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DAILY UPDATE: Core CPI and ERISA while Markets Remain High with Walmart Up

Posted on May 17, 2024 by Dr. David Edward Marcinko MBA

MEDICAL EXECUTIVE-POST – TODAY’S NEWSLETTER BRIEFING

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Here’s where the major benchmarks ended:

America’s oldest popular stock index, the Dow Jones Industrial Average, hit a brief record high yesterday morning when it traded above 40,000, reflecting renewed hope for the market’s health after Wednesday’s promising inflation report.

The S&P 500^® index (SPX) fell 11.05 points (0.2%) to 5,297.10; the Dow Jones Industrial Average declined 38.62 points (0.1%) to 39,869.38; the NASDAQ Composite^® ($COMP) shed 44.07 points (0.3%) to 16,698.32.
The 10-year Treasury note yield (TNX) rose more than 2 basis points to 4.381%.
The CBOE Volatility Index^® (VIX) dropped 0.03 to 12.42.

Walmart’s strength fueled a strong day for consumer staples shares. The S&P 500 Consumer Staples ($SP500#30), which includes Walmart as well as companies like Coca-Cola (KO) and Procter & Gamble (PG), surged 1.5% to its highest level in over two years.

Among other companies, Applied Materials (AMAT) fell 1.6% ahead of the semiconductor industry supplier’s quarterly earnings report, which is expected after Thursday’s close.

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And, Core CPI, which tracks the price of goods and services excluding volatile food and energy prices and is closely watched as an inflation indicator, rose 3.6% from the same period last year. That’s the smallest annual increase since April 2021. On a monthly basis, core CPI rose 0.3%, marking the first time in six months that its growth slowed from the prior month. Other good signs include:

Grocery prices dropped 0.2% from March, the first decrease in a year.
Health insurance and car insurance increased more slowly in April than in March.
A separate report released yesterday showed consumer spending stayed steady last month.

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Finally, Joe Manchin (D-W.Va.) and a group of Republican senators are moving to overturn a retirement investment planning rule that was finalized by the Labor Department last month. The Labor Department unveiled the new rule last month that would update the definition of an investment advice fiduciary under the Employee Retirement Income Security Act. Manchin and 15 Republican senators joined in co-sponsoring a Congressional Review Act (CRA) resolution that would overturn this new rule.

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DAILY UPDATE: The CPI, Korion Health and the Stock Markets Rebound

Posted on April 23, 2024 by Dr. David Edward Marcinko MBA

MEDICAL EXECUTIVE-POST – TODAY’S NEWSLETTER BRIEFING

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Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants

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The March Consumer Price Index, which the Bureau of Labor Statistics released last week, revealed that core inflation hit 3.8% Year over Year in March, rising for the first time in 12 months. That’s moving in the wrong direction for the Fed, whose goal is to bring inflation down to 2%.

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Here’s where the major benchmarks ended:

The S&P 500 index rose 43.37 points (0.9%) to 5,010.60; the Dow Jones Industrial Average^® ($DJI) gained 253.58 points (0.7%) to 38,239.98; the NASDAQ Composite advanced 169.30 points (1.1%) to 15,451.31.
The 10-year Treasury note yield (TNX) was little changed at 4.617%.
The CBOE Volatility Index^® (VIX) fell 1.41 to 16.39.

Chipmaker strength lifted the Philadelphia Semiconductor Index (SOX) up 1.7% Monday, partially reclaiming last week’s 9.2% tumble. Banking shares were also among the strongest sectors, while the Russell 2000^® Index (RUT) advanced 1%. WTI crude futures earlier dropped to just a few cents above $82 per barrel, the lowest intraday price since late March.

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“Telemedicine has a lot of potential to bridge barriers and make it convenient for people to access healthcare. But it’s limited by lack of tools. Your doctor can’t reach through the computer screen.”—Akshaya Anand, co-founder of Korion Health, on the startup’s efforts to create an electronic stethoscope for clinicians to record heart and lung movement (Maryland Today)

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CPI LABOR DEPARTMENT FINANCIAL REPORT: Inflation Cools

Posted on February 13, 2024 by Dr. David Edward Marcinko MBA

By Staff Reporters

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Navigating Inflation: Short and Long-term financial strategies ...

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The Dow closed at a record high, while the other major indexes dipped slightly as investors await a slew of information this week.

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For example, a new government inflation reading just dropped this morning, and 61 companies in the S&P 500 reported earnings.

