Inflation just keeps climbing higher and higher. Which we all expected but it is different thinking something might happen and actually seeing it happen. Inflation for the month of February came in at 7.9% up from 7.4% in January.
The key driver of inflation switched from used car prices to energy as the Ukraine-Russian war has really affected oil prices worldwide. However, it seems relief might be on the way, more on this below.
What to Watch: Worker pay continues to fall behind the growth of inflation. Although wages are up 5.1% which is a historically high pace. However, when adjusted for inflation is actually down -2.6% over the last year. The word beginning to float around is "Stagflation". Which is never a good word to have spoken into the atmosphere. After the announcement, the stock market turned negative.
Weekly Returns:
But like I have been saying and will continue to say.
There will always be reasons to sell but we stay the course.
Playing the LONG GAME!
Tale of the Tape
ECONOMY
Although, there have been murmurs that we might be entering a Stag-flationary environment. I do NOT think this is the actual case.
The labor market continues to remain extremely tight. The Labor Department's Job Openings and Labor Turnover Survey (JOLTS) showed 11.26 million positions were available at the end of January. Which shows signs of economic growth if companies are still hiring. So I do not think we are heading towards a recession but things tend to change extremely quickly, especially if the energy issues cannot be resolved.
Quick Aside: Pew Research released a survey of why people quit their jobs. The top reason was pay but the third was being disrespected at work. People ain’t putting up with NO MO’ BULL $#!+
Back to the Economy: the good news last week was the willingness of OPEC to increase oil production. After a conversation with the White House, UAE said they would push OPEC to produce more to help keep prices at a reasonable point. There was also news that Venezuela would be willing to increase output as well. This sent Oil Future prices crashing from $130/barrel down to $109/barrel. Hopefully, OPEC follows through on its promise. But there is a bit of a roadblock for OPEC, which is Saudi Arabia which told the US "Nah we good" when asked to increase output.
Regardless, expect more pain to be on its way to your bottom line. As Axios' Neil Irwin wrote,
In the meantime, consumers are not happy about the state of the economy AT ALL. The preliminary Consumer Sentiment Index for March was released on Friday. It continued its downhill ride falling from 62.8 in February to 59.7 in March. This is the lowest point since September 2011. Gas prices are really weighing heavily on consumers’ minds. As seen by the increased downloads of Gas apps.
According to Richard Curtin, chief economist at the University of Michigan, which conducts the survey. He explained confidence has continued to drop since the beginning of the year. He also said this is the largest percentage of people who expected their personal finance to worsen in the year ahead since the survey began in the 1940s. Most of the excess pessimism was brought on by concerns around the effects of the war in Ukraine.
I guess war tends to do that to a person.
STOCKS
Amazon is breaking up but not in the way most politicians want it broken up.
On Wednesday, Amazon moved in line with Google, Apple, and Tesla and announced a 20-1 Stock Split. As we have learned, nothing really changes about the valuation of the company. However, it does make the stock more approachable for retail investors. As an Amazon Spokesperson said,
This split would give our employees more flexibility in how they manage their equity in Amazon and make the share price more accessible for people looking to invest in the company.
The bigger announcement made by Amazon was the $10 billion buyback program they are starting this year. Although this buyback program is extremely tiny for a company as large as Amazon. This is very surprising as Amazon has been a growth first company. Literally giving up being profitable year over year to invest back in the business. The question is "Does this mark the beginning of Amazon’s push for profitability and maximizing earnings?"
Regardless, after the announcement the stock went up over 7%
So cryptocurrency is finally being acknowledged by the US. On Wednesday, President Biden signed an executive order on crypto. But rather than a regulatory hurdle that most people were expecting. It was more of an open door to welcome crypto into the US system. There were three main parts to the executive order per Morning Brew:
Consumer safety: Biden tasked the Treasury with drafting policies to protect consumers from scams, cyberattacks, and other illicit activities that run rampant in crypto.
Key Stat: 16% of American adults have invested, traded, or used cryptocurrencies. For men between the ages of 18-29, that number rises to 43%
Environmental impacts: Crypto's earned a bad rap for the high energy costs associated with mining digital currencies like bitcoin, and the US wants to mitigate those.
Digitizing the dollar: Following in China’s footsteps, the US is looking into developing its own digital currency.
Looking Ahead
ECONOMY
Expect a lot of turbulence in the Stock Market next week because the main man himself, PAPA POWELL, is taking center stage.
The Federal Reserve will be hosting their bi-monthly two-day Federal Open Market Committee (FOMC) meeting on Tuesday and Wednesday. It is widely expected that the Fed will announce a 0.25% interest rate increase. Which is lower than the expected 0.50% interest rate increase. However, the Fed has said they will continue monitoring the situation in Ukraine before making any other major decisions.
However, they have to balance that with inflation which is slowly starting to spiral. I legit do not want to be this guy
EARNINGS
Basically, Earnings Season is done there are no major companies reporting of much importance anymore. But for those who want to see what companies report this week. Well here ya go:
Totally Unnecessary Man U Update
At least we won this week.
But it was BARELY!! Ronaldo came through with a hat-trick. However, it once again showed Man I'd heavy reliance on single players. Still cannot come together as a team.
Thank you for reading
I hope you all have A WONDERFUL WEEK. I will see you back here maybe on Wednesday for another post. In the meantime, Go subscribe to Rambling Mind Podcast for mid-week stock market updates. You can also catch me on TikTok, Instagram, and YouTube every day.
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