Dimon Wary About Inflation Turning Corner; This Holiday Season, Merchants Pulling Back on Inventory; Bank of Israel Keeps Rates on Hold

Dimon Wary About Inflation Turning Corner; This Holiday Season, Merchants Pulling Back on Inventory; Bank of Israel Keeps Rates on Hold By James Christie

Good day. JPMorgan Chase Chief Executive Jamie Dimon said on Monday he thinks inflationary forces are lurking and that there is a chance interest rates will stay higher for longer. Dimon also said he believes pandemic-related cash, such as stimulus money for households, continues to bolster the U.S. economy. Meanwhile, it may not be apparent to U.S. shoppers, but merchants have been sharply pulling back stockpiles of goods to focus on getting a better handle on volatile consumer demand. U.S. retail sales have been uneven over the past year as consumers cope with high inflation and spend more on services rather than goods. Holiday retail sales in the U.S. are expected to grow at a slower rate this year, between 3% to 4%, according to the National Retail Federation. Last year, holiday sales grew 5.3%. Elsewhere, the Bank of Israel held its policy rate steady on Monday as the country's war with Hamas continues. But it gave the first real hint that an easing cycle could be on the cards early next year if the conditions are right, said Liam Peach, senior emerging-markets economist at Capital Economics.

Now on to today's news and analysis.

Top News Inflation Conquered? Not So Fast, Says Jamie Dimon

Recent economic data boosted investor hopes inflation has turned a corner and interest-rate cuts could be in store. Not so fast, says JPMorgan Chase Chief Executive Jamie Dimon. Speaking Monday at a conference in London, he warned not to get too optimistic about the economy's latest performance. "We could even have a soft landing. I just think more inflationary forces are out there," he said during a panel discussion .

U.S. Economy Retailers Have Cleaned Up Their Inventories for the Holidays

Retailers are heading into the crucial holiday sales period with a very different inventory strategy than in 2022: Warehouses are no longer stuffed with merchandise and store shelves aren't spilling over with discounted goods.

The Biggest Delivery Business in the U.S. Is No Longer UPS or FedEx Black Friday Online Spending Reaches Record Levels, but Wall Street Is Not Impressed (MarketWatch)

U.S. Whiskey Is 'Collateral Damage' in Trans-Atlantic Trade Fight

Brooke Glover wants to ship her West Virginia-made whiskey to Europe, where fans have been clamoring for a taste. But she has no plans to expand across the Atlantic just yet. Starting in 2024, each bottle shipped risks facing a 50% tax .

They Want to Split Up. The Housing Market Won't Let Them.

High mortgage rates and housing costs pose new problems for couples who are divorcing or separating. Mortgage rates are over 7% and average home prices have hit record highs, which means they can't afford to leave their home .

Key Developments Around the World Bank of Israel Holds Interest Rate as War Clouds Outlook

Israel's central bank has kept its interest rate unchanged at 4.75% but signaled possible easing ahead if inflation continues to fall and financial markets stabilize further, as the country's military conflict with Hamas continues. "Insofar as the recent stability in the financial markets becomes entrenched and the inflation environment continues to moderate toward the target range, monetary policy will be able to focus more on supporting economic activity," the Bank of Israel said on Monday. However, the path of future interest rates with be determined by the nature of the war and the uncertainty derived from it, the bank said, after it held rates for the fourth-straight meeting. (Dow Jones Newswires)

Volunteers Flock to Israel to Fill Vacant Jobs PBOC Governor Calls for More Efforts to Transform China's Economy

China's central-bank governor warned against continuing to rely on infrastructure and real-estate sectors, and pointed to the need to nurture new growth drivers as Beijing looks to chart a new path for its economy.

The Cost of Doing Business With China? A $40,000 Dinner With Xi Jinping Might Be Just the Start The Clearest Sign of India's Very Good Year

The clearest sign that things are going well in India: A stable currency . After losing more than 10% against the dollar last year, making it one of the worst-performing large currencies, the rupee has been remarkably resilient in 2023.

Tesla Sues Swedish Government in Move Related to Strike

U.S. electric car maker Tesla is suing the Swedish Transport Agency to receive new-car registration tags directly, rather than through the mail, in a move related to a mechanics strike in the Scandinavian country.

Amazon Clinches Deal With Spanish Union Over Cyber Monday Walkout 1.5 Degrees: A Tiny Number With a Global Effect

On Thursday, world leaders and companies will convene at COP28 where negotiators are pushing big nations to make good on promises to keep the Earth from warming above 1.5 degrees C. Here's what to know about the 1.5 C goal .

Forward Guidance Tuesday (all times ET)

9 a.m.: S&P CoreLogic Case-Shiller Home Price Index for September

10 a.m.: Chicago Fed's Goolsbee speaks at Midwest Agriculture Conference in Chicago; The Conference Board Consumer Confidence Index for November

10:30 a.m.: Dallas Fed's Texas Service Sector Outlook Survey for November

8 p.m.: Reserve Bank of New Zealand interest rate decision

Wednesday

5 a.m.: EU business and consumer surveys for November

8:30 a.m.: U.S. third-quarter gross domestic product, second estimate; U.S. advance economic indicators for October

1:45 p.m.: Cleveland Fed's Mester speaks on financial stability in Chicago

2 p.m.: Federal Reserve Beige Book

Research As Rents Cool, U.S. Inflation Expected to Slow

Declining rent prices in the U.S. are likely to bring inflation down toward the Federal Reserve's 2% target, says Doug Peta, chief U.S. investment strategist at BCA Research. "There is a ton of inventory in the pipeline," Peta says, referring to multifamily buildings. "We are pretty convinced we will see six-to-nine months of deceleration in inflation via rent." That, in turn, bolsters the odds that interest rates have peaked, although Peta expects the Fed won't start cutting rates as soon or as fast as markets are currently pricing.

-Paulo Trevisani

Basis Points U.S. new home sales fell 5.6% to a seasonally adjusted annual rate of 679,000 in October, from a revised 719,000 in September, the government reported Monday. Analysts polled by The Wall Street Journal had forecast a seasonally adjusted annual rate of 725,000 for October. (MarketWatch) Factory activity in Texas contracted in November again as production slowed amid signals of a difficult environment for manufacturing, with the Federal Reserve Bank of Dallas saying the index for general business of its Texas Manufacturing Outlook Survey ticked down from minus 19.2 in October to minus 19.9. (Dow Jones Newswires) Mexico posted a $252.5 million trade deficit in October compared with a $2.09 billion gap a year earlier. Exports last month increased 5.6% from October 2022 to $51.97 billion, while imports rose 1.8% to $52.23 billion, the National Statistics Institute said Monday. (DJN) Consumer confidence in Germany improved slightly in data for December, as willingness to buy improved on month amid easing inflation, despite a subdued economic climate. Annual shop-price inflation in the U.K. decelerated further in early November on the back of lower energy prices while retailer competition ahead of Christmas is helping to push prices down, a report by NielsenIQ and the British Retail Consortium showed on Tuesday. Australian retail sales were weaker than expected in October, reversing a solid rise in September. Retail turnover fell 0.2% over the month, according to the Australian Bureau of Statistics. Economists had expected a 0.2% rise in sales. Thailand's central bank is tipped to stand pat at its meeting Wednesday, a poll from The Wall Street Journal shows. All seven economists' forecasts have the BOT keeping its benchmark rate at 2.50%. Feedback Loop

This newsletter is compiled by James Christie in San Francisco.

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11-28-23 0718ET