CPI, Jobs, Rates, the IRS and IRAs, China, Michael Jordan's, and Presidents Day.
Let’s be practical…
The big news this week:
CPI – the Consumer Price Index, aka headline inflation because it’s the number that makes the headlines – came in higher than expected.
Here we go again…
The monthly increase in CPI came in at 0.3% and core CPI at 0.4%, both higher than expected.
And what is expected? I’m guessing a bunch of economists and Wall Street types think about it and throw a number out.
The annual number came in at 3.1%, still lower than last month's 3.4%, and the core number was 3.9%, the same as last month.
It wasn’t bad, just not as good as some folks wanted. But I’ll take it.
What wasn’t good was the producer price index – the cost of stuff that manufacturers pay for. That core index came in at 0.6% for the month.
0.1% was the expected number; oh, my.
So, instead of parsing this and parsing that, let’s listen to what folks are saying…
Oh, but before I tell you what folks are saying, it bears repeating that you can lay all the economists in the world end to end, and you still wouldn’t reach a conclusion. That said…
Inflation has likely stabilized. Will it drop some more? Sure, but over a longer period of time.
Jobs are the thing. The job market is very strong, and that’s what the Fed is looking at as it’s a determining factor on what to do with rates.
Because lurking in the background are all of these white-collar layoffs.
Speaking of rates, I think rates won’t come down until mid-year unless unemployment goes haywire, then they might push up the timeframe for dropping them.
Speaking of dropping, the fed funds rate is currently at 5.5%. Prime is 3 percentage points above that at 8.5%. They will drop the rates when they feel the time is right and not a moment sooner. But what is the right time?
I’m thinking June. We must see what inflation and jobs do before they even consider letting it tick down.
Mary Daly, the San Francisco Federal Reserve Bank president, thought that three rate drops this year would be reasonable.
Plug that into your projections for 2024.
The IRS gets its way
A pharmacist who started dealing in questionable medicinals was arrested and convicted of being, well, a drug dealer.
As the fed are wont to do, they confiscated his assets, one of which was an IRA.
At year-end, the custodian issued a 1099-R because that’s what happens when funds come out of a traditional IRA account.
As some of you know, taking funds out of an IRA is a taxable event.
I guess it’s hard to pay taxes when you are in the slammer, but our malefactor said he shouldn’t have to; he didn’t get the money, nor did he authorize the withdrawal. The IRS disagreed.
Well, it went to tax court, and the Tax Court ruled….
He has to pay ☹
He chose… poorly.
Bonus marks if you can tell me where that quote is from.
Let’s talk China
China’s population is about 1,400,000,000. That’s a lot of zeros.
In the 1970s, overpopulation was the issue of the day; how on earth were we going to feed everyone on the planet?
The world population was 4.4 billion in 1980.
It’s 8 billion now.
In 1980, China instituted a one-child-per-family policy. It worked.
In 2022, China’s population actually decreased.
In 2023, there were 500,000 fewer births than in 2022.
By the end of the century – in 75 years - the Shanghai Academy of Social Sciences estimates that the population will be 525 million. And they think they have real estate vacancies now…
That’s a drop. And a problem for them.
It also solves their share of man-made global warming.
When your population drops 62%, so does your contribution to carbon emissions.
It also may be why the country is currently in a bit of a deflation period.
How much are six pairs of shoes worth?
$8,000,000 if they were worn by Michael Jordan during the six NBA championships the Chicago Bulls won.
It was at a Sotheby’s auction on February 2.
The buyer and the seller would not disclose their names.
I’m not sure why they have not disclosed their names, but I know I would be racking my brain trying to figure out how to explain an $8,000,000 debit from our checking account to my wife.
And then trying to figure out how to spend $9 million on Valentine’s Day.
It’s Presidents Day! That’s why your banker is not picking up their phones. And you won’t be getting any mail.
Presidents' Day, officially Washington's Birthday at the federal governmental level, is a U.S. holiday in the United States celebrated on the third Monday of February. It is often celebrated to honor all those who served as presidents of the United States and, since 1879, has been the federal holiday honoring Founding Father George Washington
Some little-known facts about the Presidents of the United States
Not only was William Taft the 27th President of the United States, he was also Chief Justice of the Supreme Court and the first President to be buried at Arlington National Cemetery.
William Henry Harrison was the 9th President of the United States and the first to die in office; he had been President for only 31 days.
1776 is when the Declaration of Independence was signed, but the Constitutional Convention in 1789, 13 years later, established the means to elect a President of this brand new country. That is why George Washington is considered the Father of the Nation for his contributions to getting this Republic idea going.
The youngest President at the inauguration was Theodore Roosevelt, at 42.
And that’s your history lesson for the day. Back to business…
