Thank you to all the men and women that have served to protect our country and our freedom.  We salute you.  Happy Veterans Day.

Yesterday, Fed chair Jay Powell let his human side come out when he lambasted organizers of the 24th Jacques Polak Annual Research Conference for allowing climate change protesters to storm the stage as he was delivering his remarks. Interestingly, I think Powell revealed even more of his human side with those same remarks but in less colorful language.

Even before that scene, the market was lurching into turmoil mode after a sloppy 30-year bond auction illuminated the challenge of finding buyers to fund profligate government spending if the Fed is out of the picture.

The thirty-year bond yield soared, and stocks tumbled.

But later in the day, reports of a ransomware attack on the ICBC hinted at potential demand from China that didn’t materialize. 

With that reprieve, the market picked up on yesterday’s pre-auction momentum, and then ran into another kerfuffle.

The Michigan Sentiment report was ugly.

• 60.4 from 63.8, the street was looking for 63.7 (note: the report has been the proverbial snowball to bolder since spiking to 71.5 in July).
• Current conditions 65.7 from 70.6, the street was looking for 70.3.
• Expectations 56.9 from 59.3, the street was looking for 61.0.

The Fed must be pleased with the growing worries over buying conditions for homes, cars, and durables, but it’s a mix of mentions of high interest rates and tight credit reasons.

The problem is the eruption in inflation expectations.  One year 4.4% from 4.0% and 3.2% in September.

Remember when this report roiled the stock market back on June 10, 2022, when inflation expectations spiked to 5.4% from 3.3%.  Jay Powell remarked the move was “eye-catching” and the S&P 500 swooned 2.9% that session, then down 3.9% that following Monday session.

That makes today’s report a conundrum of sorts, but after initially losing steam, stocks are moving higher.

Have a great weekend.