The day after Thanksgiving is a difficult one because you now have to figure out what to do with all those leftovers from the big meal. Not all of them will be as good on their second serving. The turkey will be drier. Any vegetables or potatoes you cooked will be at risk of being overcooked when you heat them up again. Dishes that involve words like "casserole" are almost certainly best disposed of because they were bad ideas to begin with.

There is one exception. There's always room for pie.

Smart planning for Thanksgiving means preparing more than one pie to ensure that you can have enough pie to survive to the day after. While pumpkin pie is the traditional pie for Thanksgiving dinner, having another kind of pie on hand is the bonus you deserve for having enough restraint on Thanksgiving to ensure you can have more pie.

What other kind of pie do you want to have?

Sabrina Elfarra curated data from Google Trends in 2023 to find out what other kinds of pies Americans were looking up recipes to cook in the days leading up to Thanksgiving that year. Here's her map illustrating what she found to be the most popular Thanksgiving pie recipe search by state:

The alternate (non-pumpkin) pie recipes include:

• Apple
• Blackberry
• Cherry
• Coconut
• Grape
• Banana Cream
• Banoffee
• Buttermilk
• Butterscotch
• Cream
• Key Lime
• Chocolate
• Mississippi Mud
• Peanut Butter
• Pecan
• Frito Chili
• Sweet Potato
• Tamale
• Shoofly

If you're looking for non-pumpkin pie options, you might consider these for their second pie potential at next year's Thanksgiving holiday. Choose wisely!

Image credit: Different types of pies on a dining table by grabadonut on Wikimedia Commons. Creative Commons Creative Commons 4 - CC BY-SA 4.0.

Today is the big event! And if you're not already starting to cook that turkey for your 2024 Thanksgiving feast, you soon will be!

But before you get started, let's address a question that may already be in the back of your mind from when you picked up the bird you'll be cooking. Is this year's turkey bigger than the one you cooked last year?

There's a good chance it is. The U.S. Department of Agriculture's initial estimate of the live weight of the turkeys that were raised during 2024 is 32.8 pounds (14.9 kilograms). That's up 2.5% from their 2023 estimate of 32 pounds.

But it's not as big as 2021's record live weight of 33.1 pounds (15.0 kilograms). The following interactive chart shows how the size of live turkeys raised on U.S. farms has changed over the 55 years from 1970 through 2024.

At more than 32 pounds, farm-raised turkeys are more than double the size of wild "heritage" turkeys in the U.S. on average. Most the increase in the size of farm-raised turkeys has taken place since 1980.

References

U.S. Department of Agriculture. Turkeys Raised. [PDF Document]. 27 September 2024.

Image Credit: Microsoft Copilot Designer. Prompt: "A picture of a turkey who has been exercising and building up bulk".

Farm-raised turkeys account for about 97% of the entire population of turkeys in the United States. If you are having turkey at your 2024 Thanksgiving dinner, it almost certainly came from a farm.

Of the 205 million turkeys raised on U.S. farms during 2024, 180 million were raised in just 13 states. Which state do you suppose your Thanksgiving turkey came from?

Until "Big Turkey" starts putting that information on their packaging labels, you're simply going to have to play the odds. To make that easier, we've generated the following interactive map which identifies the top turkey-producing states of the U.S. and indicates the number of turkeys raised on farms within them.

When you play the odds, you'll find there is a one-in-six probability that the turkey on your table will have come from 2024's top producer of farm-raised turkeys: Minnesota.

If you want to get odds that are more in your favor, there's a better than 50% chance your turkey will have come from one of four states: Minnesota, North Carolina, Arkansas, or Indiana. Meanwhile, the odds are a little better than one-in-three that it came from either California, Iowa, Michigan, Missouri, Ohio, Pennsylvania, South Dakota, Virginia, or West Virginia. Not to mention a one-in-eight probability it came from a turkey farm in any of the other 37 states.

References

U.S. Department of Agriculture. World Agricultural Supply and Demand Estimates (WASDE - 654). U.S. Quarterly Animal Product Production. Nov Proj. Turkey (Ready To Cook Weight, millions of pounds). [PDF Document]. 8 November 2024.

Image Credit: Microsoft Copilot Designer. Prompt: "A picture of a turkey looking at a map of the United States".