Inflation cooled again in January, but the declines may have paused. The Labor Department reported Tuesday that consumer prices rose 3.1% in January from a year earlier, versus a December gain of 3.4%. That marked the lowest reading since June. Core prices, which exclude food and energy items in an effort to better track inflation’s underlying trend, were up 3.9%. That was equal to December’s gain, which was the lowest since mid-2021.

And, Nvidia kept inching up and at one point overtook Amazon, briefly becoming the fourth-most-valuable company listed in the US.

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DAILY UPDATE: Impending C.P.I. and UPS

Posted on February 11, 2024 by Dr. David Edward Marcinko MBA

By Staff Reporters

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US Economists just polled by The Wall Street Journal forecast a mild 0.2% in increase in consumer prices in the first month of 2024. The inflation rate in the past 12 months would decelerate to 2.9% from a prior 3.4%. If forecasters are right, it would mark the first time the CPI has fallen below 3% in almost three years.

The drama in the report, if there’s any, is likely to come from the more closely followed core CPI that omits food and energy prices. The core rate is viewed as a better predictor of future inflation. Wall Street expects the core rate to rise 0.3% — the upper limit of what the Fed would find tolerable in the short run. The 12-month increase in the core rate could also dip to 3.7% from 3.9%.

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UPS, the shipping giant, which forecast weak demand for parcel delivery in 2024, has said it plans to lay off 12,000 employees to save $1 billion in costs. It’s also mulling a sale of its Coyote brokerage unit.

This shocking announcement was made on January 30th and comes just six months after unionized UPS workers landed a “lucrative” new labor deal, which will see delivery drivers earning an average of $170,000 in annual pay and benefits by the end of the five years. “2023 was a unique, and quite candidly, difficult and disappointing year,” said UPS CEO Carol Tomé during the company’s earnings call. “We experienced declines in volume, revenue and operating profits and all three of our business segments.”

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ECONOMY: CPI Prices Steady Pending Government Shut-Down?

Posted on November 14, 2023 by Dr. David Edward Marcinko MBA

By Staff Reporters

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DEFINITION: In the USA shutdowns occur when funding legislation required to finance the Federal Government is not enacted before the next fiscal year begins. In a shutdown, the federal government curtails agency activities and services, ceases non-essential operations, furloughs non-essential workers, and retains only essential employees in departments that protect human life or property. Shutdowns can also disrupt state, territory and local levels of government.

Fortunately, prices held steady for consumers and are growing at a slower pace, the U.S. government just reported Tuesday morning, as overall prices in October were the same as what consumers paid in September.

The Bureau of Labor Statistics says prices in October were unchanged as gasoline prices declined and shelter costs continued to rise. The Consumer Price Index rose 3.2% compared to a year ago, the latest sign that inflation is slowing down as interest rates rise and the job market gives up some of its recent strength.

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And, the stock markets rocked upward as Presidents Biden and Xi meet in San Francisco and Congress counts down toward a possible government shutdown. As stocks were a mixed bag yesterday as investors kept their eyes trained on Washington for the latest inflation good news data and to see whether lawmakers can hammer out a budget deal to keep the government from shutting down on Friday.

Yet, Boeing stock took off following reports that China may soon end its freeze on the 737 Max, as well as the announcement of several deals for new aircraft, including Emirates’s $52 billion order for 95 planes.

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FRIDAY 13th: Triskaidekaphobia

Posted on October 13, 2023 by Dr. David Edward Marcinko MBA

By Staff Reporters

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Triskaidekaphobia, or fear of the number 13, does not fit neatly into a clinical definition of a specific phobia. The number 13 is not an object or a situation, and it can be impossible for the sufferer to avoid. Moreover, in order for a phobia to be diagnosed, it must significantly impact the sufferer’s life. Most people with triskaidekaphobia find that their fear only arises in certain situations, and does not significantly impair their lives. But could this phobia just be linked to superstition?

Experts have long debated the scientific validity of triskaidekaphobia. Some feel that it should be classified as superstition or even taken as a sign of magic, which in conjunction with other symptoms, could point to a delusional disorder.

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Fearfully, stocks dropped yesterday as fresh inflation data renewed fears that the Fed will keep rates higher for longer. The Consumer Price Index in September held steady at 3.7%—still a ways off from the Fed’s 2% target for inflation. News was better for Walgreens, whose shares jumped 7% after the pharmacy giant reported smaller losses and showed progress in its plan to cut costs.

