Christmas Vacation Winners, The Fed, Rates, Manufacturing Conflicts, Jobs, Consumer Sentiment, Florida Insurance, and what are Chrome Hearts?
Winner, Winner, Chicken Dinner!
The Readers that participated in the question of the week – the answer was National Lampoon’s Christmas Vacation – are, in order of response time:
James Tapper, Tower Glass
Rick Mercadefe, Customers Bank
Tom Novembrino, Gateway Trade Funding
Gwen Bedics, Global Credit Union
Wanda Jones, American Business Bank
Michael Paese, Retired Bicycle Store Owner
Tim Myers, Landscape Development
Ryan Tolan, Confluence Wealth Management Group
Michael Bailey, ClearEdge Private Wealth
Some of you have been readers since 2020, and for that loyalty, you get my heartfelt thanks and appreciation. Oh, and a lifetime subscription to the Russell Report.
Now onto the more mundane topics… the numbers.
Somehow, that feels like I’m putting a lump of coal in your email.
First things first: Will the Fed put a lump of coal in our stockings this week, or will they give the market a present?
Yep, the Federal Reserve is meeting Tuesday and Wednesday, and it’s not for their annual holiday party. Well, maybe it is, but the Agenda says: Discussion of Monetary Policy Issues.
I’m thinking some eggnog would goose that conversation, but that’s just me.
The general feeling is that the Fed will lower the Fed Funds rate by 0.25%. It’s a bit of a reversal from a few weeks ago, but inflation seems to be in check, and there is some softness in the job market. Fingers crossed!
OK, let’s look at manufacturing and get down into the weeds. Not to worry, though, I will get the herbicide out if I get too deep into it.
S&P US Manufacturing PMI – the purchasing managers index, basically the mood identifier for manufacturers, increased from 51.9 to 52.5 and was the 4th monthly improvement.
A rise in production and increases in employment were reported as the outlook for confidence strengthening.
Conversely, the ISM – Institute for Supply Management – reported a drop to 48.2%, a four-month low and a continued sign of contraction.
So, what gives?
The S&P surveys a broader, more diversified mix of companies, including smaller and mid-size firms. It also captures supply chains in tech, medical devices, and specialty manufacturing.
The ISM represents purchasing managers at larger, older, more industrial manufacturers and is weighted in traditional sectors (machinery, autos, metal fabrication, aerospace).
However, it is a membership-based organization that goes back decades and is closely watched by Wall Street.
Summing it up, this week’s manufacturing numbers were like the in-laws at Thanksgiving—one says everything is terrible, the other says things are looking up.
Well, it’s a mix. Big factories are still dragging, but the little guys are starting to pick up the tools again.
Other things of note:
ADP employment numbers shrank by 32,000 after rising 47,000 last month.
Initial jobless claims came in at 191,000.
Hmm. That is significantly less than last week’s 216,000. Folks had expected that number to go up, not down.
Mixed signals AGAIN!!
Finally, consumer sentiment is up. It was at 51.0, and it went to 53.3 with expectations of 52.0.
And that is good. After all, it is Christmas time and sentiment should be up.
Insurance rates are going down… in Florida.
Wait, what!!??
State Farm – yes, that State Farm that California loves to hate - is reducing auto rates in Florida by 10%.
Progressive will be sending policyholders refunds that will average $300.
The state legislature eliminated certain one-way attorney fees. What are one-way attorney fees? That’s when you and your attorney file a suit, and if you win, the defendant pays you and your attorney. But if you lose, you don’t have to pay the defendant’s fees.
BTW, California does not allow one-way fees in insurance cases. But they do have them in wage & hour lawsuits and tenant/landlord disputes.
That makes the plaintiff put way more thought into the lawsuit if there are consequences when you lose.
And that decreases the number of claims that get thrown at insurance companies every year. That, in turn, drives down expenses.
There was other tort reform as well, which cut down on inflated claims by contractors and attorneys.
Consequently, Florida Peninsula Insurance Co., one of the state’s largest insurers, recently filed for an 8.4% statewide cut in homeowners policies.
That makes mayhem a little more manageable.
What are Chrome Hearts?
Evidently, it is a luxury brand. Which explains why I have never heard of it.
They have 36 stores around the world. On the website, there are not many items: crystal, scented products – including soap on a rope (really), socks, and underwear – sorry – ‘intimates’. Apparently, in its stores, they sell $700 T-shirts and $1,100 hoodies.
The cotton boxers are $85 each. That’s what I call residual income.
And a profit margin.
Just sayin’, you can get a package of 5 boxer shorts at Marshall’s for $12, but that’s not why I bring this up.
The Chrome Hearts company recently bought the Surfrider Hotel in Malibu for $37,500,000. It has 20 rooms.
To put it in the parlance of some of the finance jockeys out there, that’s $1,875,000 a key.
Fun fact: According to CoStar, that’s the most paid for a hospitality property in Southern California on a per-room basis.
Just another hipster hotel. Do NOT get me started; I’ve stayed at two hipster hotels this year for weddings, and I’ll take a Hampton Inn any day of the week.
17 more shopping days until Christmas, folks. It’s already going too fast, so when I feel that rush of time, I stop and… just stop. And look around for something to take a mental picture of, just to stop time. Yesterday, we got together with the Alaska cousins in Norco. It was nice to reconnect with them, slow things down, and to take a few mental pictures, all while five kids, less than five years old, did everything they could to speed up time.
Yesterday was also December 7, a day that still lives in infamy, although not for as many people as it used to. For the first time, there were no survivors present at the USS Arizona Memorial. I have it on good authority that some F18s were flying over Wake Island yesterday. Coincidentally, my father-in-law flew Corsairs 80 years ago, most likely over that same Wake Island.
Only two more issues this year. Next week will be a summary of forecasts for 2026, and on the 18th is the much-anticipated Russell Report version of “A Visit from St. Nicholas”. That will be the last issue of the year.
And then it’s 2026.
