Eyes On CPI, Porch Pirates Beware & ISIS’ Return to the US - Top 3 Takeaways – April 10th, 2024
- All eyes on the CPI. No, there won’t be as many eyes on today’s Consumer Price Index Report as there were on the sky during Monday’s eclipse, but what’s reported at 8:30 this morning will be felt for far longer than a few minutes. For everyone who is concerned about inflation, interest rates and the financial markets, today’s consumer inflation report is one of the most important inflation reports in decades. For six months the belief by most economists and big money movers in the financial markets has been that the Federal Reserve has done all it needs to do to combat the historically high inflation rate we’ve lived through for nearly three years. In fact, most began betting that the Fed would be able to begin to cut interest rates during the first half of this year. But then January happened...and inflation, which was still historically high – well above the Federal Reserve’s 2% target inflation rate that’s proved to be historically sustainable – began to tick higher. It was just a one off, many thought. After all, one month does not a trend make. Then February happened...and it was shown that inflation accelerated yet again – rising back to the highest levels we’d seen since last September – incidentally just one month after the Federal Reserve’s last interest rate increase. Last month’s report, which showed a second straight month of rising inflation, began to give pause to people in the financial markets who’d begun counting their chickens before they’d hatched. Suddenly financial markets, which had mostly priced in the Federal Reserve cutting interest rates during the first half of the year, began backing off their guidance with a belief that there’s now only a 50-50 chance of interest rates starting to come down prior to the back half of the year. But still, two months doesn’t constitute a trend. Three months, however, does meet the definition of a trend and that’s why today’s inflation report is so important. Has the three-year repressive trend of interest rates swung higher once again? We’ll soon know. What’s also especially important is the monthly number itself. Without getting into the weeds of inflation calculations, following the acceleration of the inflation rate over the previous two months, if it were it to have risen again in March from where it was in February, it will at least equal the highest monthly increase in inflation in well over a year. If that were to happen, that not only would obviously be bad news for all of us consuming types, but it would likely be something the Federal Reserve wouldn’t be able to ignore. It was just on Friday that one of the Federal Reserve Governors (the people who decide interest rate policy) Michelle Bowman said While it is not my baseline outlook, I continue to see the risk that at a future meeting we may need to increase the policy rate further should progress on inflation stall or even reverse. Reducing our policy rate too soon or too quickly could result in a rebound in inflation, requiring further future policy rate increases to return inflation to 2 percent over the longer run. She doesn’t speak for all Fed governors, just for herself and her vote on policy, but she’s right. The net consumer inflation rate from January 2021, when Joe Biden became president, through February was over 19% - meaning that through February you needed to earn at least 19% more than you did three years ago just to break even. Today is a critical day to see if we have truly turned a corner on the inflation crisis or if it’s reignited yet again. Speaking of consumers and higher costs...
- Porch pirates beware. Yesterday Governor DeSantis took aim at the most lamented pirates since the reign of The Dread Pirate Roberts. The penalties for porch piracy and all forms of burglary and retail theft will be much steeper in Florida starting this fall. The Theft law which kicks in October 1st, takes specific aim at organized retail theft, burglary from private property – porches and otherwise, and lays the hammer to repeat offenders. Some previous misdemeanor theft charges will rise to become felonies. Some felony charges will become more severe felony charges. As for the impact theft has on prices...as Governor DeSantis said at his stop at a Walgreens in Stuart for the signing of the bill, while also highlighting that 88% of retail businesses report an increase in theft in recent years: If they're not able to sell those goods, if those are losses, they gotta find a way to compensate. So, you end up seeing rising prices when you go into the store. He’s right, and I’ll address specifically how much that has been costing you in today’s Q&A. No one will be made to walk the plank with Florida’s new law, however Florida’s penalties pertaining to theft and burglary will become the toughest in the country making our state unhospitable for all pirates not named Westley.
- Here we go again. It’s only been a little over two weeks since ISIS carried out its largest attack since President Trump bombed the blank of them ending their caliphate. Once that attack happened history had taught us that it was only a matter of time before they’d prove to be a problem elsewhere. Yesterday we learned that they’ve been actively recruiting and radicalizing within the United States. An 18-year-old in Idaho was arrested over the weekend for his planned plot to carry out a series of Islamic terror attacks at churches. According to FBI Director Christopher Wray: The defendant allegedly pledged loyalty to ISIS and sought to attack people attending churches in Idaho, a truly horrific plan which was detected and thwarted by the FBI’s Joint Terrorism Task Force. Thank God the FBI caught him before he carried out the attacks. The question is how many more are out there. And how much longer will ISIS be allowed to proliferate once again? Perhaps until a second coming of a President Trump?