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DAILY UPDATE: Inflation CPI, Rain, the Shutdown and Torn “Threads”

Posted on October 1, 2023 by Dr. David Edward Marcinko MBA

By Staff Reporters

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CPI: Here’s a breakdown of how different aisles and departments rose over the past 12 months:

Cereals and bakery: increase 6%
Meats, poultry, fish, and eggs: unchanged
Remaining products (ranging from dairy to beverages): increase 0.3% to 4.8%
Food in general is up 4.3%
Food away from home: increase 6.8%
Used cars and trucks fell 1.2% year-over-year, but new cars and trucks rose 0.3%. Those may not seem like much, but a new car still costs an average of more than $48,000 — as of May 2023 only three models were available in the U.S. market for $20,000 or less.
Transportation similarly rose 10.3% over the same period but shelter, which rose 7.3%, “was the largest factor in the monthly increase in the index for all items less food and energy,” according to the August CPI.

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Not to put a damper on your Sunday morning (the relentless rain is already doing that to the North East USA), but the government still appears headed for a shutdown. Among the immediate impacts: Many federal employees will be furloughed, the IRS will stop picking up your calls, you won’t be able to get married in DC courts, and most national parks—and their social media handles—will go dark.

And even more rain as New York City was hit with its heaviest rain in decades, which flooded roads and subway stations and delayed air travel. Both the mayor and New York’s governor declared states of emergency as images of the waterlogged city filled social media.

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It appears that Mark Zuckerberg’s new “Threads” social media platform is struggling with a massive decline. The social media platform called “Threads” was launched by Facebook (now called Meta). The platform is essentially a clone of Elon Musk’s Twitter, which is now called X. Threads struggling to maintain momentum and gain new users.

Among major social platforms, Threads is reportedly only ahead of Tumblr in the race for user acquisition. Forecasts by Insider Intelligence predict a U.S. user base of 23.7 million for Threads in 2023. The company reportedly anticipated 56.1 million U.S. users. In comparison, X has roughly 528.3 million monthly users.

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DAILY UPDATE: Minority/BIPOC Mental Health Awareness Month, Inflation and the Markets

Posted on July 11, 2023 by Dr. David Edward Marcinko MBA

By Staff Reporters

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July marks Minority/BIPOC Mental Health Awareness Month

A time when healthcare leaders and policymakers acknowledge the disparities that exist in behavioral health access and outcomes, as well as examine ways to address them. Tell us how your company, hospital, or practice is working to eliminate barriers and ensure equitable access to mental health services.

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U.S. inflation cooled in May to an annual 4%, its lowest annual rate in more than two years, but core inflation rose by 0.4% month-on-month and 5.3% year-on-year.

And the markets are eagerly awaiting key inflation prints from the U.S. later this week, with the core annual consumer price index (CPI) — which excludes volatile food and energy prices — remaining persistently high to date, despite the headline figure gradually edging closer to the Federal Reserve‘s 2% target.

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Here is where the major benchmarks ended:

The S&P 500^® Index (SPX) was up 10.58 points (0.2%) at 4,409.53; the Dow Jones Industrial Average (DJIA) was up 209.52 points (0.6%) at 33,944.40; the NASDAQ Composite (COMP) was up 24.77 points (0.2%) at 13,685.48.
The 10-year Treasury note yield (TNX) was down about 4 basis points at 4.008%.
CBOE’s Volatility Index (VIX) rose 0.21 to 15.04.

Chip stocks were among the strongest sectors Monday, with the Philadelphia Semiconductor Index (SOX), jumping about 2%.

Retail and industrial stocks were also strong, while the small-cap focused Russell 2000 index (RUT) gained 1.5%. Utilities and Communication Services ranked among the weakest performers. Volatility perked up, with the VIX touching a five-week high.

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CPI REPORT: May Round-Up 2023

Posted on June 14, 2023 by Dr. David Edward Marcinko MBA

By Staff Reporters

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DEFINITION: A consumer price index (CPI) is a price index, the price of a weighted average market basket of consumer goods and services purchased by households. Changes in measured CPI track changes in prices over time.

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4 Key Points from the Report

1. Energy is doing a lot of the work. Cheaper energy played a major role in pulling inflation down to 4% last month from 4.9% in April, per Axios. Gas prices plunged almost 20% from last year, when Russia’s invasion of Ukraine sent fuel costs to the moon, while broader energy prices fell nearly 12%.

