What's the difference between volatility and risk? Our Peek of the Week analyzes the recent inflation numbers, current retail sales data, and the risks involved with market volatility. We do our best to explain the difference between risk and volatility. You may have noticed... we are hearing the word "inflation" A LOT and feeling the rising prices to go with it. Mainly, it's a consequence of Russia's invasion of Ukraine and the supply chain bottlenecks with no end in sight at the moment.
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The stock market has been dropping, but it's important to know the stock market isn't very accurate when it comes to predicting recessions. And it sure seems like that's the word being thrown around these days: recession. The fact is, bear markets in stocks lead to recessions only about 53 percent of the time. In other words, the stock market has about the same predictive value for recessions as a simple coin toss. Let that sink in!
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Consumers are feeling more pessimistic than they have in a decade. The University of Michigan Consumer Sentiment Survey shows that sentiment has been sliding lower all year. Today's Peek of the Week explains how during a time when consumer pessimism feels at an all-time high, consumers could actually be more optimistic than the reports are indicating.
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Today's Peek of the Week explains the complexity of inflation and how the numbers may vary, depending on how things get measured. To determine how quickly prices will rise or fall is not easy and our government relies on two indexes to get their answers: the CPI (Consumer Price Index) and the PCE (the Personal Consumption Index). These signify headline inflation and core inflation. Read our "Peek of the Week" to learn how to differentiate between them and learn why the cost of two things we use daily, food and energy, can be excluded from inflation calculations. One thing we know for sure: policymakers have A LOT of data to consider before they make their predictions for the future.
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U.S. stocks finished the week lower. This comes as no surprise as our world is currently being forced to quickly adapt to a fast-changing reality. The war in Ukraine has intensified and financial markets are grappling with all this uncertainty. Today's Peek of the Week discusses the recent wartime sanctions and how economists are now expected to revise their predictions for global growth and inflation. Economists anticipate the rising commodity prices (on things like oil and gas) are likely to push inflation higher than it might have been otherwise, causing a slowdown for the global economy.
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If you aren't familiar with the 'January Barometer', today's Peek of the Week describes it like this: as goes January, so goes the year. . . As we know, people do not make perfect financial decisions and the predictive values associated with the January Barometer aren't perfect, either. So what's going on? Last week we saw U.S. stock indices move lower because of inflation, the pandemic and Federal Reserve policy. One thing is very clear: the global economy stays resilient, requiring new and innovative adaptations around the world.
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Is the economy doing well, or not? The answer doesn't come easy these days. Today we posted a brand new Peek of the Week that attempts to answer this question. Last week, the focus was on retail sales for the month of December 2021 being down 1.9 percent compared to November 2021. There are more factors and timeframes to consider than the month-to-month data, and Barron's reported the "the slowdown is expected to be short-lived."
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