It's Thanksgiving week! We're marking the occasion by taking on questions that may come up during family celebrations of the holiday. And while many of these questions might be asked by children, they're important enough that the U.S. Department of Agriculture's National Agricultural Statistics Service and the U.S. Fish and Wildlife Service keeps track of them.

Let's start with a very basic question: How many turkeys are there in the United States?

The answer to that question comes in two parts, because there are two distinct portions of the population of turkeys in the U.S. There are farm-raised turkeys, which are mainly raised in 13 states, and there are wild turkeys, who live throughout most of the continental U.S.

We'll start with the population of farm-raised turkeys, because their numbers are so much larger than the population of wild turkeys. In 2024, an estimates 205 million turkeys have been raised on U.S. farms. That number is down from 2023's estimated 219 million farm-raised turkeys and is well below the record number of 302.7 million turkeys that were raised on U.S. farms in 1996.

The following interactive chart presents the number of farm-raised turkeys for each year from 1970 through 2024:

It's harder to count the population of wild turkeys in the U.S. because their numbers have to be inferred from data collected by hunters and conservationists, where for every wild turkey they see, there are many more they did not see. The U.S. Fish and Wildlife Service reports there are an estimated 6.5 million wild turkeys in the U.S.

That puts the total population of turkeys in the U.S. at 211.5 million in 2024. Since about 97% of these turkeys were raised on farms, those birds are the ones you'll most often find at the center of a traditional Thanksgiving dinner.

References

U.S. Department of Agriculture National Agricultural Statistics Service. Livestock Historic Data. [Online Database: Survey - Animals & Products - Poultry - Turkeys - Production - Turkeys Production Measured in Head - Total - National - US Total - 1929-2024 - Annual - Year]. Accessed 14 November 2024.

Susan Morse. U.S. Fish and Wildlife Service. Wild Facts About Turkeys. [Online article]. Accessed 24 November 2024.

Image credit: Turkeys being raised on a turkey farm by Scott Bauer for the U.S. Department of Agriculture (3 February 2013) on Flickr. Creative Commons CC by-SA 2.0 Attribution-Sharealike 2.0 Generic Deed.

The S&P 500 (Index: SPX) rebounded in the pre-Thanksgiving holiday week of trading. The index rose 1.7% from where it ended the previous week, closing at 5,969.34 on Friday, 22 November 2024.

The biggest driver of stock prices continues to be expectations for how the Federal Reserve will be setting interest rates in 2025. The CME Group's FedWatch Tool continues to anticipate the Fed will reduce the Federal Funds Rate by 0.25% when its Federal Open Market Committee concludes a two day meeting on 18 December 2024. More significantly, the FedWatch tool's projections for all of 2025 indicate just one more rate cut is expected, a quarter point reduction on 18 June (2025-Q2). The tool expects the Federal Funds Rate will bottom at a target range of 4.00-4.25%.

Since that single rate cut now expected in 2025 would take place in 2025-Q2, that explains why investors are focusing on that distant future quarter as they set current day stock prices. The latest update of the alternative futures chart shows the trajectory of the S&P 500 just below the bottom of the range that we would expect to most likely find it for when investors focus their forward looking attention on 2025-Q2.

Since the alternative futures are projected to dip below where the S&P 500 is currently positioned in the week ahead, we can argue the market regime that has been in place since 9 March 2023 is still holding. We're still keeping an eye out for indications of a change in market regime.

With the Thanksgiving Day holiday weekend coming up, we anticipate a slow flow of market moving news in the week ahead. Here are the past week's market moving headlines:

Monday, 18 November 2024

• Signs and portents for the U.S. economy:
• Oil prices rise over 3% on Sverdrup outage, Ukraine war escalation
• US single-family housing starts slump; high mortgage rates remain a challenge
• Fed minions find more untamed inflation to fight:
• US labor market still boosting inflation, San Francisco Fed economists say
• Fed hawks and doves: what US central bankers are saying
• Bigger trouble developing in China:
• China's export tax bombshell rocks aluminium market
• Chinese exporters to hike prices, renegotiate contracts after tax rebate cuts, sources say
• BOJ minions setting stage to leave interest rates unchanged, claim they'll stop stimulus someday:
• BOJ sees progress in wage-driven inflation, keeps Dec rate hike on table
• BOJ to bid farewell to stimulus era, justify rate hikes in policy review
• ECB minions more worried about inadequate growth than inflation from tariffs:
• ECB fears Trump tariff effect on growth more than on inflation
• ECB's Nagel says Trump's tariffs may have minor impact on inflation
• ECB's Makhlouf: Premature to make decisions based on new U.S. administration
• Nasdaq and S&P advance, Dow slides and yields stumble

