Good morning.
An inflation number came out this morning providing investors with a reality check that confirmed that not only are prices still up … but continue to rise. The culprits last month seemed to be food, fuel and insurance … which one economist smartly classifies as: “a familiar disappointment.”
The Fed is wondering how to combat this … as high rates increase the cost of borrowing, normally reducing demand and purchases … but the Central Bank walks a tightrope as they do not want to slow the speed of the economic engine so much that it stops dead in its tracks or even (gulp!) reverses.
It seems small businesses are really in a bit of a pickle … as not only are borrowing costs problematic, but it is all but impossible to forecast the effects on the on-again, off-again, on-again, off-again tariffs. Do you hire workers? Fire people? Buy machinery? Cancel planned machinery purchases?
NFIB reports that small businesses “hired” in January … but with this morning’s report some owners must be wondering if they “jumped the gun” … and picked up employees too early. On top of this, Daily Shot shows the small business Uncertainty Index “surged” in the month … and you might suspect that if inflation and tariff ambiguity continue, we will see another surge in February as well.
It is interesting how things change … and even some things we hope for … don’t have the desired result.
The case here is that the end-January inventory of homes for sale is the most it has been in quite some time. The chant over the past few years was “we need more inventory … we need more inventory.” Well, the genie granted our wish … but the chant has now changed to: “we need greater affordability … we need greater affordability.” And if rates don’t come down any time soon, this tune might become louder.
That about wraps it up for today as I have to run out to Costco … increasingly afraid of what prices I will see.
I don’t need much, but I typically buy a massive container of laundry detergent and discovered this morning that … not only had mine expired … but the liquid had a terrible smell.
It was cheap and fragrant when I bought it … but neither is true right now.
My, how the Tide has turned.
Have a great day,
Joseph G. Witthohn, CFA
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