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48 Hours

02/16/2017

During a mere 48 hours this week, the following information was released:

1.  The Small Business Optimism Index rose again in January, as it has for the last three months, driven largely by the increase in small business owners who think the next three months will be a good time to expand their business.  (This is good!)

2.  The Consumer Price Index showed inflation has picked up this year, rising a surprising 0.6% in one month.  However, this core level of only 0.4% was skewed higher by the rising price of gasoline.  (Inflation is so much better than deflation.)

3.  The Producer Price Index was very similar to the CPI, which is somewhat unusual in itself, showing a 0.6% increase in January that was also skewed upwards by energy prices.  The core level of inflation at the producer level was only 0.2% in January.  (That is a little too low.)

4.  Rising inventory levels mean the consumers are buying less or that businesses are more optimistic and are building inventory levels to meet expected sales.  In December, inventory levels rose 0.4% . . . for the latter reason.  (The 2016 inventory correction is over!)

5.  Home Builder Sentiment dropped 2 points last month, not because homebuyers stayed away, but because the cost of building is rising so rapidly.  (Evidence of real inflation?)

6.  Utility Output declined 0.3% in January.  Normally, this is not a good thing, as it might indicate declining demand by business for electricity.  However, this decline was due to warmer weather this January compared to last year.  (No big deal.)

7.  Retail sales include auto sales, which are more volatile.  If you strip out those volatile numbers, retail sales increased a very healthy 0.8% in January, compared to a 0.4% increase in December.  (The consumer is stronger than expected.)

This was not all the economic data released during this 48 hour period and ignores the normal gushing of financial data from thousands of public companies.  It also ignores the unusually heavy flow of geopolitical events.

Now, how does a person consume and digest so much information?  How does a person “drink from a fire hose?”

It’s simple . . . their financial advisor should be their “designated fire hose drinker!”

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