Tuesday, 19 November 2024

• Signs and portents for the U.S. economy:
• Oil slips on Sverdrup field restart, geopolitical fears support
• Fed minions say they don't know how much longer they'll cut interest rates:
• Fed's Schmid says it is uncertain how far interest rates can fall
• Bigger trouble, stimulus developing in China:
• China’s new hobbies create a spending mirage
• ECB minions getting excited to cut Eurozone interest rates again:
• ECB's Panetta calls for lower rates, forward stance, guidance
• Nasdaq up 1%, S&P 500 ends higher as tech moves limit Russia-Ukraine pressure; Dow slips
• https://www.reuters.com/technology/bitcoin-breaches-94000-first-time-2024-11-20/

Wednesday, 20 November 2024

• Signs and portents for the U.S. economy:
• Oil little changed as market weighs mixed drivers
• OPEC+ may stick with deep oil cuts for longer due to weak demand
• Fed minions still expected to deliver December rate cut, uncertain on inflation, future rate cuts:
• Fed to lower rates in Dec but slow pace in 2025 on inflation risks: Reuters poll
• Fed governors stake out competing views of inflation risk
• Fed's Williams sees inflation cooling and interest rates falling further, Barron's reports
• Fed's Collins sees more rate cuts ahead for US central bank
• Fed's Bowman says rate cuts are concerning
• Fed's Bowman calls for cautious approach on interest rates
• Bigger trouble developing in China:
• China leaves lending benchmark LPRs unchanged, as expected
• Trump to unleash nearly 40% tariffs on China in early 2025, hitting growth: Reuters poll
• Chinese companies find solution to falling population:
• China overtakes Germany in industrial use of robots, says report
• ECB minions find new problem to worry about:
• ECB warns of 'bubble' in AI stocks as funds deplete cash buffers
• Wall Street ends mixed, Nvidia shares slip after the bell
• Bitcoin surges to record high near $95,000

Thursday, 21 November 2024

• Signs and portents for the U.S. economy:
• Oil up 2% after Russia-Ukraine missile exchange, outweighing US crude stock rises
• US natural gas drillers to lift 2025 output, reversing year of cuts
• US existing home sales rebound in October
• US 30-year fixed-rate mortgage approaches 7%
• Fed minions getting more worried about untamed Bidenflation:
• Fed's Barkin says US is vulnerable to inflation shocks, FT reports
• Fed's Goolsbee says pace of rate cuts may need to slow
• Bigger stimulus developing in China:
• Exclusive: China advisers call for steady 5% 2025 economic growth goal, stronger stimulus
• ECB minions worry about Eurozone getting into more trade wars, thinking about how to grab more power:
• ECB warns of 'sizeable' hit to growth from a trade war
• Trump and Europe: ECB policymakers say EU must complete shelved projects to tackle threat
• Wall Street closes higher as Dow, S&P hit one-week tops
• Dow ends up 1%, S&P gains with Nvidia sloughing off loss; Nasdaq tips into the green
• Bitcoin marches towards $100,000 on optimism over Trump crypto plans

Friday, 22 November 2024

• Signs and portents for the U.S. economy:
• Oil prices settle up 1% at 2-week high as Ukraine war intensifies
• US existing home sales rebound in October
• China signals its looking for trade deal with U.S.:
• China says it is willing to talk with US to push forward bilateral trade
• China announces policy measures to boost trade amid worries over Trump tariffs
• BOJ minions signal they'll attempt another rate hike to combat Japan inflation in December 2024:
• BOJ to hike rates in Dec as yen weakens and Trump returns, majority of analysts say: Reuters poll
• Japan's inflation holds above BOJ target, fanning Dec rate hike bets
• Japan's factory activity extends declines on sluggish demand, PMI shows
• ECB minions getting excited to deliver more rate cuts, wonder what to do with Germany as sick man of Eurozone:
• More ECB cuts are coming but Dec discussion must wait, Nagel says
• Vulnerable Germany heaps pressure on ECB
• Dow climbs 1%, S&P, Nasdaq advance as Wall Street's key averages cement weekly wins
• Wall Street closes higher after business activity data
• US business activity gauge rises to 31-month high in November

The Atlanta Fed's GDPNow tool's projection of the real GDP growth rate for the current quarter of 2024-Q4 ticked up to +2.6% from the previous week's +2.5%.

