Macro Briefing: 17 November 2022

* Republicans win control of House
* NATO says “no indication” that missile strike in Poland came from Russia
* US homebuilder sentiment slide for 11th straighth month in November
* US import prices fall for fourth straight month in October
* Atlanta Fed’s business inflation expectations steady at 3.3% in November
* US industrial production declines in October, first monthly slide since August
* US retail sales rebound sharply in October, rising more than expected:

The latest rebound in the stock market will soon face headwinds… again, predict analysts at BlackRock. “Equities have repeatedly jumped this year on hopes the Fed may be getting closer to stopping the fastest hiking cycle since the 1980s, letting the economy enjoy a soft landing that avoids recession,” says the head of the BlackRock Investment Institute Jean Boivin and his team. “We think those hopes will be dashed again as the Fed pushes ahead with policy overtightening. With the S&P 500 jumping 13% from its October low, stocks are even further from pricing in the recession — and earnings downgrades — we see ahead.”

US economy remains at risk for a recession in 2023, advise analysts at JP Morgan. The next Federal Reserve policy meeting on Dec. 14 is expected to bring another rate hike — 50 basis points is the likely increase, according to Fed funds futures. Federal Open Market Committee meeting in December will result a half-point hike. Additional hikes may continue in early 2023, albeit at a slower pace. Combined with the rate hikes to date, the accumulated rise in the price of money will take a toll on economic activity, advise Michael Feroli and his team at JP Morgan. “The almost 500bp of expected cumulative hikes is already delivering a commensurate tightening of financial conditions,” they predict. “[W]hich we believe will tip the economy into mild recession later next year.”