GME - 5 Things To Know In Investing This Week: The Taylor Swift Is Responsible For Inflation Issue | Benzinga
Yet another government agency revises its projections. This seems to be a weekly thing these days. Anyone want to guess which direction the revisions headed? The Bank of England disappoints UK doves and holds rates steady. DKI thinks it’s all Taylor Swift’s fault. GameStop management combined with Roaring Kitty’s memes have been great for company shareholders, but their performance at last week’s meeting was not well-received. Retail sales indicate the private economy is getting weaker. Finally, you’re not the only one feeling like there’s not much sales help in your local stores. But at least we’re all getting experience with self-checkout and bagging.
This week, we’ll address the following topics:
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New CBO debt projections only go in one direction.
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The Bank of England doesn’t lower rates. Is it Taylor Swift’s fault?
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GameStop proposal for non-business effort gets obliterated. Is management focused on the right things?
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Retail sales up less than expected. The economic news about the private economy continues to slide towards negative.
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Customer experience continues to decline.
Another round of applause for the DKI Interns. With Andrew Brown traveling in Scotland, he’s still managed to handle all the video editing and posting from vacation demonstrating his usual excellent work ethic. New Intern, Alexander Petrou, who comes to us from the University of Exeter Business School, stepped in and in his first week made valuable contributions. Alex pitched several of this week’s 5 Things, did much of the writing, and produced most of the images for this issue. We are pleased, but not surprised, to see him make a meaningful contribution in just his first week. Great job Andrew and Alex! DKI strenuously denies any rumor that while in the UK either Andrew or Alex was involved in the Taylor Swift tour and are therefore not responsible for UK inflation.
Ready for a new week of Swift-related central bank news? Let’s dive in:
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The CBO Blowout Projections:
The Congressional Budget Office (CBO) has dramatically revised its deficit projections, and now expects a surge from $1.5 trillion to $1.9 trillion for this year. New legislation, foreign aid, massive stimulus spending, and skyrocketing interest expense are all contributing to consistently higher debt and deficit expectations. Congress has elected to fund this spending with debt that leads to increased future inflation in order to deflect blame from their desire to throw money at anything that could win them a few more votes in November. They may act like the money is free, but when you see the increase in your monthly living costs, you’ll know the reason why.
Always adjusted in the same direction.
DKI Takeaway: A few months ago, DKI highlighted the inability of the Federal Reserve to predict the fed funds rate which they control. A few weeks ago, we wrote about the constant massive revisions to the employment data. And last week, we highlighted comments from Fed Chairman, Jerome Powell, who acknowledged the Fed has little confidence in their own projections. Recently, I’ve had polite debates with smart market participants who publicly express confidence in government statistics and claim they are a valid way to evaluate the economy. While I respect these individuals, every month there is increasing evidence that government statistics do not reflect reality, and that government projections are worthless. These statistics move markets, but don’t expect the "data” to have much empirical value. Said another way: The next time the CBO offers debt projections, do you think they’ll be higher or lower?
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The Bank of England’s Dilemma: Swiftly Navigating Inflation and Rates:
As the Bank of England (BoE) readied for its interest rate decision this Thursday, a rather unexpected influencer threw a glittery wrench into the works: Taylor Swift’s Eras Tour ( #TaylorSwift ). According to TD Securities analysts, the tour's impact could inflate services prices by 0.3%, potentially upending the BoE's rate-cut plans. Picture this: Swifties descending on London, not just singing along to "Shake It Off" but also driving up hotel prices and boosting local businesses (the horror!). This "Swiftonomics" phenomenon could significantly skew inflation metrics, especially with a tour date landing on a key inflation index day. Financially, Swift's Edinburgh concerts injected ...