On a programming note, we're going to break away for our annual celebration of the Thanksgiving holiday this week. The next edition of our

Image credit: Microsoft Copilot Designer. Prompt: "An editorial cartoon with a Wall Street bull and a bear playing basketball, with the bull rebounding". We have to admit the AI did a great job with the bull. As for the bear, with how good the bull came out, we can only assume that AI believes bears are bad at basketball.

"Mars... I can't believe I'm back on Mars."

If you're a fan of science fiction, you'll recognize the quote from the Babylon 5 character Michael Garibaldi. It's an inhospitable place. And yet, it's a place where economic activity has been occurring since the Earth Year 2021. Or if you prefer, since the first quarter of Mars Year 36, if we go by a bespoke calendar for the Red Planet determined by Earth astronomers.

We've developed an approach for estimating the value of Mars' Gross Domestic Product, which at this phase of the planet's economic development, consists of rock samples being collected by the Mars 2020 Perseverance Rover on the planet's surface.

Unlike previous science missions to Mars, what makes the collection of these samples qualify as economic activity is the intent to export them to Earth, as the samples are currently being deposited into inventory to support their export.

Those export plans have run into a snag as being too costly, with NASA laying off hundreds of employees at its Jet Propulsion Laboratory because of the cost of its export business plan. During 2024, NASA has been soliciting new ideas for how to make the Martian export economy a reality.

Assuming one or more of these new plans proves to be both viable and affordable, the following chart indicates our range of estimates of Mars' GDP by Martian year and quarter. This data differs from our previous estimates because we've modified the estimates align the dates of the storage dates of Perseverance's rock samples with the Martian calendar:

Should NASA's initiative to export Perseverance's inventoried rock samples be shelved, the Mars' GDP estimates will drop to zero.

Previously on Political Calculations

• Meanwhile, on Mars...
• The Birth of the Martian Economy
• Mars Recovers from First Recessionary Event
• Mars' GDP Triples in Martian 3Q
• The Annual GDP of Mars After One Martian Year
• Plans for Exports from Mars Go Back to the Drawing Board

Image Credit: NASA/JPL-Caltech/MSSS: Mars. Caltech's 84th Annual Seminar Day Looks into the Body and out to the Stars. [Photo]. 21 May 2021.

When it comes to volatility, the last two years have been very quiet ones for the S&P 500 (Index: SPX) .

That realization struck us as we recently updated our volatility statistics for the index. We define "quiet" in terms of the standard deviaton of the day-to-day percentage change in the value of the S&P 500. To qualify as quiet, that day-to-day change has to be less than three-standard deviations, where a single standard deviation represents 0.99% of the index' value. With respect to the S&P 500's long-running mean daily change of 0.036% since 3 January 1950, the index stops being quiet if it either rises by 3.01% or falls by 2.94% in value from the previous day's close.

Since 30 November 2022, the S&P 500 has experienced a total of one "non-quiet" day: 5 August 2024. The S&P dropped by 3.00% on that day, when it was rattled by a sudden crisis caused by a policy mistake by Japan's central bank. Here's how we summarized the story:

The S&P 500 (Index: SPX) got rattled on Monday, 5 August 2024, losing a full three percent of its value in a single day.

That's not a typical day for the index. Before 5 August 2024, there have been just 140 declines greater than 2.94% from previous trading day's closing value recorded since 3 January 1950. Now there are 141.

And yet, after all that sound and fury to start the week, the S&P 500 had almost fully recovered all that it had lost by the end of the week, as if the index had simply gone mostly sideways during the trading week that was. The index ended the trading week at a level of 5,344.16, just 2.4 points less than where it closed the previous week.

The big story of the week came out of Japan, when the combination of the BOJ's surprise rate hike combined with bad jobs data in the U.S. to start unwinding the "carry trade" based on the difference between Japan's low interest rates and higher rates everywhere else.

Markets went on to recover after the Bank of Japan quickly backed off its plans to continue hiking rates to fight inflation developing in Japan. Although it took the rest of the week, as shown in the latest update of the alternative futures chart.

Although the trajectory of the S&P 500 briefly deviated from it in what we'll call the Japan carry trade noise event, an event others describe as a "big ol' nothingburger", the chart indicates stock prices recovered enough to continue falling within the range associated with investors focusing on the distant future quarter of 2025-Q2.

