The Capitalist Investor - Episode 173

Welcome back! The Capitalist Investors discuss the Masters, earnings season, the US Dollar, and the former Twitter now known as X. The conversation focuses on the Consumer Price Index (CPI) and its improvement, the Fed’s hawkish stance, and the difference between deflation and disinflation. The numbers released this morning showed that year-over-year inflation was 5% compared to the expected 5.1%, and month-over-month was 0.1% instead of 0.2%. The biggest increases in inflation came from transportation, electricity, and food away from home, while the biggest decreases were in gasoline, energy, commodities, fuel, and oil. The conversation discusses the potential for an increase in inflation due to energy prices rising again, the possibility of shifts from small regional banks to bigger banks, and the loan loss reserves of banks. They also speculate that banks will blame the Federal Reserve for raising rates and causing economic instability. In the end, what do you need to know?

U.S. Dollar In Jeopardy?

We have never lived in an environment where the U.S. dollar isn’t the world reserve currency. But it looks like other countries are making moves to take the U.S. dollar out as the middle-man and the strongest & most liquid currency. Countries like China, Russia, and even some countries in Africa are going to limit their trading of the U.S. dollar and takeaway buying commodities such as Oil in U.S. Dollars. What could happen if the U.S. dollar weakens and what could be the next in it’s place?

CPI Disinflation & Earnings

There is a big difference between disinflation and deflation, but it seems like a lot of people are mixing up the meanings. Deflation is the opposite of inflation. Prices are actually going down. Disinflation means declining inflation, but inflation still exists. Right now, we are in a disinflation environment where inflation & CPI numbers are coming in lower than expected which could be good news. But also, it could be due to recessionary pressures and consumers pulling back their spending. All of this eventually gets reflected in earnings, and earnings season is right around the corner. What are the expectations for Q1 2023 earnings and banks leading the way?

 

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Episode 3:
Impact of a Bernie Sanders Presidency
Episode 4:
Coronavirus, Pandemics, and Your Money
Episode 2:
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Episode 5:
What We Consider A Smart Investment Strategy, Ep #5
Episode 6:
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Episode 7:
How a Joe Biden Presidency Will Impact Your Portfolio, Ep #7
Episode 11:
The Student Loan Problem: Is Capitalism to Blame? Ep #11