By Bill Hornbarger, Chief Investment Officer
Print This Post
Three Things to Watch
- With 10 days to go before the next rate announcement from the U.S. Federal Reserve (Fed), this week’s Consumer Price Index (CPI) report will be closely watched, and it is the last major report before the Federal Open Market Committee meeting. January’s hotter-than-expected CPI report pushed bond yields to the year’s highs; since then, traders have stepped up June rate cut bets, and bond yields have come back down. February CPI is expected up 3.1% year-over-year, with core CPI falling to 3.7%. Those readings will leave the Fed on track to cut rates this year, but the risk is that a second consecutive “hot” number could push rate cuts back later into the year.
- Other economic reports this week include the Producer Price Index, retail sales and Friday’s U. of Michigan consumer sentiment report. Retail sales are expected to rebound after a disappointing January reading. Stripping out the more volatile components (autos, gas, food), retail sales are expected to increase 0.4%. Consumption makes up roughly 70% of the economy, and a robust consumer is the best defense against a recession.
- Consumer sentiment has improved in recent months on stronger stocks and lower inflation. Higher gas prices and any signs of rate cuts being pushed back could cause that stall. Consumer sentiment tends to drive spending, and as a result the economy could also influence how consumers will vote in this year’s election.
Three Things to Know
- The S&P 500 is officially up 25%, adding 1,000 points, since its low in October 2023. This has only happened 10 times dating back to 1930, according to Bank of America. (Source: @KobeissiLetter)
- Owning the average home in 2024 now requires an income of $106,000, according to Zillow. Just 4 years ago, you needed just $59,000 in income to afford the average home. That’s a $47,000, or 80%, increase in income from 2020, while wages are up just 23% over that time. (Source: @KobeissiLetter)
- Daylight saving time started this weekend. It has been lengthened three times and today runs for eight months, while standard time is just four. When daylight saving time was lengthened by a month in 2007, the airline industry opposed it. The Air Transport Association estimated the cost to rearrange schedules to align U.S. flights with international travel would cost the industry $147 million. (Source: Mental Floss)
The above information reflects the current opinion of the author. It is based upon sources and data believed to be accurate and reliable. Opinions and forward-looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security mentioned.