We have to go back to 30 November 2022 to find the previous trading day that qualified as "not quiet". Here's our chart tracking the day-to-day volatility of the S&P 500 since 3 January 1950, with the index' fully updated volatility statistics through 20 November 2024:

How long do you suppose the U.S. stock market's relative period of quiet might last?

References

Yahoo! Finance. S&P 500 Historical Data. [Online Database]. Accessed 20 November 2024.

Image credit: Microsoft Copilot Designer. Prompt: A stock price candlestick chart with positive and negative changes".

The outlook for the S&P 500 (Index: SPX) quarterly dividends per share has continued to improve over the last several weeks.

Beyond simply reporting on that trend, we can now provide a first look at how the index' quarterly dividends payouts are expected to come in throughout each quarter of 2025!

For good measure, we can also show how those expectations have changed since the morning of 5 November 2024. This period coincides with the strongest rally in the S&P 500 in more than a year, which recently saw the index break through the 6,000 level for an all-time high record close.

All these things are shown in the following animated chart, which shows the snapshots we have of the outlook for the S&P 500's dividends on both 5 November 2024 and 15 November 2024.

How changes in the outlook for dividends at specific points of time in the future affects stock prices is described by this math.

More About Dividend Futures Data

For this series, we have been taking a snapshot of the CME Group's S&P 500 quarterly dividend futures data shortly after the second or third week of each month.

Dividend futures indicate the amount of dividends per share to be paid out over the period covered by each quarter's dividend futures contracts, which start on the day after the preceding quarter's dividend futures contracts expire and end on the third Friday of the month ending the indicated quarter. So for example, as determined by dividend futures contracts, the now "current" quarter of 2024-Q4 began on Saturday, 21 September 2024 and will end on Friday, 20 December 2024.

That makes these figures different from the quarterly dividends per share figures reported by Standard and Poor. S&P reports the amount of dividends per share paid out during regular calendar quarters after the end of each quarter. This term mismatch accounts for the differences in dividends reported by both sources, with the biggest differences between the two typically seen in the first and fourth quarters of each year.

Image Credit: Microsoft Copilot Designer. Prompt: "A crystal ball with the word 'SP 500' written inside it". And 'Dividends' written above it, which we added.

Every three months, we take a snapshot of the expectations for future earnings in the S&P 500 (Index: SPX) at approximately the midpoint of the current quarter, shortly after most U.S. firms have announced their previous quarter's earnings.

The index' earnings per share show little change with respect to where they were just three months earlier. We find some minor erosion in 2024-Q4's projected earnings, which dipped from $216.65 per share on 13 August 2024 to $211.67 per share on 13 November 2024.

Meanwhile, there's virtually no meaningful change in Standard and Poor's projections of the S&P 500's earnings per share at the end of 2025-Q4. Here, we see S&P's forecast dipped by a trivial 25 cents per share, from $250.87 in mid-August 2024 to $250.62 in mid-November 2024.

These developments are shown on the following chart:

At this point, we'll observe that it's changes in the outlook for dividends per share, rather than earnings per share, that primarily drives stock prices. The last three months have been characterized by the S&P 500 rising to new record highs, though there has been very little-to-negative changes in its earnings per share outlook. We'll present how the outlook for the S&P 500's dividends per share in the very near future.

Reference

Silverblatt, Howard. Standard & Poor. S&P 500 Earnings and Estimates. [Excel Spreadsheet]. 13 November 2024. Accessed 1 November 2024.

Image Credit: Microsoft Copilot Designer. Prompt: "A crystal ball with the word 'SP 500' written inside it". And 'Earnings' written above it, which we added.

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The S&P 500 (Index: SPX) definitively broke through the 6,000 level on Monday, 8 November 2024, closing at an all-time record high of 6,001.35 that day.

Unfortunately, by the end of the week, the index fell by 2.2% from that new high to end the week at 5,870.62.

The precipitating event for that drop came on Thursday, 14 November 2024 as Federal Reserve Chair Jerome Powell stated that he saw no need to rush interest rate cuts. That was followed up by similar statements by other Fed officials.

In response to that new information, investors dialed back their expectations for future rate cuts. The CME Group's FedWatch Tool still anticipates a 0.25% cut in the Federal Funds Rate the Fed controls on 18 December 2024, but the odds dropped from a near lock a week earlier to a 62% probability this week. The FedWatch Tool also projects another quarter point rate cut on 19 March 2025, followed by one last one on 17 September 2025, with the Federal Funds Rate bottoming at a target range of 3.75-4.00%.