2. “Revenge spending” is down. Once COVID pandemic lock downs lifted, Americans splurged on vacations, leisure, and recreation (new pickle ball paddles!) in what economists dubbed “revenge spending.” Now that everyone has taken their week long trip to Italy, there are signs that revenge spending is waning: Airfare prices dropped 13% annually in May and, according to the US Travel Association, hotel demand is below 2019 levels. Bad for your Instagram, but good for inflation.

3. Food prices are up. The cost of food ticked up 0.2% in May from April after staying flat in the previous two months, showing how inflation has persisted on grocery store shelves. But not all aisles are created equal—the price of eggs dropped nearly 14% from April (the biggest one-month drop since 1951), while fruit and veggie prices rose 1.3%.

4. More than anything else, rent is propping up inflation. Shelter costs are the largest category in the CPI report, and they’re still on the upward march, climbing 8.7% from a year earlier. The good news: Economists say this government data doesn’t reflect on-the-ground information, such as reports of softening rent by Zillow and Apartment List. Shelter costs in the CPI are expected to decline during the second half of the year.

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DAILY UPDATE: Banks that Paused, Charles Schwab, Vanguard and the Equity Markets

Posted on March 15, 2023 by Dr. David Edward Marcinko MBA

By Staff Reporters

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On Monday, Newsweek published a list of banks that had trading of shares halted. According to the NASDAQ Trader website, these banks were placed under a Volatility Trading Pause. Some of the banks that were placed under a Volatility Trading Pause included PacWest Bancorp, Western Alliance Bancorporation Common Stock, First Republic Bank Common Stock and Comerica Incorporated Common Stock. Some of these banks were placed under the halt several times, but the pauses only lasted a few minutes. For example, the NASDAQ Trader website shows that PacWest Bancorp was halted at 9:49 a.m. EST and resumed at 9:54 a.m. EST.

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Billionaire Charles Schwab’s net worth has plunged about $3 billion since March 8th, 2023.
Shares of Charles Schwab Corp fell sharply amid the collapse of Silicon Valley Bank.
Investors are worried as Charles Schwab Corp is sitting on a significant amount of unrealized losses on its bond assets.

Billionaire Charles Schwab’s fortune has taken a massive beating after shares of the eponymous company he founded plunged amid the banking crisis. Shares of Charles Schwab Corp, a savings and loan holding company, closed 11.6% lower at $51.91 apiece on Monday, bringing its market value lower by nearly 38% so far this year. But, by 11am Tuesday, shares of the corporation were back up 9.5 percent.

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Meanshile, mega-manager Vanguard Funds bought sizable stakes in both Silicon Valley Bank (US:SIVB) and Signature Bank (US:SBNY) in recent months, according to data compiled by Fintel.

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Finally, U.S. equities finished with gains and near the highs of the day, as investors sifted through the first look at February’s inflation picture. The Consumer Price Index (CPI) rose in line with estimates month-over-month, while the core rate—excluding food and energy—increased a little more than expected. On a year-over-year basis, both the headline and core rate declined, but remained elevated. In other economic news, small business optimism increased last month.

The banking sector remained in the headlines, with many banks climbing higher following sharp losses over the past few trading sessions. In other equity news, United Airlines fore-casted an adjusted Q1 loss, and Meta Platforms announced another round of layoffs that will begin tomorrow.

Treasury yields rebounded, especially at the shorter end of the curve, and the U.S. dollar was nearly unchanged, while crude oil prices tumbled, and gold traded lower.

Asian stocks fell as turmoil in the U.S. banking sector spilled over into the region, while European stocks climbed as investors digested the inflation data out of the U.S.

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What is the Elderly CPI?

Posted on February 19, 2023 by Dr. David Edward Marcinko MBA

The CPI-E

[By staff reporters]

We’ve written about the CPI and Chained CPI before on this ME-P.

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Q = So, what is the Elderly CPI?

A = It is experimental CPI for the elderly called the CPI-E.

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MORE:

https://www.ssa.gov/history/pdf/80chap15.pdf

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According to the Bureau of Labor Statistics, or BLS, the CPI-E includes households whose reference person or spouse is 62 years of age or older.

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Risk Management, Liability Insurance, and Asset Protection Strategies for Doctors and Advisors: Best Practices from Leading Consultants and Certified Medical Planners™

Comprehensive Financial Planning Strategies for Doctors and Advisors: Best Practices from Leading Consultants and Certified Medical Planners™

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INFLATION: Slowing … Slowly!

