Editor’s Note: A version of this story appeared on CNN Business’ Nightcap. Sign up for free to get it in your inbox, here
The Fed has spoken.
As we discussed yesterday, the Fed’s 75-basis-rate move was essentially a foregone conclusion. And the central bank delivered, announcing it would raise interest rates again by three-quarters of a percent – its fourth straight move of that size since it began trying to tame inflation this spring.
So what did we learn from President Jay Powell’s closely watched speech?
Some interesting points:
Markets initially rallied when the Fed released its policy decision, which contained a new detail that in the cynical world of Fed-watching is considered a blunder: “In determining the pace of future increases in the target area, the Committee will take into account the overall tightening of monetary policy, the delays that monetary policy affects economic activity and inflation and economic and financial developments.”
The merchant read as follows: Don’t worry guys, the worst is almost over…
But the party was short-lived.
Powell took the stage and said:
“I think it’s too early to think or talk about stopping our rate hikes. We have a ways to go.”
The Dow fell more than 500 points, or 1.6%, on the day. The S&P 500 fell 2.5%, and the Nasdaq fell 3.4%.
THE BIG PICTURE
The Fed is working on data that has offered a negative view of the economy’s health in recent months. On the one hand, the housing market is cooling down considerably, but the high cost of borrowing has not kept up with inflation so far. Part of the problem with inflation, in the Fed’s view, is that the labor market is tight show up with force, it exerts upward pressure on the wages, which increases the heat according to demand.
Look ahead: On Friday, analysts will focus on the government’s October jobs report, which is expected to show the economy added another 200,000 jobs in October – down from the previous month but still historically high. This may ensure the Fed has room to continue raising rates without triggering a recession.
CVS and Walgreens have tentatively agreed to pay a combined $10 billion to settle lawsuits brought by state and local governments alleging the retailers misprescribed opioid painkillers.
US states, cities and counties have filed more than 3,000 lawsuits against manufacturers, distributors and pharmacies, accusing them of downplaying the drug’s dangers and preventing the pill from being taken for illegal use.
‘Tis the season for another edition of everyone’s favorite Nightcap nosh. Let’s dig in.
To no one’s surprise, Thanksgiving will be much more expensive this year. A market research firm pays a premium of 13.5% compared to last year.
Food inflation is no joke: Severe weather, highly contagious bird flu and the war in Ukraine have pushed grocery prices even higher, especially around Thanksgiving. Prices in Turkey vary by region, but in some cases have increased by more than 40% compared to last year. Potatoes have increased by 18%. Fat: 27%.
For some families, this may mean cutting. Maybe consider a potluck? Or focusing on the sides because who really needs the stress of cooking a whole turkey? According to Bloomberg, some cash-strapped Gen Zers are opting for soup, salad, and pizza, and I totally support them.
Consider a side you might want to add: guacamole.
Yup. There is an abundance of avocados in America and this has led to a significant drop in retail prices. After peaking at the end of June, sales prices on a carton of avos are down 67%. At the retail level, prices are down 2.6% from a year ago.
Whatever you decide to serve, remember the true meaning of the holiday – add and discuss politics with your relatives.
Not many people know this, but Starbucks is now the official arbiter of the seasons. Fall now starts in August because that’s when Pumpkin Spice arrives. Winter starts right after Halloween because that’s when the holiday mugs arrive. Don’t get me wrong, I don’t make the rules…
Anyway, starting Thursday, it’s holiday cupping season, which Starbucks fans seem excited about. Here’s what Bux had to say about them: “We’ve always talked about glasses as little gifts, and we hope they feel like a holiday gift to our customers and retail partners.”
If someone at Starbucks HQ had consulted me, I would have said the better gift would be – like – free coffee or something. But what do I know?