V-Day Debt & Inflation💔
GM Friends & Investors,
The National Retail Federation expects spending to reach an all-time high of $25.9 billion this Valentine's Day. Americans will average $192.80 on cards, flowers, and other gifts. That's an increase from the $175.41 spent in 2022.
The scary part? 27% of couples will be putting their V-Day purchases on credit cards. Even worse, 20% of couples think their gift is worth the debt.
Highlights:
🐳 Whale Watching in the Market
🔥 Inflation is what?
💲Bitcoin vs Inflation
S&P 500
Whale Watching
What's going on here?, the markets questioned after Warren Buffet revealed he had sold off $3.7 billion worth of Taiwan Semiconductor (TSM -5.24%) stock in the previous quarter.
Whales: When a large investor, such as Buffet, moves a significant amount of money away from a stock, it can cause alarm among investors. This type of investor is referred to as a "whale" - someone who has enough money and power to influence the stock's price.
When Buffet moved billions from TSMC shortly after establishing a major stake in the company, it sent shockwaves throughout the market. Investors were left feeling fearful and uncertain.
Economy
Inflation Continues to Rise
January's inflation report was released yesterday, and it seems high prices will persist throughout 2023. Last month saw a 0.5% rise in inflation, or a 6.4% year-over-year increase - higher than analysts initially predicted.
So, what was the biggest cause of this price hike? Dairy products and eggs saw the highest increase in prices, while fuel oil followed closely behind.
Good news though - some sectors saw massive price drops too. Televisions used vehicles, computers, and major appliances all saw declines of 13.2%, 11.6%, 6.2%, and 3.9%, respectively.
What are economists expecting The Fed to do in response? They suggest more aggressive action may be necessary to slow down inflation.
Around the World
The United Kingdom's inflation rate has been on a downward trend, dropping to 10.1% in the third month of the year. This follows the record high of 11.1% in October 2022.
While this is good news, the data still showed that food prices, housing, and gas continue to increase.
An analyst stated:
″Prices will remain high, though not necessarily increasing as quickly as before. People's ability to afford them may still be strained, particularly if their wages haven't kept up with their expenses.″
Crypto
The Impact of Inflation on Bitcoin
It's heating up!
At the start of 2023, inflation rates began to surge - this caused a temporary dip in the price of Bitcoin, which then rallied back up mid-day.
The Fed is Key: Cryptocurrency traders and the crypto market in general are paying close attention to the trends in inflation. A slowdown in inflation could lead to the Federal Reserve loosening its stance on interest rates.
On the whole, the crypto market has tended to follow the same path as the stock market when it comes to inflationary data.
Before 2020, many in the crypto world had predicted that cryptocurrencies would become a hedge against inflation (like gold) - however, those predictions have not come true.
Real Estate
The Ups and the Downs.
Upside: Optimism is on the rise! Homebuilders are feeling confident due to a recent decrease in mortgage rates. This has resulted in the National Association of Home Builders Index increasing by 7 points to 42 - the highest reading since September and the largest monthly gain since 2013. Builders now believe the housing market will improve this year.
Downside: Unfortunately, U.S. home building (housing starts) has decreased for the past five months in a row.
Even though builders are eager to build and confidence in the market is increasing, fewer homes are being built. Mortgage rates are decreasing, but they are still much higher than they were one year ago - making homes less affordable.
Thank you for reading! I’ll see you next Saturday!
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