Posted on February 15, 2023 by Dr. David Edward Marcinko MBA

By Staff Reporters

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Consumer price data showed it may be a long and winding road back to normal inflation levels. While inflation continued to cool last month, it did so at a slow pace (prices grew 6.4% annually, compared to 6.5% the month before).

And prices for a variety of goods and services, such as groceries and rent, continued to climb considerably. For example, egg prices in January were up 70% from the prior year.

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DAILY UPDATE: The Metaverse, Nvidia, Tesla and Mixed US Equities

Posted on February 15, 2023 by Dr. David Edward Marcinko MBA

By Staff Reporters

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Microsoft (MSFT) ended a project that aimed to encourage the use of the Metaverse in industrial environments just four months after it was formed, according to a new report by The Information. The 100 members of the team have been laid off as the company wants to prioritize shorter-term projects over those needing longer to generate meaningful revenue.

Tech, led by Nvidia and Tesla, had it better than other sectors.

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U.S. equities finished mixed, as investors digested the highly anticipated Consumer Price Index report, and its potential impact on the Fed’s future monetary policy decisions. The headline rate and core rate—excludes food and energy—both rose in line with estimates, but on a year-over-year basis inflation came in slightly hotter than expected. In other economic news, small business optimism rose slightly less than anticipated, and remained below its 48-year average for the thirteenth month in a row.

Earnings results were mixed, as Marriot International and Dow component Coca-Cola both bested EPS estimates and provided upbeat outlooks, while Restaurant Brands International missed earnings expectations, but increased its quarterly dividend.

Treasury yields were higher following the inflation data, and the U.S. dollar nudged lower, while crude oil prices fell, and gold was modestly higher in choppy trading. Asian stocks were mostly higher as markets in the region awaited the CPI report, while European stocks mostly added to its strong year-to-date gains amid the inflation data.

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DAILY UPDATE: US Stocks UP!

Posted on February 14, 2023 by Dr. David Edward Marcinko MBA

By Staff Reporters

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U.S. stocks rose ahead of some key January inflation data this week, which will begin with the Consumer Price Index (CPI) report. The economic calendar was dormant today, while Q4 earnings season continued down the back stretch, as Check Point Software Technologies topped estimates and announced an increase to its share buyback plan, while Fidelity National Information Services offered disappointing guidance.

Treasury yields were mixed, and the U.S. dollar was lower, while crude oil prices gained ground, and gold traded to the downside.

Asian stocks finished mostly lower ahead of the U.S. inflation data and as tensions between the U.S. and China remained, though markets in Europe rebounded from last week’s decline.

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DAILY UPDATE: Good CPI News and Higher Stock Markets

Posted on January 14, 2023 by Dr. David Edward Marcinko MBA

By Staff Reporters

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The December CPI report showed 59% of its components “are now in deflation,” Fundstrat’s Tom Lee said in a Friday note. That’s good news for the stock market, as a drop in inflation will help ease financial conditions. “This is setting up 2023 to be the opposite of 2022, where inflation expectations fall faster than EPS risk,” Lee said.

***

Stocks Higher as Q4 Earnings Season Begins U.S. equities ended the day and week higher, as the markets reacted to a host of results from the banking sector to kick off Q4 earnings season. Bank of America, Wells Fargo, and Dow member JPMorgan Chase all bested estimates, but each posted significant increases in provisions for loan losses, while Citigroup fell short of forecasts.

Meanwhile, Dow component UnitedHealth Group beat forecasts and reaffirmed its guidance. News on the economic front was mixed, as a read on import prices surprisingly increased, detracting some from yesterday’s tamer read on consumer prices, while consumer sentiment rose far more than what was projected.

Treasury yields were higher, and the U.S. dollar dipped, while crude oil and gold prices traded to the upside.

Asian and European stocks finished mostly higher, as investors digested inflation reports from the U.S. and abroad.

***

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FOMC Prognostications?

Posted on January 8, 2023 by Dr. David Edward Marcinko MBA

By Staff Reporters

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***

Consumer price data will offer clues about the Federal Reserve’s next policy move, while quarterly results from big banks get fourth quarter earnings season underway.

CITE: https://www.r2library.com/Resource/Title/082610254

The stock market rally to kick off 2023 will be put to the test next week when investors face a highly-awaited inflation reading and the start of fourth quarter earnings season, which will be led by big banks.

And, this Thursday morning will bring December’s Consumer Price Index (CPI), a release likely to dictate bets on whether the Federal Reserve raises interest rates by 0.25% or 0.50% at the start of next month.