The result of that change pushed the trajectory of the S&P to the bottom end of the range that would be expected for investors focusing on the distant future quarter of 2025-Q2. The latest update of the alternative futures chart captures the market's response to the news of the Fed's signaling.

The sudden change in the market's trajectory is such that we're now on the lookout for indications a new market regime is setting up. It's too early to make that determination now, but the next several weeks will be important in determining whether the market is simply responding to a short-term noise event or if something more fundamental is changing within it.

Either way, part of that determination relies on the random onset of new information. Here are the past week's market moving headlines:

Monday, 11 November 2024

• Signs and portents for the U.S. economy:
• Oil falls as China stimulus fails to boost sentiment, US dollar strength
• Walmart and major retailers cut back on Christmas holiday imports. Here’s why
• BOJ minions not sure of what direction they want to go, get easily distracted:
• BOJ divided on rate hike timing as U.S. election loomed, Oct summary shows
• BOJ hopes to keep 2% inflation target while monitoring climate shock risks
• ECB minions getting super excited for their next rate cut:
• No reason not to cut rates in Dec as of now, ECB's Holzmann tells paper
• Dow ends session on top while S&P and Nasdaq inch up with CPI data looming
• Benchmark S&P 500 notches shortest time span on record between 1,000-point milestones
• This is how the S&P 500 is expected to finish 2024 as it is up 25% YTD

Tuesday, 12 November 2024

• Signs and portents for the U.S. economy:
• Oil prices hold near 2-week low after OPEC cuts demand view, dollar rises
• Fed minions say they're still turning the screws on the economy, also say lots of liquidity for money markets, want private sector to innovate payments:
• US monetary policy still restrictive, two Fed officials say
• Fed policy is 'modestly restrictive,' Kashkari says
• US banks saw weaker loan demand in the third quarter, Fed survey shows
• NY Fed's Perli still sees ample money market liquidity
• Fed's Waller says private sector should lead on payment system innovation
• Fed's Waller: Stablecoins could bring benefits to financial system
• ECB minions getting excited to deliver more rate cuts, worry about trade with U.S.:
• More ECB rate cuts coming but pace of easing uncertain, Rehn says
• Europe must prepare for new trade war with US, ECB officials warn
• S&P, Nasdaq snap win streaks, Dow ends lower as post-election rally takes a breather
• Record-breaking bitcoin surges towards $90,000 on Trump boost

Wednesday, 13 November 2024

• Signs and portents for the U.S. economy:
• Oct CPI inflation up modestly, as expected
• Oil rebounds slightly on short-covering as strong dollar caps gains
• US East Coast, Gulf Coast port union and employers still at odds over automation
• Fed minions worry they haven't really beaten Bidenflation, may put future rate cuts on the line:
• Fed officials wary of inflation risks as they weigh more rate cuts
• Fed's Schmid: extent of further rate cuts 'remains to be seen'
• Musalem says Fed in 'last mile' of inflation fight, but recent data raise risks
• Fed's Kashkari says he's confident inflation is headed down
• More stimulus developing in China:
• China unveils tax incentives to revive struggling property sector
• BOJ minions upset they might not get to hold interest rates lower:
• Japan's rising wholesale inflation heightens uncertainty on BOJ's rate hike timing
• ECB minions want Eurozone banks to manager risk better, seek to blame others for their pending policy failures as Euro falls in value on their watch:
• ECB wants banks to better manage private equity risk
• ECB's Villeroy: Trump's economic agenda risks global economy, return of inflation
• Why is the euro falling and could it hit $1?
• Dow, S&P, Nasdaq end mixed as post-election rally slows; CPI inflation lifts rate-cut bets

Thursday, 14 November 2024

• Signs and portents for the U.S. economy:
• Oil prices ease on fears of higher output, sluggish demand
• Rising US producer prices add to signs of fading disinflation
• Fed minions say they're doing a good job, don't need to rush on delivering rate cuts, starting to worry about untamed inflation again:
• Fed's Kugler says Fed has made good progress on achieving mandates
• Powell says no need for Fed to rush rate cuts given strong economy
• Fed has time to see what Trump policies mean for the economy, Powell says
• Fed's Powell declines to say if he would remain after chair term expires
• Barkin: Wages, possible tariffs, reasons to be careful about declaring inflation victory
• Bigger trouble developing in Eurozone:
• Euro zone industrial production falls more than expected in Sept
• Euro zone employment ticks up, GDP growth figure confirmed
• Euro zone economy seen hit early next year by Trump tariffs, say economists: Reuters poll
• Wall St indexes end lower after Powell erodes hopes for December rate cut
• Dow, S&P, Nasdaq end lower as Powell signals economic strength lends time to cut rates

