Market 10/27: Fed's favorite inflation gauge rises again

PCE rises for 2 consecutive months due to sharp oil price increase

Overall PCE price index up 0.4%, mainly from oil price increase. Service sector inflation (excluding housing and energy) up 0.4%, vs. just 0.1% last month.

Core PCE inflation falls to 3.7% in September (lowest since May 2021). Headline PCE inflation remains at 3.4% YoY.

Personal spending surges 0.7% MoM while income rises only 0.3%.

This shows the savings rate among the public is falling sharply, from 4.0% to 3.4%.

Private sector wages fall to 3.9%, while government employee wages rise 7.8% YoY, hitting record high since October 2021.

UMich inflation expectations explode in October

UMich inflation expectations rise to 4.2%, highest since May 2023, beating expectations of 3.8%.

Consumer sentiment falls about 6% after two straight months of little change.

This decline mainly from high-income consumers and those holding large stock positions, aligning with recent stock market weakness.

Record inflows into money market funds, bank relief funds

After largest outflow since Lehman Brothers financial crisis, money market funds saw inflows last week (+$24.9B).

Inflows recorded for both retail and institutional funds.

However, bank deposits and money market fund assets still diverge.

Fed balance sheet shrinks another $25B last week, lowest since May 2021.

Amazon ER: Revenue beats expectations, AI segment highlighted

• Revenue up 13% YoY to $143.1B.

• Operating margin 8% (+6pp Y/Y).

• EPS $0.94 ($0.58 beat).

• AWS revenue up 12% YoY to $23.1B.

Recent quarters saw AWS growth slowdown as large enterprises control and cut spending.

Amazon ad revenue remains bright spot as major brands ramp up campaigns for visibility, up 26% YoY, surpassing Meta and Google.

Intel ER: Profits beat expectations despite revenue decline

• Revenue down -8% YoY to $142B ($0.6B beat).

• Gross margin 45.8%.

• EPS: $0.41 ($0.22 beat) thanks to 15% cut in operating expenses. Intel says it has 120,300 employees, down from 131,500 last year.

Exxon ER: Dividend hike despite profit decline

• Revenue at $90.76B, down from prior quarter but above expectations.

• Adjusted EPS $2.27, below expectations.

• Profits at $9.1B, up $1.2B from Q2.

3 out of 4 product segments beat profit plans, except chemicals due to high global industrial raw material costs.

Report comes weeks after announcing acquisition of Pioneer Natural Resources for nearly $60B. Company's largest deal since Mobil two decades ago.

Swing-state voters' views on top 2024 election issue

• Economy considered the most important factor influencing the November 2024 presidential vote.

• 83% of respondents agree with this view.

• As expected, Cost of living, Taxes and Housing costs are the 3 most prominent issues receiving the most attention.

• Compared to Biden, Trump is somewhat more trusted in handling economic issues.

• Nearly 50% believe that Bidenomics has a negative impact on the economy.

Some other news:

• Jamie Dimon (CEO of JPMorgan) plans to sell 141 million USD of JPMorgan stock.

• Chevron stock falls after reporting earnings lower than expected.