According to Yahoo Funance, economists expect headline CPI rose 6.6% over the prior year in December, a downshift from the 7.1% increase seen in November, according to data from Bloomberg. On a month-over-month basis, CPI likely stayed flat.

Core CPI, which removes the volatile food and energy components of the report and is closely tracked by the Fed, is also expected to have risen at a slower pace last month, coming in at 5.7% after a 6% increase in November. Over the prior month, core CPI is expected to rise 0.3% after a 0.2% jump in November.

Policymakers monitor “core” inflation more closely due to its nuanced look at key inputs like housing, while the headline CPI figure has moved largely in tandem with volatile energy prices this year.

***

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The CPI and Stock Markets

Posted on November 10, 2022 by Dr. David Edward Marcinko MBA

By Staff Reporters

***

***

The consumer price index (CPI), the inflation report we dislike every month, dropped today and showed that price growth cooled off a bit in October (but is still far higher than where the FOMC wants it).

The Consumer Price Index (CPI) for October reflected a 7.7% increase over last year and 0.4% increase over the prior month, better than Wall Street expected. Economists surveyed by Bloomberg called for a 7.9% annual rise and 0.5% monthly gain.

The S&P 500 (^GSPC) rallied 5.5% — its biggest intraday gain since April 2020 — while the Dow Jones Industrial Average (^DJI) jumped 1,200 points, or 3.7%, the most since May 2020. The technology-heavy Nasdaq Composite (^IXIC) advanced a whopping 7.4%, its sharpest climb since emerging from the pandemic crash in March 2020. Meanwhile, Treasury yields tumbled following the report, with the benchmark 10-year note falling well below the 4% level.

Meanwhile, earnings season rolls on with reports from Disney, AMC, Palantir, Beyond Meat, and more.

***

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UPDATE: Corporate Earnings Bearish?

Posted on October 11, 2022 by Dr. David Edward Marcinko MBA

By Staff Reporters

***

Investors are eyeing this week’s Consumer Price Index report and sifting through corporate earnings reports, which could both bring bearish news to the market.

DEFINITION: https://medicalexecutivepost.com/2022/09/14/inflation-cpi-and-the-ppi/

Morgan Stanley’s Mike Wilson just told CNBC he believed earnings would be a mixed bag, and JPMorgan warned investors that stocks could see another 5% sell-off on Thursday if September inflation clocks in above 8.3%.

***

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Inflation, CPI and the PPI

Posted on September 14, 2022 by Dr. David Edward Marcinko MBA

By Staff Reporters

***

DEFINITION: In finance, inflation is a general increase in prices of goods and services in an economy. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a reduction in the purchasing power of money.

***

DEFINITION: The Producer Price Index PPI is a group of indexes that measure the change, over time, in the prices received by domestic producers of goods and services. It measures price changes from the perspective of the seller rather than the consumer, as with the CPI. The CPI would include imported goods, while the PPI is relevant to U.S. producers, and therefore would not include imports.

CITE: https://www.r2library.com/Resource/Title/0826102549

The PPI measures over 10,000 products and services. It reports the price changes prior to the retail level. This information is useful to the government in formulating fiscal and monetary policies. The data gathered from the PPI is often used in escalating purchase and sales contracts. That is the dollar amount to be paid at some time in the future.

***

***

Inflation stayed elevated in April but eased off its 40-year high, signaling that a stomach-churning surge in consumer prices since last summer may have peaked.

PPI April 2022: https://medicalexecutivepost.com/2022/05/12/what-is-the-producer-price-index/

The consumer price index increased 8.3% annually, down from 8.5% in March, as a drop in gasoline prices offset a continuing run-up in food, rent and other costs, the Labor Department said Wednesday. March’s yearly advance marked the fastest since December 1981.

READ: https://www.msn.com/en-us/money/markets/inflation-stays-elevated-at-83percent-in-april-but-eases-from-40-year-high/ar-AAX9vp3?li=BBnb7Kz

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UPDATE: CPI Triggers Stock Melt Down = KA-BOOM!

Posted on September 14, 2022 by Dr. David Edward Marcinko MBA

***

***

Stocks nosedived after a surprising inflation report showed prices rose more than expected last month. All three major averages logged their worst day since June 2020. Technology stocks led the way down, with the NASDAQ Composite plunging 5.2%. Tuesday’s session marks the seventh time this year the NASDAQ slid 4% or more, per data from Bespoke Investment Group. No declines of the same size were recorded last year, while 10 were experienced in 2020.

