Market Update Week 41

Gordon Achtermann |
Categories
Investing

Weekly Market Recap 

  • Headline CPI rose 0.2% m/m (2.4% y/y)
  • Initial jobless claims jumped to 258K
  • PPI (Producer Price Index) came in lower than expected at 0.0% m/m (1.8%y/y), i.e., there was no inflation in producer prices.

Key data coming out in the week ahead

  • Retail sales (Thursday)
  • Housing starts (Friday)

The S&P 500 index rose 1.1% this week, setting fresh record highs, as the Q3 earnings season started on a positive note.

The market index closed Friday's session at 5,815.03, a new closing high and its fifth consecutive weekly gain. The S&P 500 also reached a fresh intraday high on Friday at 5,822.13. It is now up 0.9% for the month of October and over 22% for the year to date.

 

Style box and sector returnsWeekly market data dumpGlobal Oil Production by Group


Thought of the Week

It is perfectly rational to consider whether an Israeli strike against Iran's oil production capacity would seriously impact the US economy and oil prices.

The short answer is probably not.

Should Iranian production take a hit, the market still appears well-positioned to absorb the shock. While conflicts like the Iranian Revolution in 1978 caused crippling supply disruptions, the region’s share of the market has declined significantly. Around 65% of supply now comes from non-OPEC countries, and the U.S. is the world’s largest producer of oil. 

Additionally, as this week’s chart shows, OPEC has an excess production capacity of about 5 million barrels or 6% of the current supply. Member nations plan to revive 2.2 mbd of capacity for 2025 and would likely ramp up sooner should prices spike. 

While the fog of war is clouding the future, modern-day oil markets are resilient. Prices fell back quickly after the Russian invasion of Ukraine and then again after Hamas’s initial attack on Israel. Nevertheless, geopolitical risk is highly elevated. 

 

All the Best,
Gordon Achtermann, CSRIC®, MBA, CFP®

Gordon@yourbestpathfp.com
703-573-7325


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