Given all the issues that are dominating the news, would you have guessed the S&P 500 (Index: SPX) would reach a new record high?

The index closed at a record high of 4,549.78 on Thursday, 21 October 2021, which puts the trajectory of the index into the upper half of the latest redzone forecast range:

Sharp-eyed readers will catch that the trajectory of the range has itself shifted upward, which is a result of the 'dynamic' method we use to set it. When we bridge across periods where the echoes of past volatility in stock prices affect the dividend futures-based model's projections, the past end of the range is fixed while the future end 'floats' with changes in expectations.

For the chart, the rising expectations for the future now means parts of the S&P 500's actual trajectory that were once within the redzone forecast range now fall outside of it. That's visible by design in this period because we set the total width of this forecast range to be plus-or-minus three percent of the historic typical level of volatity for stock prices.

Under typical volatility levels, the trajectory of the index should generally fall well within that statistically-determined range. But as the chart visually confirms, the market is experiencing greater than typical levels of volatility.

For us, what that means is that when we get around to projecting the S&P 500's future trajectory for 2021-Q4, we'll need to generate a new redzone forecast, since today's stock prices will become the base reference points from which we project the future for the index in that period. The echoes of today's volatility will affect the accuracy of the dividend futures-based model's projections a year from now.

The market moving headlines of the week point to several contributing factors for what new information has contributed to improving the outlook for investors. Pay particular interest to the signs and portents for the U.S. economy in the latter half of the week that was:

Monday, 18 October 2021

• Signs and portents for the U.S. economy:
• U.S. homebuilder confidence unexpectedly rises in October, survey shows
• Zillow shares slip as it pauses homebuying on U.S. labor, supply crunch
• 'Enough's enough': tight U.S. job market triggers strikes for more pay
• Oil prices ease off highs as U.S. factory data weighs on market
• Chip shortages, Hurricane Ida weigh on U.S. factory output; demand remains strong
• Another Fed minion caught trading while central banking:
• Powell Sold More Than a Million Dollars of Stock as the Market Was Tanking
• Bigger trouble developing in China:
• China's economy stumbles on power crunch, property woes
• China's plunging construction starts reminiscent of 2015 downturn
• Instantview: China Q3 GDP growth hits 1-year low, raising heat on policymakers
• China's Sept industrial output rises 3.1% y/y, misses forecasts
• China faces challenges from 'mismanagement' at certain firms, says PBOC head
• Bigger inflation developing all over:
• New Zealand inflation surges at fastest pace in over a decade
• No place to hide: investors to trawl Europe's Q3 earnings for inflation clues
• S&P, Nasdaq enjoy boost from big tech firms, Dow ends a hair lower

Tuesday, 19 October 2021

• Signs and portents for the U.S. economy:
• Oil remains near multi-year highs as energy crunch continues
• U.S. housing starts fall; permits hit one-year low as shortages bite
• Fed minions becoming concerned about inflation:
• Fed's Waller says high inflation through year end may need 'aggressive' response
• Bigger trouble developing in China is home made in China:
• China's economic wobbles cast long shadow for Asia
• Analysis-China's self-inflicted slowdown tests Beijing's reform resolve
• ECB minions see no reason to hike interest rates soon, are concerned by rising inflation:
• No reason for the ECB to increase rates by end of next year, Villeroy says
• ECB's Rehn warns of risk if inflation surge lasts much longer
• Risk of higher euro zone inflation on the rise: ECB's Vasle
• Wall Street ends higher as investors bet on positive earnings season

Wednesday, 20 October 2021

• Signs and portents for the U.S. economy:
• U.S. mortgage rates surge to 6-month high -MBA
• California ports, key to U.S. supply chain, among world's least efficient
• U.S. trucking industry disruptions to last as long as pandemic persists - Buttigieg
• Oil rallies as U.S. crude stocks decline in tight market
• Pandemic fallout could slow U.S. online holiday spending growth: report
• Fed minion says Fed's policies are perfect:
• Fed's Quarles: taper test is met, Fed not behind curve
• Fed report shows wage pressures amid 'modest to moderate' economic growth
• Bigger trouble developing in China:
• China's new home prices stall for first time since COVID-19
• Bigger inflation developing all over:
• UK house prices rise 10.6% in year to August - ONS
• Energy, services boost euro zone inflation as expected in Sept
• Canada's annual inflation rate hits 4.4% in September, highest since 2003
• Supply chain chaos set to extend further, port operator ICTSI says
• German regulator cuts power, gas grid earnings to protect consumers
• ECB minions, having solved all problems of jobs and inflation, turn attention to climate change:
• Euro zone banks should be legally bound to climate transition plans, ECB says
• Bundesbank chief Weidmann quits early with one last inflation warning
• Weidmann: the often lonely ECB voice against easy money
• Wall Street closes higher as earnings reports soothe investor fears

