Inflation Hits 3.2% 🤯

💀 The latest inflation print came out… and it’s not pretty. March 13, 2024 | Peel #666 Silver Banana goes to... [CapLinked. ]( In this issue of the Peel: - 💀 The latest inflation print came out… and it’s not pretty. - 🤖 AI stocks really are defying gravity—they just keep going up. - 👑 It’s time for short kings and small caps to unite. Market Snapshot 📸 = Stop Dealing in Antiques! Like your 30 year old VDR = Using a VDR that looks like it was designed for Windows 95? PROBABLY! That’s like driving a car with a cassette player in 2024. Get real – your deals deserve better than antique tech that’s as confusing as a hedge maze and pricier than a vintage wine collection. Caplinked is the sleek, modern upgrade you need. We’re talking intuitive design, cutting-edge security, and pricing that won’t make your wallet weep. Why stick with a shitty relic when you can join the future? Ditch the digital dinosaur and [let Caplinked lead the way.]( Macro Monkey Says 🐒 CP-High In a certain 1998 horror/comedy movie, saying the word “Beetlejuice” three times in a row would summon the ghost of Beetlejuice and completely ruin your day. Apparently, saying the phrase “rate cuts” does the exact same thing. Except, instead of reincarnating a ghost, we’re worried about the return of a much scarier beast… Yesterday, we got the latest print on consumer inflation, with the BLS dropping the February CPI report. And, based on the data, we might’ve said “rate cuts” one too many times. The Numbers Consumer prices increased 0.4% for the month and 3.2% compared to February of last year. [Source]() This time, economists hit the nail on the head. The monthly rate of 0.4% came right in line with expectations. But that was about where the good news ended. The annual inflation rate clocked in slightly higher than expected, with consensus estimates expecting a 3.1% jump. And sure, 3.2% isn’t much different, but this marks the third month in a row with the monthly or annual reading beating to the upside. Not exactly ideal. And, to make matters worse, core CPI beat the upside as well. Core CPI excludes food and energy because, despite those line items encompassing two out of the three most important things you spend money on, their price action is a little too volatile for the Federal Reserve’s liking. In February, core prices rose 0.4% and 3.8% on a monthly and annual basis. Like headline annual inflation, both of these readings were just 0.1% higher than expected. [Source](=) I know—inflation beating expectations makes us all want to go loot a Walmart and head for the bunkers, but the above chart gives us reason not to go full Mad Max on each other just yet. Annual core inflation is easily the most important inflation metric in the CPI report. To be honest, Fed Chair JPow and the FOMC use the CPI print as toilet paper, caring much more about the monthly PCE. However, the annual core inflation metric via CPI is as close as we can get. As we always say—the trend generally matters more than the level. This is again one of those instances, so seeing core CPI continue on that downtrend is gonna help me sleep tonight. A More Energized Report Since September of last year, shelter costs have dominated the CPI league, amounting to 60-70% of almost every CPI reading since then. Meanwhile, energy costs had been moving lower, remaining negative (a.k.a. deflationary) for the past 5 months. Much like my love life, that trend made a drastic turn for the worse in February. Shelter teamed up with Energy last month, with these two responsible for pushing ~60% of the index higher. Alone, shelter costs increased 0.4%, a downtick from January’s 0.6%, but still much higher than we wannabe-homebuyers would like. But, as always, keep in mind the CPI accounts for shelter costs worse than SVB accounted for duration risk. [Source]( But just because the BLS is bad at counting costs for housing doesn’t mean we’re free and clear just yet. According to Redfin’s monthly asking rent index, February saw the largest annual jump in asking rents in more than a year last month. So, for once, shelter costs might actually be cause for concern. We’ve seen new construction slow down, as is usual during winter months, but this is the first time we’re seeing a spike in rents alongside that slowdown in new supply. The Takeaway? Famed American philosopher and gospel musician, Eminem, once famously said “How many times can I say the same thing different ways that rhyme?” Luckily, I don’t have to make this rhyme, but February’s CPI print is further evidence that the return to 2% is gonna take its time. [Source]() This likely won’t alter the Fed’s path to rate cuts. Judging by the movement of stock and bond prices yesterday, along with a minimal decline in rate cuts at next week’s meeting, it is safe to say no one really cared. But it’s the same thing once again. Shelter costs continue to rise, obscuring consumer inflation due to the miserable collection methods of the BLS, but seeing energy prices move higher can be cause for concern. Without a seasonal adjustment in place just yet, we could be seeing a normal increase in energy costs that aligns with cold temperatures and not