A Quad of Information…

Am I talking economy or ice skating?  Read on to find out.

Tuesday

• The Consumer Price Index – CPI – for August was released. This is the main index that tells everyone what inflation is.

• While it was less than last month, it did not decrease as much as investors/economists/politicians/PhDs and others had hoped it would.

  • Yes, it came in at 8.3% and expectations – hopes, really – were set at 8.1%.

  • Mind you, it was 8.5% in July and 9.1% in June. So there is definitely a trend, but is it the right trend? You have to look at the individual pieces, but I think so.

• Core inflation – that’s inflation taking out fuel and food, because that is such an unimportant part of our expenses – was 6.3% for August and 5.9% for July and June. It was as high as 6.5% in March. It’s all over the place and did not reassure investors.

  • So core inflation increased as well.

• Because of these reports, the stock market lost 4.94% on Tuesday alone. Clearly, this was not good news as it means the fed will raise interest rates 0.75% for the third time this year.

Wednesday

• The Producer Price Index – PPI – for August was released. This is the measure of price increases that retailers and distributors pay manufacturers for their products.

• For August, it was 8.7%

  • This means that the prices that domestic producers receive for their output increased 8.7% in August from a year ago.

  • This is down from July’s number of 9.8%.

    • Fuel cost is a big part of this, and that is down. That helps.

  • This was in line with expectations.

• The market fell 0.45% but tech stocks recovered from the day before. Basically, a break-even day.

Thursday

• The Retail Sales (and Food Services) Report

  • People are still spending. Retail sales were up 0.3% from the previous month.

  • Uh-oh. The previous month was revised down 0.4% from unchanged.

  • Year over year, it is up 9.1%.

• So, we are up from July, which had been revised down, so that’s good and bad.

• The full report is titled Retail Sales and Food Services Report.

  • It does breakdown Retails Sales from the whole enchilada; that is, food sales.

  • Retail only sales were up 0.2% from last month.

• The good news is that folks are still spending.

• But the market was down another 0.45%.

Friday

• The Consumer Sentiment Report. Drum roll please…..

• But first, what is the Consumer Sentiment Index compiled by the University of Michigan?

  • Each month, the university conducts a minimum of 500 phone interviews across the continental U.S. The survey asks 50 core questions and covers three areas: personal finances, business conditions, and buying conditions. The answers to these questions form the basis of the index.

  • Here’s the interesting part: the base year for the index is 1966.

  • It’s just numbers, really. Really good is over 100. Bad is in the 50s and that’s where we are presently. And it’s not a percentage; it’s just a number that goes up or down.

• The index has been steadily dropping since covid started – big shocker – and currently sits at 59.5. The last time it was over 100 was February 2020.

  • And then it all came crashing down. Amazing what a virus can do.

• Regardless, consumer sentiment is up from the previous month when it had hit an all-time low at just above 50.

• So, overall, good news or at least, not bad news.

• The market was still down albeit a small amount.

The Quad – Option One:  Four days of stock market hell.  Or one big, bad day followed by 3 days of not knowing what to do.

• Overall, reality set in that inflation is here to stay and is not going away.

• The Fed would be raising rates 0.75% this week. That by itself caused the decline in the market this week.

• The Upside: No one really knows what is going to happen. It’s all guesses or opinion. So at the slightest news, the market can go up or down.

• For what it’s worth – my thoughts:

  • The CPI and PPI continues to decrease or stay even, but are still high.

  • Consumer sentiment, while very low, went up a bit this month.

  • People are still spending money. Why? They have jobs.

  • That’s the thing, really. Unemployment is still very low which is still propping up prices. As long as prices - CPI - stay up, the Fed will keep raising rates.

The Quad – Option Two:  The Quadruple Axel:  Ice Skating’s Barrier (or is it?)

• So what? Skaters have been doing quad’s for years.

• Yes, but all of those quads are 4 rotations – hence the name Quadruple Toe Loop or Quadruple Salchow, or quad for short.

• The Quad Axel is 4 ½ rotations in the air. On ice skates. And then landing it.

• It’s never been done in competition. Not by anyone. Until last Wednesday.

• Ilia Malinin, a 17 year old American man whose parents skated for Uzbekistan, was the first to do it in competition.

• And what has this to do with any sort of economic news?

  • Not a darn thing, but it’s like breaking the 4 minute mile in running or crushing a world record in any Olympic sport.

So, the Question:  What will you be doing in your business this week to set new records?  Give that some thought, please.

Adam

See previous Russell Reports here.  To be added to the distribution list, just email me at adam@ss4bllc.com.