Click here: The Weekly Beacon – September 16 2022
We will be giving some macroeconomic market updates on a weekly basis. No
recommendations will be given in this commentary and we encourage you to contact us
today if you have any questions regarding any observations.
Feel free to send in your pictures of lighthouses to be featured in our weekly commentary.
This weeks issue: Inflation, Interest Rates, Sticky Prices, FED, Energy Prices, Food Prices, Volatility, Market Reaction to CPI, Twitter Stock, Elon Musk Buys Twitter, Shareholders Approve Deal, Ugly Sectors, Energy Stocks, Utility Stocks, Food Stocks, Hype Stocks, Tech Stock Rout, Oil Market Fundamentals, Natural Gas Shortage, Oil Rig Count, Investor Sentiment, Most Bought Stocks, SoftBank, Vision Fund 3, FED Funds Rate.
The Story Continues Despite the Narrative
It is always important to understand the difference between the story and the narrative and why different sides are using certain narratives, it helps us make decisions in financial markets and will do the same for you.
Over the past 5-6 weeks a narrative has been deployed across the financial, political, and news worlds: “inflation has peaked”, “inflation is falling”. Many pundits who fell for this believed the FED beat inflation, they pointed to oil prices declining since June, home prices coming off their all-time highs, used car prices dropping, and even certain retail prices dropping. One (multiple) problem(s): food, rent, and even electricity prices have risen. The other thing to remember, even though prices are down over 3 months they remain heavily elevated in a historical sense and are up A LOT YoY (Year over Year).
We did not buy into that narrative and have consistently stated that inflation will swing higher as we head into fall/winter. Energy prices will rise, food prices will not improve, and the housing problem will not solve itself. The people who claimed inflation had peaked acted more like activists rather than investors. We are glad we were not one of them. Even though the YoY number dropped from July to August, prices still increased in August, and we expect that trend to continue.
The inflation numbers for August’s end were released this past Tuesday and inflation not only increased, but it also beat analyst expectations…. yet again (after another month missing their estimate, maybe we should use different economists to estimate inflation). Economists projected a 0.1% dip in prices for August, prices increased by 0.3%.