wanting to freeze at night. Or, you could use my dad’s method to avoid energy inflation by just simply never turning the heat on. What's Ripe 🤩 MicroStrategy (MSTR) 📈7.4% - You know what my BTC investments need? More volatility. No better way to do that than to juice your gains by owning BTC miners and proxies. - And Wall Street agrees. Commentary on effective-spot-BTC-ETF MicroStrategy from TD Cowen and Canaccord helped boost shares. - Both firms increased their price targets, raising to $1,650 and $1,810. But, BTC to $100k is still a higher return, so place your bets wisely… AI Stocks (NVDA) 📈7.2% - After ripping nonstop, consistently, every single day for more than the past year, it was natural to see AI stocks take a breather… for a single day. - On Tuesday, these market leaders were right back to it. There wasn’t much major, direct news, but Oracle had the alley-oop. - Strength in Oracle’s AI-linked data center business was a big reminder as to exactly why the Nvidias and others of the world have been booming. What's Rotten 🤮 Southwest Airlines (LUV) 📉14.9% - Boeing is kinda like the guy that gets a bid for a frat because his dad has a lake house. They got great resources, but damn, they suck to interact with. - And on Tuesday, Southwest was the primary victim. Southwest said delivery delays from Being would hurt previously issued guidance for 2024. - Down from 58, Southwest is getting only 46 737 MAX planes this year, reducing their planned capacity and revenue for the year. - But, they’re also probably reducing the number of doors flying off their planes, too. Boeing shares lost 4.3% on the announcement as well. On Holdings AG (ONON) 📉8.9% - Shareholders laced up their On running shoes and sprinted the f*ck away from this stock as fast as possible yesterday. Bad earnings will do that. - Net sales might’ve grown 47%, but it’s hard to get excited when you report a surprise loss. Guidance was lower than expected too. - As a Swiss company, much of On’s trouble came from currency conversion. But, analysts can’t read too well, so this may be a short term overreaction. Thought Banana 🤔 Little Things That Count Similar to the oppressive plight of short kings on dating apps, small-cap stocks often go undeservedly ignored. Well, not anymore. It’s time for short kings and small caps to unite. The Mag 7 has gotten a lot of attention over the past year for carrying the entire market of stocks on its back. But with two of the big dawgs—Apple and Tesla—in the red this year, that explanation is lacking with regard to the S&P 500’s 9.12% 2024 rise. What’s Happening? The main S&P 500 index closed at an all-time high yesterday of 5,175.27. Meanwhile, the equal-weighted S&P 500 index—which is made up of the same stock but allocates an equal % of the index to each—has broken out to record highs recently as well. Investors have spread their bets more broadly across markets as of late, leading to the similar recent performance seen in the above chart. Strong growth in the U.S. compared to peers has attracted investment dollars that are now spreading beyond the mega-cap tech names. Not only is this sweet for your portfolio right now, but it gives a more robust underpinning for all U.S. markets. In Dodgeball, they say “if you can dodge a wrench, you can dodge a ball.” In post-pandemic U.S. markets, we say “if we can dodge inflation, unemployment, a pandemic and Kanye’s latest album, we can reach all-time highs.” [Source]() Per the WSJ chart above, the equal-weight S&P has just about kept up with the broader index since the October 27th lows. And that’s despite the main S&P having a 5% Nvidia allocation, while the equal weight has just 0.2% exposure. The Takeaway? I really wish I could come up with some cool, contrarian take, but this data historically only gives more of a reason to be bullish. Every time asset prices spike, the peanut gallery starts yappin’ on some nonsense about “bubbles.” But maybe—just maybe—rising asset prices is a good thing for markets, the economy, your wallet, and your peace of mind. Let’s ride it out while it lasts. 💭 The Big Question 💭: Will the rally in U.S. stocks continue to spread more broadly? When can we expect even a slight correction? Are too much gains really a bad thing? Banana Brain Teaser 💡 Previous 🗓 The price of a coat in a certain store is $500. If the price of the coat is to be reduced by $150, by what percent is the price to be reduced? Answer: 30% Today 🕐 While a family was away on vacation, they paid a neighborhood boy $11 per week to mow their lawn and $4 per day to feed and walk their dog. If the family was away for exactly 3 weeks, how much did they pay the boy for his services? Send your guesses to vyomesh@wallstreetoasis.com Wise Investor Says 🤓 “Selling your winners and holding your losers is like cutting the flowers and watering the weeds” — Peter Lynch How Would You Rate Today's Peel? 😁[All the bananas]( 😐[Meh]( 😩[Rotten AF]( Happy Investing, David, Vyom, Jasper & Patrick [ADVERTISE]() // [WSO ALPHA](=) // [ACADEMY](=) // [COURSES](=) // [LEGAL](=) [Unsubscribe]( IB Oasis Corp. (aka "Wall Street Oasis") 20705 Saint Charles St Saratoga, California 95070 United States (617) 337-3353