Thursday, 21 October 2021

• Signs and portents for the U.S. economy:
• U.S. weekly jobless claims hit 19-month low as labor market tightens
• U.S. existing home sales surge to 8-month high in September
• White House tells Democrats that corporate tax hike unlikely in current bill -source
• Biden, Democrats shred spending, tax plans to get a deal done
• Fed minions want to stop holding so many U.S. Treasuries, get new rules to minimize potential for insider trading:
• Fed should let its balance sheet shrink over next couple of years - Waller
• Fed puts 'tough' investment limits on top officials in aim to staunch scandal
• Bigger inflation developing all over:
• World Bank sees 'significant' inflation risk from high energy prices
• Soaring prices dampen consumer mood in India's festival season
• UK manufacturers raise prices by most since 1980 - CBI
• BOJ minions want to stop doing so much stimulus, says Japan's banks are stable:
• Exclusive-BOJ discussing phasing out pandemic support as economy reopens - sources
• BOJ says Japan's banking system stable, warns of risks
• IBM weighs on the Dow; Nasdaq and S&P gain ground

Friday, 22 October 2021

• Signs and portents for the U.S. economy:
• U.S. business activity accelerates in October, shortages hamper factories - IHS Markit survey
• Biden backs down on corporate tax hikes, open to altering filibuster
• Chief Fed minion says its time to taper stimulus bond buys while facing forced stock sale, another minion says Fed should keep stimulus going:
• Time for Fed to taper bond purchases but not to raise rates, Powell says
• Fed Chair Powell may need to sell millions in bonds under new rules
• Fed's Daly: standing pat is right course for monetary policy now
• Bigger inflation developing all over:
• Exclusive-UK public's inflation expectations rocket to record high: GfK
• China's soyoil hit near 10-year high, crush margins swing back to profit
• Euro zone business growth slowed in October, prices soared -PMIs
• Japan's consumer inflation turns positive as energy costs rise
• Euro zone inflation expectations hit ECB target of 2%
• Mixed economic picture emerging in Asia:
• Japan's private-sector activity grows for first time in 6 months - PMI
• South Korea's economy likely lost some steam in Q3, cooling China a worry: Reuters poll
• ECB minions want to be last in line to hike interest rates, may get new ethics rules like Fed:
• ECB to raise rates in 2024, but risk remains of earlier hike: Reuters poll
• Take Five: ECB, FAANG and China's bond conundrum
• ECB urged to tighten trading rules for policymakers
• Nasdaq, S&P 500 end lower, dragged down by communications services

If you haven’t already guessed it by clicking through the headlines, Reuters is a terrific resource for business and markets news, with a higher-than-average signal to noise ratio for picking up on market-moving news items.

The Inventions in Everything team has seen a lot of really strange inventions over the years, but today's featured invention is the only one that truly creeps us out. Which is why we're featuring it just ahead of Halloween!

We're referring of course to U.S. Patent 112,550, issued to Robert J. Clay on 14 March 1871. If you read the patent, the description of the invention sounds rather innocent:

This invention relates to a new doll, which is provided with a concealed clock-work and mechanism, whereby its limbs are moved in imitation of those of a creeping baby while the doll itself is being propelled on the floor by concealed rotating wheels which support it. A very amusing toy is thus produced at small cost.

What could possibly be wrong with that? Well, the title of the invention is "Improvement in Creeping Dolls", which should start sending up warning flags on its own, but wait, there's more. Prior to 1880, in order to be issued a patent, inventors were required to submit a physical model of their invention as part of the patent examination process. The model Clay submitted of an "Improved Creeping Baby-Doll" still exists and is in the possession of the cryptkeepers at the Smithsonian Institute.

Think of every horror movie you've ever seen and let us know what your reaction would be if you suddenly saw this thing in action on the screen. Or better still, what if you saw it in your home, coming toward you?

"Pure nightmare fuel" is how the IIE team has come to describe this invention, where the patent's illustrations fail to do justice to what the real-life thing looks like.

