High for Even Longer

Peter's Market Rap for the Week Ending February 16, 2024

Hi.   Peter Navarro here with this week’s market wrap for the week ending February 16, 2024. The most remarkable thing about this week is what almost happened but ultimately didn’t happen, which is to say a market crash. There’s the story:

Last Tuesday, the consumer price index came out unexpectedly hot. Consumer prices ran over 3% from a year earlier, significantly above expectations. As you can see from the chart below – podcast listeners please go to the substack to see this if you’d like – the S&P 500 promptly tanked.

Yet, that was just a one-day wonder as the market rebounded sharply on Valentine’s Day and finished above the 5000 threshold for the week and only down 0.4% after five straight weekly gains.

The crystal-clear implication of the hot inflation report is that the Federal Reserve will not just keep rates high for longer. It is likely that rates will be higher for EVEN longer.

Once again, however, the S&P 500 has demonstrated great resilience which, as I continue to maintain, is not the result of a strong underlying economy but rather the inexorable upward secular trend of a small handful of large artificial intelligence-driven stocks like Nvidia and Facebook.

Looking more carefully at the numbers you can see why there is a growing disconnect between low- and medium-income American families ravaged by inflation and the elites in this country who no six ways from Sunday how to insulate themselves from such inflation.

For example, there are no more basic needs than shelter and food. Grocery prices rose sharply in January – food prices are fully 25% higher than in January 2020 prior to the pandemic while rents are up by 22%. Note: home prices are not measured in the CPI but continue apace.

Memo to millennials and the upper range of Gen Z getting ready to leave college – if they ever got there to begin with: In Joe Biden’s America, you will likely never own your own home or car.  You are also either going to be really thin because healthy food like fresh vegetables and fruits along with meat and milk are really expensive OR you going to be really fat because, instead of eating healthy, you’ll buy all the cheap carbohydrates and sugar stuff that will destroy your pancreas and lead you down the road to Type II diabetes.

They say that money can’t buy happiness, and that may well be true. But it can surely by better health – and of course healthcare. And Joe Biden is steadily making most Americans poorer not wealthier.

As for the economic news that caught my eye, yet another Democrat judge from a blue state slapped President Donald Trump with an almost half $1 billion fine and imposed harsh conditions that will force Trump to pay that fine prior to any possible appeal.

This is effectively a death sentence for one of New York’s most iconic and most prosperous businesses, and it’s gotta make other people in the broader business community think just a little bit about how secure their businesses might be from government intrusion and destruction.

I thought it was just the Communist Chinese that smashes companies that disagree with CCP ideology. The Big Apple is now the Big Banana Republic.

And on that note, let us bow our heads and say a prayer for the now late Victor Navalny who Vladimir Putin murdered by putting him in an arctic prison camp on bogus charges.

Predictably, our fearless and feckless President Joe Biden denounced Putin for his barbarous act, but I will be damned if I can tell the difference between what Vladimir Putin did to Navalny and what Joe Biden, through Bolsheviks like Jack Smith, Merrick Garland, Alvin Bragg, Fani Willis, and Arthur Engoron is trying to do to Donald Trump through attempted financial destruction and what it will be in effect attempted murder when they put him in prison.

Hard to be bullish on America right now in this political environment, even if the stock market keeps rising. Unless you want to take on significant risk, I still like short-term bonds that deliver you something on the order of 5% annually.

See you next week. Sorry I got this out a little late but some legal issues intruded. Peter Navarro. Out.