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“At first, dreams seem impossible, then improbable, and eventually inevitable.”– Christopher Reeve
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As Florida recovers from Hurricane Milton and investors prepare for the latest round of economic data, equity futures are just modestly lower, treasury yields are higher, and crude oil is modestly higher. In Asia, equity markets in the region were higher across the board. Australia and Japan were modestly higher while Hong Kong rallied 3% and China was up just over 1%. In Europe, the tone has been less positive as the STOXX 600 trades down 0.2%, and most individual country benchmarks are also lower. Retail Sales in Germany increased 1.6% y/y versus 1.5% in July. Industrial Production in Italy rose just 0.1% m/m versus expectations for an increase of 0.3% but was still up from a decline of 1% in July.
Economic data just hit the tape, and each report went in the wrong direction in terms of the economic impact. CPI data came in higher than expected on both a headline and core basis. Headline CPI increased 0.2% m/m versus expectations for an increase of 0.1% while core CPI rose 0.3% which was also a tenth higher than expected. Jobless claims, on the other hand, both surpassed expectations. Initial claims came in at 258K versus forecasts for a reading of 230K. That’s a pretty significant miss, but looking at the state-by-state numbers, the ones impacted by Hurricane Helene all saw large increases. North Carolina, for example, saw claims surge by over 8K alone.
Besides today’s CPI report and jobless claims, one big area of focus today will be Tesla Robotaxi Day after the close, and investors are expecting the company to shed light on its plans for a ride-hailing fleet of self-driving Teslas. Expectations are high regarding Musk’s vision, but investors probably aren’t expecting much in the way of an actual ready-for-the-wild vehicle. Tesla still has a way to go before getting approval for full-self driving, and Waymo, which currently holds the lead in this space, only operates a limited fleet in a limited number of areas.
Keep in mind, though, that however pie in the sky the concept of getting in a car without a driver feels today, it’s only a matter of time. iPhones, cloud computing, Uber, and even for most people, remote work, didn’t exist 15 or 20 years ago, and now they’re routine parts of our days. Only a little more than a few years ago, if you left for work and forgot your phone you probably decided to go the day without it. Today, you can’t get very far out the door without it. ChatGPT isn’t even two years old, and already has over 180 million users! As Christopher Reeve said above, the impossible becomes inevitable and the inevitable becomes routine.
The S&P 500 closed at another all-time yesterday for the first time this month after five record closes in September. Record closing highs are starting to feel somewhat routine for the market these days, and this year’s total of 44 already ranks as the 11th most since 1954.
Looking at the chart, nothing is guaranteed, but it will only take a couple more closing all-time highs to crack the top ten. With 56 trading days left in the year, there’s even a decent chance that this year could crack the top five (56) if the market averages one new closing high per week. It’s also technically possible but also unlikely that the record of 77 could be reached, but that would require a record high at a pace of about two every three days. Even reaching the 70 in 2021 would require a pace of about one every other day. New closing highs may feel routine, but they’re unlikely to become that routine.