Friday, 15 November 2024

• Signs and portents for the U.S. economy:
• Oil prices set for weekly loss on China demand fears
• US import prices unexpectedly rise in October
• US industrial production sags in October amid continued drag from Boeing strike, hurricanes
• Fed minions thinking about either shrinking or taking December rate cut off the table:
• Boston Fed president says December rate cut not a 'done deal', WSJ reports
• Strong US data feeds doubts about Fed December rate cut
• Fed's Collins won't rule out a December rate cut, on Bloomberg TV
• Fed's Collins says tech changes can improve financial system
• Fed's Goolsbee sees another 125 bps of rate cuts by end-2025
• Bigger trouble developing in China:
• China's Oct data shows soft economic underbelly, Trump threat looms large
• China's home prices fall fastest in 9 years, but officials see signs of stabilisation
• BOJ minions get reasons to hold Japan's interest rates lower for longer:
• Japan's economy expands annualised 0.9% in Q3 on tepid capex
• Japan October inflation likely eased, exports picked up: Reuters poll
• Nasdaq slides 2%, S&P, Dow end lower as Powell remarks prompt repricing in rate cuts

The Atlanta Fed's GDPNow tool's projection of the real GDP growth rate for the current quarter of 2024-Q4 was unchanged at +2.5%.

Image credit: Microsoft Copilot Designer. Prompt: "An editorial cartoon with a sad Wall Street bull in front of a stock market chart showing a downtrend in an office, and a bear leaving the office holding a box that says 'FUTURE RATE CUTS'". We tweaked some parts of the image to convey the downward shift in the index and to properly label the bear's box.

The biggest math story of 2016 was the failure of political polls to accurately predict the outcome of the U.S. presidential election. Eight years later, they failed again, suggesting the presidential race would be tight and could go in favor of either candidate. It wasn't.

Expecting a tight race, political fanatics watching established mainstream news outlets for the latest election returns were in for a long night. The slow pace at which states reported their results meant it would be hours after the polls closed before these observers would have any good sense of which candidate won the race.

But election watchers in Las Vegas had a very different election night experience. Kalshi, the only prediction market in which Americans could directly bet on who would win the U.S. presidential race, took out massive electronic billboard ads providing real-time updates on the market's prediction of who would win the race in Las Vegas. Because they did, everyone within sight of these billboards, or for that matter, anyone with a mobile device who could access Kalshi's elections web site for the race, knew early in the evening of 5 November 2024 that Donald Trump was very much on track to beat Kamala Harris to win the election. The die had been cast.

By the time our lead photo was taken the following morning, the final results of the election die toss were clear. The odds had swung and they swung decisively. Even though many states were still reporting election results, Kalshi's prediction market outperformed both the polls and the official reporting of election results to confirm Donald Trump had locked up a sweeping victory hours before it became official. What's more, Americans who had put money on a Trump victory in the prediction markets won money. The following chart shows how Kalshi's odds for each candidate changed throughout the election before being effectively settled shortly after election day voting ended in the western United States.

Kalshi's 2024 U.S. presidential prediction market begins in early October 2024 because the firm only won the right to operate its prediction market in the U.S. on 2 October 2024, following an year-long legal battle with the U.S. Commodity Futures Trading Commission who blocked it from operating in September 2023.

The success of prediction markets in anticipating the outcome of the 2024 U.S. presidential election raises several good questions, starting with "what is a prediction market?" Robin Hanson's 18-minute video introduction to prediction markets provides an excellent overview of the ideas behind what they are and how they work:

Prediction markets can deliver superior performance because they directly address many of the inherent shortcomings of traditional political polling. While not perfect, they represent a significant advance over the kind of political polling that has repeatedly come up short in accurately predicting major election outcomes during the past eight years.

There's more to the story of prediction markets, particularly with the best known one, Polymarket, which is still making headlines for reasons other than its success in anticipating the outcome of the U.S. elections. We opted to focus on Kalshi for this article because its operator cleared the hurdles needed to operate in the U.S. during the 2024 election.

