Market Update - January 15th, 2024
Good morning team! Happy Sunday! For those of us in Ohio, the bad news is that winter is here in a big way and we sadly saw the Brownies fall in the wild card game last night to the Texans. BUT CJ Stroud, former OSU QB, is making waves as a rookie so we still have something to root for đ
Donât forget Rise & Thrive 2024 is coming up on Tuesday January 23rd.
We are posting regular content to Instagram (Nick | Kreg) and Facebook (Nick | Kreg) to help you and your buyers stay informed. Be sure to follow us!
Read time: ~5 minutes
Quick Lesson : CPI vs. PPI
To help understand this weekâs update, I thought it would be best to start with a quick lesson on the difference between the CPI (Consumer Price Index) vs. PPI (Producer Price Index):
CPI (Consumer Price Index): When you sell a glass of lemonade to your friends or neighbors, CPI tells a story about the price that regular people (consumers) pay for the lemonade. If the price of a glass of lemonade goes up, CPI will go up. It tells us how expensive things have become for people who buy them.
PPI (Producer Price Index): To make lemonade, you need to buy lemons, sugar, and maybe some cups. PPI tells a story about the prices that businesses (producers), like your lemonade stand, pay for the things they need to make products. If costs go up, PPI will go up. It shows how expensive it is for businesses to make things.
December Inflation (CPI) Beats Forecast đ€Š
On Thursday, the Consumer Price Index (CPI) data from December surprised analysts by coming in a bit higher than expectations.
US Annual CPI Actual 3.4% (Forecast 3.2%, Previous 3.1%)
US Core Annual CPI Actual 3.9% (Forecast 3.8%, Previous 4.0%)
US Monthly CPI Actual 0.3% (Forecast 0.2%, Previous 0.1%)
US Core Monthly CPI Actual 0.3% (Forecast 0.3%, Previous 0.3%)
If we dig under the covers a bit, many of the basic necessities we all deal with day-to-day are running much higher than 3.4% :
Car Insurance Inflation +20.3%
Transportation Inflation +10.1%
Car Repair Inflation +7.1%
Rent Inflation +6.5%
Homeownerâs Insurance Inflation +6.3%
Key Takeaway : With the annual CPI ticking up and core annual CPI basically flat, you begin to wonder whether the Fedâs job of taming inflation is done. But waitâŠ
December Inflation (PPI) Declines đ
On Friday, the Producer Price Index (PPI) for December continued declining. Annually, core PPI came in at 1.8% vs. 2.0% from November. Remember, this report measures the price for things businesses need to make products.
With PPI closer to the Fed target of 2.0%, investors are still holding to their belief that we will see cuts in 2024 to the Fed Funds Rate which should provide relief to mortgage rates.
Below is a chart that details the market expectations of a rate cut at future meetings of the Federal Reserve. SEVEN rate cuts are now being priced in through December 2024.
Key Takeaway : Itâs hard to wrap my head around the marketâs expectation of 7 rate cuts in 2024 based on the CPI and PPI reports from this week. The US job market is still đ„ and wages are still ticking higher. CPI is 2x the Fed target. Why would they cut rates which technically should cause inflation to rise? Maybe politics are coming in to play here seeing that this is an election year. Nice, linear rate cuts leading into November would paint a much rosier picture for the incumbents looking for re-election.
RISE & THRIVE 2024 : Only a Few Spots Remain đ„
Words canât explain the gratitude Kreg and I have right now. The initial response from our community towards the Rise & Thrive 2024 has been overwhelming.
We humbly thank those that have already purchased a ticket and we cannot stress the importance to those waiting that the time is now!
Currently, we have sold through 80% of the tickets available for the event. Once the tickets are sold, their gone. Donât hesitate. Make sure you secure your seat at the biggest event of 2024.
Dr. Tanya Menon : Current Ohio State professor and former TEDx presenter who has an interactive negotiation training to help you clinch deals like a pro.
Amir Syed : CEO of GO! Coaching and Chief Growth Officer at Lower.com will share his innovative approach to business planning for 2024.
Mo Ismail : Flying in all the way from Egypt, Mo will deliver the goods on the science and AI behind viral content creation
Letâs set ourselves up for success in 2024! All proceeds from the event will benefit St. Jude Childrenâs Research Hospital đ Click the link below to purchase tickets before theyâre gone!