The Buzz on Business for February 17th, 2024

Inflation at the wholesale level measured by the Producer Price Index or PPI came in way, way, way above expectations on Friday morning. We'll get to the specifics and the rest of the economic calendar in just a minute. But I do think that any hope for a March or, May, or even June rate cut by the Federal Reserve is now probably out of the question. Stocks took it on the chin as a result.

Stock Market Report

In spite of the bad news. Stocks actually attempted a midday rally but ultimately sold off pretty hard into the close.

• The Dow Jones Industrial Average was off four-tenths of a percent. That's 145 points. And it closed at 38,628.
• The S&P500 was off five-tenths of a percent, or 24 points, and it closed at 5006.
• The NASDAQ Composite. It was off eight-tenths of a percent, 131 points, and it closed at 15,776.
• The Russell 2000 was off 1 1/4 percent, 26 points. It closed at 2,033.
• The RSP was off. About a half a percent.
• The SOXL was off 2 percentage points on the session.

Bond Market Report

Rates were up across the board, as you would expect, given the inflation news.

• The 2-year treasury closed at 4.644%. That's up 8 basis points.
• The yield on the 20-year was up 3 ticks and closed at 4.562%.

Oil, Gold, and Bitcoin

• Oil was up $0.63, and a barrel will now set you back $78.16.
• Gold was up $9.20 and closed at $2024.10 a troy ounce.
• Bitcoin closed above 52,000 at 52,005. And finished the week up $55.

Inflation Back With A Vengeance

So, where to begin?

Inflation at the wholesale level, the Producer Price Index, month-over-month for January came in at 0.3% versus expectations of 0.1%. And December’s number of -0.1%.

Core PPI month-over-month came in at 0.5%. That's a half a percent! That's 6% inflation at the wholesale level. Expectations were for 0.1%, and in December, -0.1%.

These numbers, combined with the brutal and unexpected Consumer Price Index that came out on Tuesday, represent a dramatic reversal from what we've seen in the last year and a half.

From where we sit, inflation does not appear to be under control. Listeners may remember a podcast we did on inflation back in October, where we pointed out that most inflation episodes in the last 100 years in the US had double peaks. We hope the Federal Reserve will ignore the catcalls from its critics, stay vigilant, and slay this monster.

Housing Market Disappoints As Well

But that wasn't all the bad news. We also got the housing complex on Friday. Building permits came in at 1.47 million versus expectations of 1.51 million and 1.49 million last month.

Housing starts were down almost 15% month over month, and in January, they missed expectations by over 120,000. And they were down over 200,000 from last month.

Could higher interest rates? Finally be taking their toll on the housing market.

And remember, Japan and Great Britain have both fallen into recession. A strong economy can probably handle higher for longer. An economy in recession might not.

This is a story everyone here at World Headquarters will continue to follow closely. All you have to do is keep it right here on the Buzz