Within a decade after it was delivered to the U.S. Patent Office, the U.S. Patent Office discontinued its requirement for inventors to provide models of their inventions, perhaps motivated by the possibility they might receive more things like the physical model of U.S. Patent 112,550.

We're being a bit facetious in saying that. In truth, the U.S. Patent Office started running out of space to store all the stuff they were getting, so they dropped the requirement except in the case of flying machines and perpetual motion machines, preposterous and impossible inventions that demanded a higher level of examination to be considered for a patent.

After the Wright brothers earned U.S. Patent 821,393 on 22 May 1906, the requirement for inventors of flying machines to deliver working models of their inventions to the U.S. Patent Office was dropped. But should you invent a perpetual motion machine, you will need to provide your working model to the U.S. Patent Office when you submit your patent application.

The IIE team is aware of other creepy inventions, but subjectively, we rank this one the creepiest. Pleasant dreams, and happy Halloween!

How does your household compare to the average American household when it comes to spending for food at home?

Answering questions like that takes data, and for that, the Consumer Expenditure Survey has detailed the average amount of money spent by American household "consumer units" in each year from 1984 through 2020. In the following chart, we've extracted the survey's data for expenditures by food category, showing the data for each year to show the trends for each.

In 2020, the average total amount of food-at-home expenditures for American households was $4,942. Here's how that breaks down into major food categories:

• Meats, poultry, fish, and eggs: $1,075
• Fruits and vegetables: $977
• Miscellaneous foods: $973
• Cereals and bakery products: $640
• Dairy products: $474
• Nonalcoholic beverages: $455
• Other food at home: $348

This list brings up a good question: what's the difference between "Miscellaneous foods" and "Other food at home". Here's how the Bureau of Labor Statistics defines both of them (we've added the additional examples in parentheses):

Miscellaneous foods includes frozen prepared meals and other foods; canned and packaged soups; potato chips, nuts and other snacks; condiments and seasonings, such as olives, pickles, relishes, sauces and gravies, baking needs and other specified condiments; and other canned and packaged prepared foods, such as salads, desserts, baby foods, and vitamin supplements. Other food at home primarily represents sugar and other sweets (such as sugar, candy and chewing gum; artificial sweeteners; and jams, jellies, preserves, fruit butters, syrup, fudge mixes, icings, and other sweets), and also fats and oils (including margarine, shortening, and salad dressings, vegetable oils, nondairy cream substitutes and imitation milk, and peanut butter).

Since food prices have been rising, you can use these average 2020 expenditures to benchmark how much more money you're having to spend on these items in 2021.

References

U.S. Bureau of Labor Statistics. Consumer Expenditure Survey. Multiyear Tables. [PDF Documents: 1984-1991, 1992-1999, 2000-2005, 2006-2012, 2013-2020]. Accessed 9 September 2021. 

We've updated our chart tracking the periods of order and chaos that have characterized the S&P 500 (Index: SPX) over the past 30 years.

It won't be a surprise, but the index entered into a period of chaos with the arrival of the coronavirus pandemic in March 2020. Through eighteen full months later, the index is still characterized by chaos.

The big question: Is the U.S. stock market in an economic bubble?

• Pro: Jeremy Grantham says U.S. stocks are in a ‘magnificent bubble,’ crazier than 1929 and 2000
• Con: The stock market is not in a bubble as tech innovation drives rapid growth, according to Cathie Wood

If you want to know where we stand on the question, we wrote the definition of an economic bubble.

We are seeing an unexpected development in Arizona's experience with the coronavirus pandemic. While the trends for the number of cases and deaths in the state are showing a slow, steady decline, the number of new hospital admissions in the state have plunged by a much larger amount by comparison.

The following chart shows the state's data for all three of these COVID-19 data series from 15 March 2020 through 15 October 2021, or rather, their rolling seven-day moving averages for which the data is at least 95% complete:

According to the state's data, the number of new hospital admissions has fallen by over 57% from their third-wave peak during the week of 14 through 22 August 2021. That figure applies for 20 September 2021, which meets the 95% complete threshold at this writing. By contrast, Arizona had only seen a 23% decline in cases at the same point in time, which has grown to a nearly 33% reduction through 3 October 2021. The data for deaths through 20 September 2021 will be too incomplete to provide an additional point of comparison for another two weeks.

The Arizona Department of Health indicates their COVID dashboard is undergoing scheduled database maintenance, so this is the most current information available for the state until it might update it later today. We're curious to see if the state's data for COVID hospital admissions might be subject to revision when that work is complete.