The S&P 500 sank 4.3%, while the Dow Jones Industrial Average erased 1,300 points, or roughly 4%.

The Bureau of Labor Statistics released its Consumer Price Index (CPI) for August early Tuesday, which showed prices rose 8.3% over the prior year and 0.1% over the prior month. Economists had expected an 8.1% increase in inflation over last year and a decline of 0.1% over the prior month.

***

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UPDATE: Palantir, T Bonds and the CPI

Posted on May 11, 2022 by Dr. David Edward Marcinko MBA

By Staff Reporters

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***

Palantir Technologies Inc., Peter Thiel’s single-biggest equity position, plummeted as much as 23% Monday after it reported widening losses and slow revenue growth. The slump erased $270 million from the value of Thiel’s stake. So far this year he’s shed 19% of his net worth, now valued at $7.4 billion, according to the Bloomberg Billionaires Index.

10 Year T-Bond: 2.987%

Economy: The Consumer Price Index report will drop this morning and give us inflation data for April.

NOTE: The CPI is a price of an index or the price of a weighted average market basket of consumer goods and services purchased by households. Changes in measured CPI track changes in prices over time.

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UPDATE: The CPI, NASDAQ, Gas Prices and Digital Health Investing

Posted on April 12, 2022 by Dr. David Edward Marcinko MBA

By Staff Reporters

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***

Today’s consumer price index [CPI] reading is expected to show that March prices surged 8.4% over last year.

Treasury yields rose and stocks dropped in anticipation of higher interest rates and a cooling economy. The tech-heavy NASDAQ lost more than $1 trillion in market value in just the past five trading sessions.

US average gas prices sank to their lowest level in more than a month, at $4.11 a gallon. The easing is likely a reaction to the White House’s big release of crude reserves and lock-downs in China reducing overall demand for fuel.

US digital health company investment financing experienced a dip in Q1 of 2022, dropping to $6 billion from the $6.7 billion invested in Q1 2021. In addition, the average size of each investment deal dropped from $46 million last year to just shy of $33 million.

***

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Macro-Economic Mid-Year Update

Posted on August 8, 2016 by Dr. David Edward Marcinko MBA

Last Week’s Headlines

By Michael Green [TGA Capital Management]

www.tgacapitalmanagement.com

Businesses are paying more for goods and services as the Producer Price Index increased 0.5% in June, the largest increase in a year, according to the Labor Department. Higher energy costs pushed the increase. Since businesses usually pass on increases in the cost of goods and services, it’s likely consumer prices will increase as well, driving inflation upward.

Here is a mid year economic summary:

In fact, consumer prices did increase in June–just not at quite the same rate as producer prices. The Consumer Price Index rose 0.2%, following the same increase in May and a 0.4% gain in April. Over the last 12 months, the CPI has increased 1.0%. Excluding the volatile food and energy components, consumer prices still increased 0.2% in June and 2.3% from a year earlier.

Consumers continue to spend as retail sales increased in June, jumping 0.6% from the previous month and 2.7% ahead of last June. This follows a 0.2% (downwardly revised) increase in May. Excluding autos and gas, household spending climbed 0.7% from May. Output excluding autos remained the same as the prior month. This report, coupled with increases in consumer and producer prices, provides optimism for the economy over the summer months.

The manufacturing sector experienced a noticeable uptick in June, as industrial production increased 0.6% after falling 0.3% in May. Manufacturing output rose 0.4%, largely due to an increase in motor vehicle assemblies. June’s gain is the largest monthly increase since November 2014.

The number of job openings decreased by 345,000 to 5.5 million on the last business day of May, according to the Job Openings and Labor Turnover Survey (JOLTS) report from the Bureau of Labor Statistics. April’s rate was 5.8 million. May’s job openings rate is the lowest of the year. The quits rate was unchanged at 2.0% as workers continue to remain at their present jobs. It’s important to remember that June’s employment situation report showed significant improvement on the labor front.

U.S. import prices rose 0.2% in June from May, largely due to a spike in petroleum prices. Exports also increased in June, rising 0.8% following increases of 1.2% in May and 0.4% in April. The 2.4% rise in export prices for the second quarter of 2016 was the largest three-month advance in export prices since the index rose 2.7% between February and May 2011.

The Treasury Department reported a $6.3 billion budgetary surplus in June, following May’s $52.5 billion deficit. However, over the first nine months of the fiscal year, the deficit is up almost 27%, at $400.9 billion, over the same period last year ($316.4 billion).

