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Stagflation Isn't Goldilocks
Daily Rap 02-16-2024

This morning's macro events were housing-related data, which was weak, and various sliced and diced versions of the PPI, the net of which was hotter than expected. The summation of all that is stagflation, which is the environment that I believe we have been in and will continue to be in, only it will be a little softer on the growth side. Needless to say, that environment is anything but the Goldilocks dream that so many have regarding the economy and inflation.
Three Bears Go Stag
The data had a mild impact on equity prices, with the Nasdaq about 0.5% lower through midday, although the Dow and S&P barely budged. Today is another very large option expiration, so the price machinations likely don't have much to do with the underlying fundamentals,...more
Last year's posts for Ask Fleck
Q: Bill,
I wonder what Mr. Skins magic squiggles machine could tell us about the pathetic state of miners?
Fleck: See his recent post.
(posted: 2/15/2024)
Q: A quick barometer check in this AI craziness...
This morning Renesas Electronics (a Japanese US$34bn mkt cap semi company) announced the acquisition of Altium (Australian $9bn mkt cap software company) at a 30% premium to the current valuation of 66x earnings.
Typically M&A like this is a good barometer of where current sentiment is (not that we needed any) and may indicate the top of the capital cycle for semis...
Fleck: Wow, the insanity just keeps building. It's like 1999, only way crazier.
(posted: 2/15/2024)
Q: Hi,
Please share revised cost of construction inflation figures if you think it's useful. This is from an insurance company regarding buildings. A 3rd party calculates this for the industry.
"Revised Trend Factors for Homeowners, Dwelling Fire, Farmowners, Farm Fire and Commercial Property
We recently received updated property trend factors. Inflation continues to be a primary driver of increased construction costs in 2023 and there is an expectation that these higher rates of inflation will continue through 2024.
Construction activity expected in 2024 has led to a countrywide average inflation rate prediction for 2024-25 of +7%."
Thanks for all you do!
Fleck: OK, thanks for the data.
(posted: 2/15/2024)
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