If the hospital admission data is unchanged or only sees minor revisions, it suggests Arizona's experience with the coronavirus pandemic as its third wave recedes is very different from what it saw during its first two waves.

But if there's been a reporting glitch for new COVID admissions from Arizona's hospitals to Arizona's DHS, we would expect the states datatrend for COVID hospitalizations to follow the same basic pattern for as for cases. We'll update the original article on our site with what we find after the state's next COVID data update.

Update 19 October 2021, 11:15 PM EDT: The patterns we've described above have held through the latest daily update, which covers available data through 18 October 2021.

Previously on Political Calculations

Here is our previous coverage of Arizona's experience with the coronavirus pandemic, presented in reverse chronological order.

• All Indicators Confirm COVID Third Wave Receding in Arizona
• Arizona's Third COVID Wave Peaks and Begins to Recede
• Arizona COVID Cases Rising in Third Wave
• Arizona COVID Cases on Slow Uptrend in Summer 2021
• Increase in Arizona COVID Cases from Border Migration Crisis Stabilizing
• COVID-19 and the 2021 Border Migration Crisis in Arizona
• Improving COVID Trends Bottom and Flatline in Arizona
• Surge of Migrants, Lifting of Business Capacity Limits Change Arizona COVID Trends
• COVID-19 in Retreat in Arizona With Vaccines Gaining Traction
• The Ebb and Flow of COVID-19 in Arizona's ICUs
• Arizona's Plunging COVID-19 Caseloads and the Vaccines
• Arizona Enters Downward Trend for COVID-19 After Second Peak
• Arizona Passes Second COVID-19 Peak
• A Tale of Two States and the Coronavirus
• COVID-19 Questions, Answers, and Lessons Learned from Arizona
• The Deadly Intersection of Anti-Police Protests and COVID-19
• 2020 Campaign Events Drive Surge in Arizona COVID Cases
• Arizona Arrives at Critical Junction for Coronavirus Cases
• Arizona To Soon Reach A Critical Junction For COVID-19
• Getting More Than Care from Arizona's COVID ICU Beds
• Arizona's Decentralized Approach to Beating COVID
• Going Back to School with COVID-19
• Arizona Turns Second Corner Toward Crushing Coronavirus
• Arizona's Coronavirus Crest in Rear View Mirror
• The Coronavirus Turns a Corner in Arizona
• A Delayed First Wave Crests in the U.S. and a Second COVID-19 Wave Arrives
• The Coronavirus in Arizona
• A Closer Look at COVID-19 Deaths in Arizona
• The New Epicenter of COVID-19 in the U.S.
• How Long Does a Serious COVID Infection Typically Last?
• How Deadly is the COVID-19 Coronavirus?
• Governor Cuomo and the Coronavirus Models
• How Do False Test Outcomes Affect Estimates of the True Incidence of Coronavirus Infections?
• How Fast Could China's Coronavirus Spread?

References

Political Calculations has been following Arizona's experience with the coronavirus experience from almost the beginning, because the state makes its high quality data publicly available. Specifically, the state's Departent of Health Services reports the number of cases by date of test sample collection, the number of hospitalizations by date of hospital admission, and the number of deaths by date recorded on death certificates.

This data, combined with what we know of the typical time it takes to progress to each of these milestones, makes it possible to track the state's daily rate of incidence of initial exposure to the variants of the SARS-CoV-2 coronavirus using back calculation methods. Links to that data and information about how the back calculation method works are presented below:

Arizona Department of Health Services. COVID-19 Data Dashboard: Vaccine Administration. [Online Database]. Accessed 16 October 2021.

Stephen A. Lauer, Kyra H. Grantz, Qifang Bi, Forrest K. Jones, Qulu Zheng, Hannah R. Meredith, Andrew S. Azman, Nicholas G. Reich, Justin Lessler. The Incubation Period of Coronavirus Disease 2019 (COVID-19) From Publicly Reported Confirmed Cases: Estimation and Application. Annals of Internal Medicine, 5 May 2020. https://doi.org/10.7326/M20-0504.

U.S. Centers for Disease Control and Prevention. COVID-19 Pandemic Planning Scenarios. [PDF Document]. 10 September 2020.

More or Less: Behind the Stats. Ethnic minority deaths, climate change and lockdown. Interview with Kit Yates discussing back calculation. BBC Radio 4. [Podcast: 8:18 to 14:07]. 29 April 2020.