This was yesterday, Tuesday, September 13, 2022.
Heat map from Finviz. Click here.
Yesterday happened because inflation, as measured by our government, was a little higher than economists were predicting. Then they thought that the higher number would panic Powell into two rate hikes of as much as 100 basis points (one percent) in coming days.
Higher rate hikes can, it is believed, seriously impact big pieces of the economy, dragging them into recession,
hurting corporate earnings and further hurting share prices. And, most importantly, bringing inflation closer to the desired 2%.
But, folks, this is not your grandfather’s economy of cars and houses. and things that get bought (or not) on
borrowing money from banks.
Our economy is awash in money — a lot of it spendable, if many of us could find something to spend it on and if
Miele dishwashers and Sub-Zero refrigerators were available for sale and could be delivered before next Spring.
Not all of us want a $40,500 refrigerator. But, if you do, it’s available from Meneghini La Cambusa,
Custom-made in Italy, this comes with a freezer, an ice maker, a coffee maker area, steam oven, microwave, multi-function oven, and a dry storage pantry. If you want it encased in exotic word from North Borneo, you may pay a little more.
Joking aside, car and home sales are dropping. The supply chain is easing. Gas prices are way down. Copper is down. Here is the last six months. The first chart is oil. The second is copper.
But the good news is that our economy is also technology and “experiences.” The cloud and travel, And airlines and Airbnb. Look at the heat map of the S&P500 above. All the big companies are tech.
In short, this will blow over. Inflation will ebb. The panic will stop. And good companies will see their stocks rise. Check for flush companies. Cash on the balance sheet is good. Heavy borrowings are not good.
The Queen’s final journey
Nothing that the English monarch was riding a Mercedes, Reader Bruce Robin writes:
They should’ve used a Rolls Royce (owned by BMW) or a Bentley (owned by Volkswagen) or a Jaguar/Land Rover (owned by Tata (India)). A Cooper (owned by BMW) would have been too small.
If it were me, I’d opt for James Bond’s Aston-Martin. When they get to the cemetery they could simply hit the eject button!
It’s still going on.
Favorites
And one from this week’s New Yorker.
I’ll probably cover my few shorts this morning.
i really shouldn’t get up at 3:00 AM with a “brilliant” insight (today’s column). I will not be able to do a single down-the-line backhand this morning. I’ll be too exhausted.
But, who could resist writing a blog in the middle of the night around the idea of ejecting the dead Queen from Bond’s beautiful Aston Martin?
Send me a delicious thought today, please. — Harry Newton
