Hot Inflation Report

Rob Black (0:00)

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Rob Black (0:12)

October 14th, 2026, S&P 500 opens down about 1% in early trading. The Dow Jones Industrial Average opened in the green, but it's now down about 1 tenth of 1%. The NASDAQ, it's a bigger loss, down 1.3%, but the biggest of the day, the Russell 2000 Small cap stocks down roughly 1.55%.

Russell's still up over 10% for the year. The NASDAQ's up over 15% for the year. The S&P 500's right around 10 to 12%, so it's a good year, but a bad day. Ten-year treasury sits at 5.25% kind of back in the news this week after being off on Monday for a holiday. Ten-year treasury's reacting to some inflationary numbers that came out this morning. Surging gas prices pushed CPI inflation to 3.7% in September. The Federal Reserve is watching. I doubt that they raise rates in October, in large part because the election is in November. Historically, but not always, but usually the Federal Reserve does nothing right before an election, typically the two or three months leading up to it. So this is rare that we've already seen one move hike up. Let's take a look a little bit closer at those inflationary numbers. If you will, indulge me. Consumer price is up 3.7% year over year. It's a big election issue with the polls opening in less than about three and a half weeks. September consumer prices increased six tenths of a percent for the month. So the monthly push was largely due to energy, which should abate at some point if this war ever ends. But is it going to be a forever war? Surging energy cost up 5.2%. Gasoline prices for the month up 9.1% in one month. But for the past year, gas prices are up 34.2%. Fuel oil for ships and planes up 74.2% in last year. Food prices on the month up, but also for the year up 2.5%. So food prices, not as bad as energy. Shelter price is increasing, used car and truck price is increasing, apparel price is up 3.4% on an annual basis. Boy, it feels like I'm yelling today. Some days I just don't have that dulcetone, if you will.

Morgan Stanley turned a top and bottom line beat this morning driven by a huge beat in equities trading. Shares not doing too much on that news. A strong quarter they delivered. Its results reflected a broader trend across banking peers with capital markets activity moderating sequentially from elevated second quarter levels. Particularly in September, things went bad in the last six weeks of the quarter. So what do we get in the back half of 2026 in the final three months? Do we get that trend from the back half of the third quarter? Or do we get what was happening before the months of September and first half of October?

Wealth management continued to provide an important source of growth for Morgan Stanley. Management's confidence in investing in banking pipelines suggest underlying corporate demand remains healthy despite the recent slowdown. Although near-term performance remains sensitive to broader market conditions. Morgan Stanley CEO went on CNBC this morning and said the economy was moving along. Then in September, rates increased, which could have a negative impact on the economy. He is cautiously optimistic about fourth quarter. Speaking of the AI super cycle, he thinks it could be a once in a jade generation event. The bank continues to be bullish on the corporate finance life cycle, which is led by IPOs and mergers and acquisitions. Many of them are stalling right now, the IPOs on coming public because of market conditions with a higher interest rates. Morgan Stanley CEO Ted Pick finally said on CNBC this morning that the economy continues to move along at full employment. So not only do I like what the banks are telling us about what they're doing in the economy, but then they come out and extrapolate bigger picture issues. Let me give you another example.

Bank of America missed on revenue and was hit with a 1.2 billion dollar penalty by the Treasury Department over money laundering violations. Stocks are off about 4 percent. Remember, when I say stocks are off, I tend to like that, if I like the stock. But Bank of America CEO Brian Moynihan went on CNBC this morning and says, and I respect this guy, I feel like he's a straight shooter. He says, it takes time to get on the same page with the regulators. The Department of Justice potential, Department of Justice penalty went through last quarter and the companies are going to resolve it. Fourth quarter expenses are expected to be flat.