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TECH - 5 Things To Know In Investing This Week - The Stagflation And Doom Issue | Benzinga

This wasn’t a good week for the "pivot” people and asset gatherers who have been begging the Federal Reserve for lower rates. We got a higher-than-expected CPI and PPI. Making things worse, the short-term monthly numbers have started to accelerate meaning the disinflation story might be dead for now. Retail sales and manufacturing numbers were also a disappointment, but Congressional spending will keep us out of an "official” recession despite a weakening "real” economy as experienced by most Americans. Laks Ganapathi provides a guest "Thing” focused on her concern about the EV business. We explain in more detail the meaning behind the all-time highs in gold and Bitcoin. Finally, we express concern about commercial real estate based on what we’re seeing in the warehousing business.

This week, we’ll address the following topics:

  • The CPI comes in hot. Should we panic about inflation?

  • The PPI comes in hot. Should we panic about inflation?

  • Retail sales come in weak and manufacturing is down. Should we panic about a recession?

  • EV companies already heading for bankruptcy (NYSE: FSR). Guest post by Unicus Research which called this one well in advance.

  • Gold and Bitcoin at/around all-time highs. We do a better job explaining the implication.

  • A decline in warehouse employment is a negative economic signal for commercial real estate.

Nice work this week by DKI Intern, Andrew Brown, who continues to contribute graphs and ideas for the weekly 5 Things. In under two months, he’s become a real contributor which we’re happy (but not surprised) to see.

Ready for a new week of horrifying economic data? Let’s dive in:

  • The CPI Comes in Hot:

This week we got the February CPI (Consumer Price Index) which came in at 3.2% vs last year and 0.4% vs last month. Both of these are 0.1% above last month and above expectations of 3.1% for the year. The Core number, which excludes food and energy, was up 3.8% for the year and up 0.4% vs last month. This was also above expectations and almost double the 2% target largely due to continued high services inflation.

The disinflation story has faded for now.

DKI Takeaway:  Last year, people were excited about disinflation and using that as the reason to scream that the Federal Reserve should pivot to lower interest rates. Disinflation is not lower prices; but rather, a slowing in the inflationary increase in prices. It’s a change in the rate of change. For those of you without fond memories of your high school calculus class, it means we still have inflation. A quick look at the chart above makes it clear that the Fed is having trouble making further progress. The obvious conclusion: "higher for longer”. 

  • The PPI Comes in Hot:

The February producer price index (PPI) came in at 1.6% vs last year which is a pretty good number. The problem is the monthly increase was 0.6% which was double the expected 0.3% rise. A 0.6% increase might not seem like much, but it annualizes to 7.4%. If this continues, we’re about to see an acceleration of producer price inflation. As usual, the Core PPI remains above the all-items version of the index.

Like the CPI, the disinflation story is stalling.

That’s a big acceleration at the end.

DKI Takeaway:  The reason the PPI matters is it is intended to be a forward-looking measure of inflation. As producers and manufacturers experience increases in the prices of their raw materials and labor costs, we can expect ...

Full story available on Benzinga.com

Stock Information

Company Name: Bio-Techne Corp
Stock Symbol: TECH
Market: NASDAQ
Website: bio-techne.com

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