By Bill Hornbarger, Chief Investment Officer
Three Things to Watch
- High-profile economic reports this week include a last look at 2021 inflation. December CPI and PPI will be released Wednesday and Thursday, respectively, and are expected to post the highest readings of this cycle and in the case of CPI, the highest since the early 1980s. CPI is expected at 7% and PPI (final demand) at 9.8%. In addition, import prices are forecasted to be up 10.8% when released on Friday. Retail sales for December and the all-important holiday season are expected to be down slightly when released on Thursday.
- Multiple Fed speakers and the Beige Book will give investors the Fed’s thoughts on inflation, monetary policy, and Omicron’s impact on the economy. The Beige Book will be released Wednesday, and midweek (Tuesday, Wednesday, Thursday) will feature eight speaking appearances by Fed members.
- Earnings season starts in earnest this week, with multiple banks, a homebuilder and an airline reporting fourth-quarter earnings. KB Homes will report on Wednesday, Delta Airlines on Thursday, and Wells Fargo, JP Morgan, BlackRock, and Citigroup all report fourth-quarter earnings on Friday. Of particular interest to investors is the impact that higher interest rates have on mortgage rates and, by extension, demand for homes.
Three Things to Know
- Bitcoin suffered three corrections of greater than 30% during calendar year 2021, including the current drawdown. From its all-time peak on Nov. 10, Bitcoin is down 41% through Jan. 8. (Source: CoinDesk)
- The so-called Buffet Indicator measures the total value of the U.S. stock market (as measured by the Wilshire 5000) versus current GDP. As of Jan. 6, the U.S. market value was $50.7 trillion versus U.S. GDP of $24 trillion. The 211% ratio is at a record-high level. (Source: Current Market Valuation)
- Despite having the lowest tax-to-GDP ratio among seven advanced economies (United States, United Kingdom, France, Japan, Germany, Italy, Canada), the U.S. had the highest interest payment as a share of tax revenue among the same group. (Sources: International Monetary Fund, Vanguard)
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.