 23 subscribers like yourself who have already completed a free pledge to support and stand in solidarity with the people of Ukraine. 

🚨🚨🚨 INFLATION'S FINANCIAL FRENZY 💰💰💰 

Investing

• Remember I-Bonds?  There was some excitement earlier this year and many a CIC thought they might invest in this direction, until they understood the $10,000 annual contribution limit and several other administrative challenges.

  • The sleeper hit of 2022 investing is about to lose some of its luster—but it still might be one of the best places to store your cash. The rate for US Series I savings bonds is estimated to drop to 6.47% beginning Nov. 1, down from a record high of 9.62%. - Bloomberg Evening Briefing 10/17/22

The Worst Is (May Be?) Yet to Come

• US core inflation hit a 40-year high, dashing hopes the Federal Reserve will dial back interest-rate hikes that may tip the country into a downturn and further damage the global economy. That number excludes rent and food, but those aren’t getting cheaper either (though people still want their Pizza Hut). The inflation problem seems to run deep and almost certainly means another 75 basis-point hike is coming next month. The International Monetary Fund cut its global forecast as its chief economist warned “the worst is yet to come” and “for many people, 2023 will feel like a recession.” Another looming issue is liquidity in Treasuries, Janet Yellen warned this week. “If the Treasury market seizes up,” Robert Burgess wrote in Bloomberg Opinion, the global economy and financial system will have much bigger problems than elevated inflation.” Meanwhile, when it comes to the US housing market, things are just getting weird.  - Bloomberg Weekend Reading 10/15/22

• A closely watched measure of US consumer prices rose by more than forecast to a 40-year high last month, pressuring the Federal Reserve to raise interest rates even more aggressively. The core consumer price index, which excludes food and energy, increased 6.6% from a year ago, the highest level since 1982. From a month earlier, the core CPI climbed 0.6%. On the heels of a solid jobs report last week and record-low unemployment, the inflation data likely cement an additional 75-basis point interest rate hike at the Fed’s November policy meeting. Markets oddly skyrocketed rather than tanked. Here’s your markets wrap. - Bloomberg Evening Briefing 10/13/22

• As a counterpoint, see Latest US inflation data raises questions about Fed’s interest rate hikes from The Guardian:

  • A fresh round of US inflation data released last week showed persistently high prices, raising more questions about whether the Federal Reserve’s interest rate hikes are missing what many economists contend are the real inflationary culprits: corporate pricing, energy costs and supply chain disruptions…

• The Fed should keep raising rates, even beyond 4.75%, if inflation is still rising, according to Minneapolis Fed President Neel Kashkari. In remarks on Tuesday, Kashkari said that if core inflation keeps surprising to the upside then "I don't see why I would advocate stopping at 4.5% or 4.75% or something like that." Higher rates raise the likelihood of a US recession, something that Citigroup analysts believe equities are pricing in more than any other asset. Still, Alex Saunders, a quantitative analyst at Citi, said that equities have not priced in enough recession risk as "earnings estimates have further to adjust." - Bloomberg 5 Things 10/19/22

• St. Louis Fed President James Bullard said he expects the central bank to  end its ‘’front-loading” of aggressive interest-rate hikes by early next year and shift to keeping policy sufficiently restrictive with small adjustments as inflation cools. “You do have to think about what the reasonable level is,” said Bullard, who has become Wall Street’s gauge for any Fed policy pivots. Such an approach would resonate with DoubleLine Capital Chief Investment Officer Jeffrey Gundlach’s view that Treasury yields may hit a peak between now and the end of the year.  - Bloomberg 5 Things 10/20/22

We frequently quote Bloomberg’s coverage because it provides an accurate and succinct summary of important news.  If your inbox will tolerate it, you can sign up for free to receive the Evening Briefing and 5 Things You Need to Know to Start Your Day.