Tucker Goes Grocery Shopping in Russia, Ugly Inflation Report, Fedwatch Updated, Gold and Silver Charts
Weekly Recap for the Week Ending February 16, 2024
Domestic
1. Hot inflation data
Ongoing Challenges Amidst Inflation Fight
Despite the US Federal Reserve's substantial progress in combatting inflation, recent data highlights the fluctuating nature of the battle. While high interest rates have effectively defied recession predictions, inflation remains a concern. The goal of reaching a 2% inflation target faces resistance as sectors of the US economy exhibit stubborn resilience.
January's consumer prices experienced an unexpected surge of 0.3%, primarily driven by housing costs. This spike disrupts the previous trend of slowing inflation and undermines immediate hopes of the Fed lowering interest rates. A similar increase was seen in producer prices, reinforcing concerns.
There were, however, some positive developments for consumers. Used car prices experienced a sharp decline following a methodology change, sentiment rose slightly, and both energy and broader goods prices maintained their downward trend.
Key Points:
Inflation remains a challenge despite recent progress.
Consumer prices rose unexpectedly, fueled by shelter costs.
Pockets of economic strength hinder the Fed's desired inflation target.
Used car prices fell significantly, offering relief to consumers.
Investors will have to wait a while for interest-rate cuts, Fed’s Bostic says:
“… rate cuts probably wouldn’t be suitable until the third quarter given the current strength of the economy.”
The CME Group reacted to this week’s inflation report by dramatically reducing the probability of interest rate cuts soon. March and May are off the table. The first hopes of a rate cut are in June with just a 50.4% probability of cutting 25 basis points.
2. Gold and silver charts
We’ve seen some pullback in online dealer discounts in premiums, indicated by the green-shaded area. The blue shade shows the volume of regular-priced bullion coins, which have remained rangebound since early January.
A reduction in discounted premiums volume would potentially indicate a change in the trend toward higher premiums. Watch out for that.
International:
3. Tucker Carlson goes grocery shopping and finds cheap prices
Surprise, surprise! When Tucker visited an economy with a much lower standard of living he found cheaper prices on groceries.
I was a little surprised at his reaction of becoming “Radicalized” during his epiphany.
Having lived as an expat for 10 years, much of that time spent in Russia’s neighboring country of Ukraine, I can confirm the culture shock and indignation at what we’re asked to pay for certain things compared to other parts of the world. Especially with the inflation we’re going through now and the difficult road that lies ahead.
There are even cheaper prices than the markets in Russia and Ukraine. Antalya Turkey, another place I lived for several years, have these incredible open-air markets that move to different locations through the city each day. One day a week in your area a parking lot turns into a bazaar. Produce sold at these rotating markets is often directly sourced from local farmers, guaranteeing freshness that's sometimes challenging to obtain in US supermarkets.
But there’s a flip side to all this. Not everything is so cheap.
This was my car in Turkey …
It’s the Volkswagen Polo, a smaller version of the VW Golf not sold in America. Cars like this, with their smaller size and fuel-efficient 1.2-liter 3-cylinder diesel engines, are highly desirable in Turkey. With fuel prices significantly higher than in the US, economy remains a critical factor for Turkish car buyers. It was more than 10 years ago that I lived in Antalya. Gas was $10 per gallon so economy was the foremost feature you looked for.
Another reason to have such a small car was taxes. In Turkey, vehicle registration taxes are based on engine displacement size, unlike the MSRP-based system common in the US. Taxes increase dramatically with engine size, reaching up to $8,000 annually for a car having something like a Hemi V8.
We have such great freedoms, for now anyways, in the cars and trucks we choose to drive. Yes, we have choice. The first vehicle I bought after returning to the States had a 6.4 liter Hemi V8. Why? Because I could. A freedom not always possible in other parts of the world.
While Tucker's reporting on Russian supermarkets offers valuable insights, comparing them to US supply chains would have revealed global economic disparities stemming from supply chain bottlenecks, varying input costs, and geopolitical factors. This could foster a greater understanding of the challenges faced globally and an appreciation for the advantages at home.
Now, having offered my opinion, it was good reporting by Tucker because we generally don’t get this type of journalism from mainstream news. The mainstream narrative is Russians and Ukrainians are corrupt, backward, alcoholics… and it’s absolutely false.
Alternative news, alternative journalism is the only way we’re going to know what’s going on in the world without traveling there to see it for ourselves. I hope to see more such reporting out of Tucker, and others, in the future.
Disclaimer: City Stacker is intended to provide general information and personal opinions related to disaster preparedness and investing in precious metals. I am not a certified financial planner (CFP), chartered financial analyst (CFA), or a certified public accountant (CPA). The content of this publication should never be considered a substitute for professional financial advice. Before taking any action based on anything within this publication, you should always consult with a qualified financial professional familiar with your unique situation. Investing involves risks, and I am not liable for any investment decisions made or results obtained from the use of information in this publication.