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FED RATE HIKE: 1% CHANCE

The odds of a Fed rate hike today stand at just 1%. Raymond James is the sole major bank predicting a 0.25% increase; the rest anticipate rates to hold at 5.5%, leaving room for another hike later this year.

What factors weigh into their decision? The latest data since the last meeting tells the story:

· Hawkish Data (favouring higher rates): Consistent inflation growth over two months, a 25% surge in oil prices since May, robust retail sales, rising GDP estimates for Q4, and persistent low unemployment.

· Dovish Data (favouring lower rates): Sluggish job growth, quicker-than-expected dissipation of excess labor demand, surging corporate defaults matching 2009 highs, and concerns about the housing market and consumer borrowing costs.

While surface indicators lean towards hawkishness, the Fed may believe that the full impact of rate hikes hasn't yet permeated the economy, prompting a pause for observation. This week's United Auto Workers strike and a potential government shutdown could further affect the economy, possibly resulting in negative non-farm payrolls and a 4% unemployment rate, per Bloomberg.

Interestingly, Bloomberg's machine-learning model, trained on 46,000 "Fedspeak" headlines, suggests that the Fed has concluded its rate hikes for this year.

GRIT TAKE: I'm not expecting a rate hike today, but I strongly believe the Fed should consider one more increase before year-end. In Canada, we've witnessed inflation climbing from 2.8% in June to 4% in August. Our central bank paused rates in January, resumed in June, and recently hit the brakes again just two weeks ago. This situation should put the U.S. on high alert. The next meeting is scheduled for Oct. 31-Nov 1, providing one more inflation release, a jobs report, and Q3 GDP data for assessment.

U.S DEBT SKYROCKETS TO RECORD $33 TRILLION

In just three months since the debt ceiling crisis was resolved, the U.S. has tacked on an additional $3 trillion to its national debt. But let's not overlook the elephant in the room: federal spending surged by a staggering 50% from 2019 to 2021.

The Real Cost: Rising Interest Rates

As interest rates climb, so does the cost of servicing this mammoth debt. We're now seeing debt service costs at their highest levels since 2009. In real terms, interest on U.S. debt is rising faster than ever before.

Revenue Down, Costs Up: A Dangerous Mix

To make matters worse, federal tax receipts have dropped 8.4% over the past year, leading to a $300 billion leap in the U.S. deficit. It's a grim equation: less money coming in, more money going out. This is a recipe for economic trouble.

GRIT TAKE: If the U.S. were a business, racking up deficits this fast with no clear plan to turn things around, the CFO would be out the door. Yet, here we are, heading into an election year with either the same leadership or a new one—likely to continue the same fiscal recklessness. Crisis? Far from over. The options are clear but none are easy: hike taxes, slash spending, or cut interest rates. Which pill will we swallow? Tick-Tock: Shutdown Looming And let's not forget, this $33 trillion debt milestone comes just before the federal government risks shutting down due to funding issues. What could possibly go wrong?

FOX BUSINESS: GENEVIEVE TALKS TOP PICK

Genevieve talked about her views on the stock market, the U.S consumer and what one of her top picks is right now…

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HOUSING STARTS DROP TO LOWEST SINCE 2020

U.S. housing starts plummeted 11.3% last month, hitting just 1.28 million units against a forecast of 1.44 million. That's the lowest we've seen since 2020. To add salt to the wound, applications for new builds are down 2.5% year-over-year  – although they did pickup at the fastest pace in nearly a year.

A Perfect Storm: Low Inventory, High Costs

This couldn't come at a worse time. The housing market is already starved for inventory. Why? Homeowners are reluctant to list because taking on a new mortgage at today's high rates is a non-starter for many. With demand already low, the scant supply is pushing prices even higher.

Affordability Crisis: Mortgage Rates Soar

Mortgage rates have leapt from 3.9% pre-pandemic to over 7% now, driving housing affordability to rock-bottom levels and suppressing demand. Mortgage applications for home purchases have sunk to mid-1990s levels.

New Construction: Not the Silver Bullet We Hoped

The idea was to boost new construction to alleviate the problem. But guess what? Cracks are starting to show there too.

GRIT TAKE: We're navigating the sharpest interest rate hikes in recent memory, and the fallout is becoming increasingly visible. These aren't mere hairline cracks; they're warning signs of deeper fractures that could destabilize the housing market and ripple through the economy. Let's hope the Fed is paying attention, because the stakes couldn't be higher.

Coming Up…

Wednesday: FED rate decision, FedEx and General Mills earnings.

Thursday: Bank of England rate decision.

Friday: Bank of Japan rate decision.

Headlines You Need To Know:

• Instacart closes up 12% in IPO debut

• Gas prices hit 2023 highs as oil stays hot

• Fed’s next challenge: $100 oil

• McCarthy hits new hurdle with unhappy Republicans

• Fed set to pause rate hikes, but don’t count out another increase

• Disney set to invest $60 Billion in theme parks, cruises

• Dollar rally is crushing one of the most popular trades of 2023

• FTX accuses SBF’s mother of being key-advisor to son

• Tiktok is launching new tool that will help creators label AI

• Amazon plans to hire 250,000 logistics workers for holidays

• White House no longer sending top officials to negotiate UAW strike

Just for fun…

The Real Estate Company That You Never Knew

McDonald’s isn’t actually a fast food restaurant but one of the largest commercial real estate companies in the world. The McDonald’s brothers opened up their first restaurant in 1951, but they eventually sold the McDonald’s Corporation to Ray Kroc for pennies on the dollar. He had a brilliant idea for the company that would eventually transform everything. Instead of the normal franchise model, McDonald’s would buy the land and rent out the building to the franchisees that were selling the actual burgers. The rent is usually 10% of the restaurants sales each month. On top of this, McDonald’s receives a royalty for the use of their name, image, and likeness. In other words, they were transforming their company from being focused on selling burgers to collecting rent. Today, McDonald’s owns some of the best real estate locations in the world. In fact, their portfolio is worth over $40 billion and a majority of their profits comes from the rent that they collect.

3 Most Important Charts Right Now

US National Debt

United States debt has hit $33 Trillion

Homebuyer Housing Payments

Housing payments are up 13.9% YoY

Median IPO Return

IPO Returns have been down in recent years

The author, publisher or insiders of the publisher may currently have long or short positions in the securities of the companies mentioned herein, or may have such a position in the future (and therefore may profit from fluctuations in the trading price of the securities). To the extent such persons do have such positions, there is no guarantee that such persons will maintain such positions.