We predict prediction markets will be much more visible when the 2028 election rolls around. If their success continues, they may very well replace traditional political polling.

China's emissions of carbon dioxide are so immense that its difficult to fully grasp their scale. However, thanks to the United Nations, we have a unique set of data that makes it possible to visualize how immense its CO₂ emissions are compared to other nations.

That data was presented in the form of a table, which doesn't quite do the numbers justice. We've taken a portion of that data and visualized it, comparing China's carbon dioxide output to the combined CO₂ emissions of several of the world's major economic regions during 2023. In the following chart, those emissions are measured in millions of metric tons of CO₂ equivalent (MtCO2e) greenhouse gases, which factors together the contributions of several gases that contribute to the greenhouse effect in the Earth's atmosphere.

What makes this data unique is that China's output of 16,000 MtCO2e for 2023 coincidentally matches the combined output of carbon emissions from the United States, India, the 27 nations of the European Union, and the Russian Federation. That's something that's not easy to see in the table of numbers presented in the UN's Emissions Gap Report, but it leaps out when you visually compare the emissions side-by-side in a simple bar chart.

China's estimated population in 2023 was 1,413,142,846 people, which compares with a combined population of 2,331,402,007 for the United States, India, European Union, and Russian Federation. China's per capita emissions total 11.32 metric tons of CO2e, which is nearly 65% larger than the 6.86 metric tons of CO2e per capita emissions for the major economic regions featured in the chart whose combined total emissions equal those of China.

References

United Nations Environment Programme (UNEP). Emissions Gap Report 2024: No more hot air… please! Table ES.1 (and Table 2.2) Total, per capita and historical emissions of selected countries and regions. DOI: 10.59117/20.500.11822/46404. 24 October 2024.

U.S. Central Intelligence Agency. The World Factbook (2023 Archive). Field Listing - Population. [Online Data]. 28 December 2023.

The total value of goods exchanged between the U.S. and China rose in September 2024. The U.S. Census Bureau reports the combined value of goods either imported or exported between the two nations totaled $54.3 billion, which is both up from $51.8 billion in August 2024 and up from $52.1 billion in September 2023.

Much of the increased was paced by China's exports to the United States, which grew by 8% over August 2024's level while U.S. exports to China dropped by nearly 6%. That's somewhat remarkable since many of the Biden-Harris administration's new and expanded tariffs on a range of goods went into effect in August 2024.

But that may only be the beginning of a new, short-term surge in exports. China's exporters facing new and expanded tariffs in 2025 have a strong incentive to accelerate shipments of their products to the U.S. once again. Early export data for October 2024 points to that motivating factor as Chinese companies once again seek to "beat the clock" on new tariffs:

China's exports grew at the fastest pace in over two years in October as factories rushed inventory to major markets in anticipation of further tariffs from the U.S. and the European Union, as the threat of a two-front trade war loomed large.

Donald Trump's sweeping victory in the U.S. presidential election has brought into sharp focus his campaign pledge to impose tariffs on Chinese imports in excess of 60% and is likely to spur a shift in stocks to warehouses in China's No.1 export market.

That's a remarkable development for a different reason. If the threat of new tariffs that might be imposed by the incoming Trump administration carried enough weight for China's factories to justify spending millions to shift into overdrive to ship as many goods as they can before they might take effect in 2025, China's decision makers had to have concluded that Donald Trump was likely to win election many weeks earlier. In effect, they would have to have been betting real money on that outcome as early as August 2024, months ahead of the U.S. elections on 5 November 2024, in order for it to affect Chinese export data in October 2024.

Going back to the U.S. side of the international trade ledger, the following chart shows the evolution of trade between the U.S. and China from January 2017 through September 2024.

The trailing twelve month average of the total value of goods exchanged between the two countries increased in September 2024 for the fourth consecutive month since it bottomed in May 2024.

Meanwhile, the gap between that trajectory and a counterfactual projection of what the level of trade would be in the absence of the Biden administration's anti-free trade actions declined to $17 billion in September 2024. The cumulative loss in trade in the two years since October 2022 because of the Biden-Harris administration's tariffs now totals $275.8 billion.

Image Credit: Microsoft Copilot Designer. Prompt: "An editorial cartoon of a Chinese businessman ordering his crew to ship as many products to the U.S. as they can before new tariffs go into effect".