(Kicking Down the Cobblestone)
President’s week shortened the week with markets closed Monday and most schools closed for the week allowing some time off with loved ones. What a great wrap for Valentine’s Day. Lyrics of Simon & Garfunkel singing, “Slow down, you move too fast, you’ve got to make the moment last” pursed my lips at moments. In between those moments the 2020 debate on whether the market was slowing down or not was continuing with new economic data points.
Economic readings reported the Bureau of Labor Statistics showing that producer price inflation in January came in above projections. This had headline inflation rising 0.5% month over month, marking the highest since October of 2018. PPI measures the change that producers receive for their domestic products. This ultimately works it way to the consumer price inflation which is the gauge of something being more expense or not to us, the consumer. We have had very low inflation and the Federal Reserve has been working to increase it to improve the health of the U.S. economy. This is a positive sign at this point since there are no fears of it being out of control. Another indication released was the January housing starts. They were stronger than expected and new permits surged to a near 13-year high. Earlier in the week treasury prices inverted again. This has been a repeating concern, a historic marker for possible looming recession, since last year when it first inverted. Treasuries turned higher though after the inflation rose more than expected last month.
Updates on the Corona Virus reported two deaths in Iran. After testing positive for the new virus in the holy Shi’ite city of Qom, died the same day they tested positive for the respiratory illness. Following this the International Monetary Fund (IMF) head Kristalina Georgieva said the COVID-19 outbreak is the “most pressing uncertainty” for the global economy. The new corona virus is going to slow China’s economic growth for the year – just how much depends on how well world leaders can contain the fast spreading outbreak, she said in a blog post.
The first quarter despite the headwind risk of the Virus seems to be picking up speed with the tail winds of economic growth and inflation picking up. Overall this is good news for your portfolio, home prices, jobs and the market.
Right now, the market isn’t slowing down. With the rally it is “making the moment last” and kicking any hint of slowing down the cobblestone as the rest of the Simon and Garfunkel song goes, it’s feeling groovy.
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Andrew F. Kotyuk, CIMA* is CEO and Principal of Alpha Wealth Management LLC. For questions or investment topics please email me [email protected].
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