Dashing Through the Headlines

MONETARY

• Within the Federal Reserve’s most recent release of its Beige Book publication, it was noted that overall economic activity across all districts was mixed, with some reporting districts experiencing modest growth, and other experiencing slight declines³
  • (Beige Book) “On balance, economic activity slowed since the previous report, with four Districts reporting modest growth, two indicating conditions were flat to slightly down, and six noting slight declines in activity”³
  • Regarding the labor markets, employment was seen as increasing across the board, in addition to there being continued easing of labor market supply/demand imbalances; however imbalances were still seen as remaining. Wage growth continued to remain positive, but moderated slightly³
    • (Beige Book) “Demand for labor continued to ease, as most Districts reported flat to modest increases in overall employment”
    • (Beige Book) “Wage growth remained modest to moderate in most Districts, as many described easing in wage pressures and several reported declines in starting wages. Some wage pressures did persist, however, and there were some reports of continued difficulty attracting and retaining high performers and workers with specialized skills.”
  • With respect to inflation, the report noted that prices do remain elevated, however price increases continued to moderate as disinflationary effects began to spread more widely across various areas of the economy. Moving forward, many districts started to consider lower inflationary pressures in the year to come³
    • (Beige Book) “Most Districts expect moderate price increases to continue into next year.”
    • (Beige Book) “Price increases largely moderated across Districts, though prices remained elevated…… Pricing power varied, with services providers finding it easier to pass through increases than manufacturers.”³
  • Housing inventories across many districts were also characterized as normalizing from historically low levels on the basis of lower demand³
    • (Beige Book) “Commercial real estate activity continued to slow; the office segment remained weak and multifamily activity softened. Several Districts noted a slight decrease in residential sales and higher inventories of available homes”³

FISCAL

• Congress passes a temporary stopgap measure to fund the government on an interim basis through January 19, by which point in time a full-year spending plan is sought to be fully negotiated²
  • The stopgap measure extends current spending levels through January 19 for military construction, veterans benefits, transportation, housing, urban development, agriculture, the Food and Drug Administration and energy and water programs²
  • All other federal programs, which includes the Defense Department, extends out slightly further until February 2²
  • Some potential areas of negotiation difficulties include²
    • Further financial and military aid to Ukraine²
    • Financial and military aid to Israel²
    • Financial aid and support into Gaza/West Bank²
    • Increasing the budget for U.S./Mexico border protection²

GEOPOLITICS

• President Biden and Chinese President Xi Jinping meet in California to discuss a number of issues ranging from geopolitics to international economics¹
  • President Biden reiterated that the U.S. and China’s competitive nature should be checked and not escalate to levels that would jeopardize either country’s stability¹
    • (White House) “President Biden emphasized that the United States and China are in competition, noting that the United States would continue to invest in the sources of American strength at home and align with allies and partners around the world.  He stressed that the United States would always stand up for its interests, its values, and its allies and partners.  He reiterated that the world expects the United States and China to manage competition responsibly to prevent it from veering into conflict, confrontation, or a new Cold War.”¹
  • Additionally, both leaders committed to maintain a level of cooperation with regards to combatting global drug trafficking operations¹
    • (White House) “They welcomed the resumption of bilateral cooperation to combat global illicit drug manufacturing and trafficking, including synthetic drugs like fentanyl, and establishment of a working group for ongoing communication and law enforcement coordination on counternarcotics issues.”¹
  • On the subject of Taiwan, President Biden maintained previous rhetoric over the United States commitment to defending the interests of an independent and democratic Taiwan¹
    • (White House) “President Biden underscored the United States’ support for a free and open Indo-Pacific that is connected, prosperous, secure, and resilient. The President reaffirmed the United States’ ironclad commitment to defending our Indo-Pacific allies.”¹

 

[See Below for Disclosures & Annotations]

DISCLOSURES

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

The companies presented here are for illustrative purposes only and are not to be viewed as an investment recommendation.

Tax laws and regulations are complex and subject to change, which can materially impact investment results. LPL Financial does not provide tax advice. Clients should consult with their personal tax advisors regarding the tax consequences of investing.

 

ANNOTATIONS

1. The White House. “Readout of President Joe Biden’s Meeting with President Xi Jinping of the People’s Republic of China”. November 15, 2023
2. Reuters. “US Senate passes stopgap funding bill to avert government shutdown”. November 15, 2023
3. The Federal Reserve. “The Beige Book”. November 29, 2023