Consumer Price Index up 0.3% in December, up 3.4% Over Last Year… Core inﬂation rose 0.3% over the month and 3.9% for the year.
What it means— Consumers are ticked off. While average weekly earnings are rising faster than prices, this is a new phenomenon and prices are still going higher. As we’ve pointed out, about two thirds of Americans own their homes, and few have adjustable mortgages. They judge the state of the economy by prices that they pay regularly, like gas and food. Gas prices are lower (good), but food prices are up (bad), and consumers are getting whacked by jumping home and auto insurance premiums. Add to that the rising costs of services and tip screens everywhere, and you get cranky consumers. We’d like to ask for a tip ourselves for choosing any given vendor (coffee, etc.), but the person at the counter did not create this system.
As for investors, they started listening to Federal Reserve governors and presidents when the numbers came in a little hotter than expected. Maybe the overnight rate will remain stuck near 5% through at least the ﬁrst half of 2024 to make sure inﬂation doesn’t come back. That will be a problem for equity investors, but bond buyers will welcome another chance to buy quality assets at higher yields. Whichever unfolds, the Fed’s decisions will drive markets higher or lower.
Consumer Credit Rose $23.7 Billion in November… That was the biggest gain since November 2022 and was much higher than the $8 billion economists expected.
What it means— We got this one wrong. We thought the resumption of student loan repayments and rising costs would result in consumer fatigue, but it didn’t. Consumer credit is reported on a two-month lag, so this is the November ﬁgure, but it didn’t look like consumers let up in December. Whatever drove consumers to open their wallets at the end of the year, it resulted in retailers having decent holidays. We will get reports on retail sales next week and see if they conﬁrm the consumer credit reports.
The U.S. Securities and Exchange Commission Approved Eleven Bitcoin ETFs… The SEC approved several ETFs for retail investors to buy, including offerings from Blackrock, Grayscale, and ARK.
What it means— Many investors bought Bitcoin and Ethereum before and lost. The unresolved question is why do they exist? The halving for Bitcoin is approaching in May. That’s the date when it will take twice the effort to mint a new Bitcoin, which makes them twice as valuable. But for what? Bitcoin and other cryptocurrencies could go to the moon or to zero, and we still wouldn’t be able to give you a cogent reason why they exist. They have value because buyers exist, until they don’t. We understand why people who live in inﬂationary economies like Venezuela and Argentina would favor cryptocurrencies, but wouldn’t Tether, which trades very close to the buck, do the same thing without the volatility? It’s all fun and games until someone loses an eye… or half their investment.
Man Sues Dunkin’ Donuts After Exploding Toilet Covers Him in Sewage… After using the bathroom at Dunkin’ Donuts in Winter Park, FL, Paul Kerouac was surprised when the toilet exploded and covered him with sewage. Kerouac exited the restroom and asked for employees for help. One of them told Kerouac they knew the toilet had a problem and there had been previous incidents. Kerouac is suing Dunkin’ Donuts for $100,000 for severe and long-term injuries, bodily injury, and need for mental health care and counseling since his exploding toilet debacle. It might be hard to prove Kerouac hasn’t used a bathroom since the toilet exploded, but does give him yet another reason not to use the bathroom in fast food restaurants.
Data supplied by HS Dent Research
“When the facts change, I change my mind.
What do you do?” ~ John Maynard Keynes
Our plan is “the plan will change.”
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