Largely influenced by the immediate negative impact of the Brexit vote, the Index of Consumer Sentiment fell from 93.5 in June to 89.5 in July.

In the week ended July 9, the advance figure for seasonally adjusted initial unemployment insurance claims remained level at 254,000, unchanged from the prior week’s level. The advance seasonally adjusted insured unemployment rate remained at 1.6%. The advance number for seasonally adjusted insured unemployment during the week ended July 2 was 2,149,000, an increase of 32,000 from the previous week’s revised level.

Conclusion

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Milliman Medical Index [CPI June 2015]

Posted on June 24, 2015 by Dr. David Edward Marcinko MBA

By Javier Sanabria

The price of medical care boosts Consumer Price Index June 2015

A sharp rise in medical care prices contributed to a recent increase in the Consumer Price Index (CPI).

Although economists and healthcare experts have not clearly identified the reasons for the spike, the 2015 Milliman Medical Index (MMI) indicates that prescription drugs are driving medical costs upward.

MMI co-author Chris Girod offers some perspective in this CNBC article.

***

The so-called medical care index, maintained by the Bureau of Labor Statistics, rose 0.7 percent in April, “its largest increase since January 2007,” the BLS wrote in a report issued Friday. The BLS report comes three days after the large actuarial and consulting firm Milliman projected 6.3 percent growth in the costs of health care for a typical family of four on an employer-based plan in 2015. That compares to a low-water mark growth rate of 5.4 percent last year. Milliman’s report is the latest indication that health-care costs, which saw a historic slowdown in their rate of inflation in the years after the Great Recession of 2008, are headed back up toward the trends seen before the financial meltdown. Before the recession, double-digit inflation in health-care costs was common. “There’s a correlation between the CPI medical index and the MMI, but they’re very different measures,” said Chris Girod, a principal and consulting actuary at Milliman, who added that the MMI looks at a broader range of prices. “The annual increases [in the MMI] tend to be a lot higher than CPI.” Milliman’s report blamed resurgent inflation on price increases for prescription drugs, particularly specialty drugs. “The rest of the category, the increases were pretty ho-hum this year,” he said. Prescription drug prices overall are expected to increase by 13.6 percent in 2015, according to Milliman’s index. In the category of specialty drug prices alone, “the annual increases are around 20 percent right now,” Girod said. Those specialty drugs include Sovaldi, made by Gilead, which in a 12-week course of treatment can cost $84,000. “The drug trends have actually been coming down in the last four or five years until now,” Girod said.

***

See more at:

http://www.healthcaretownhall.com/#sthash.xgDF7hpd.dpuf

***

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Understanding the New “Inflation Tax”

Posted on January 22, 2013 by Dr. David Edward Marcinko MBA

More on the CPI

By Rick Kahler MS CFP® ChFC CCIM www.KahlerFinancial.com

With all the talk recently, about tax rates and the fiscal cliff, hardly anyone has mentioned what is probably the most effective and least understood tax in the federal arsenal: inflation.

Wait a minute. Isn’t it confusing to call inflation a tax? It is. That confusion is exactly why inflation is the ultimate stealth tax.

The CPI Formula

One of the few deficit-reducing measures that had the support of both parties and President Obama is a change in the way the government measures inflation. Our lawmakers have agreed on another in a series of adjustments to the way they calculate the consumer price index (CPI). The proposed changes will understate the future CPI even more than the current formula already does.

This maneuver is a brilliant way for deficit-reducing lawmakers to both cut spending and increase taxes, without calling their action either a spending cut or a tax increase.

The “Chained” CPI

How is this possible? First, here’s a brief explanation of the proposed change, which is called the chained Consumer Price Index. According to an AP article published in the Rapid City Journal on December 5th, 2012, “the chained CPI assumes that as prices rise, consumers turn to lower-cost alternatives, reducing the amount of inflation they experience.”

The assumption is that, if the price of pork rises while chicken doesn’t, people will buy more chicken. Yet they’re still buying protein. Therefore, presto—no inflation has happened. This argument is like saying if the price of gasoline goes up and the cost of walking doesn’t, people will just walk more, so there’s no problem.

A Spending Cut

The chained CPI is a spending cut because many entitlement programs are indexed to the CPI. These include Social Security, government pensions, veterans benefits, and the interest on some of the national debt. The lower the increase in the CPI; the less benefits will rise.

The AP estimates that once the new CPI is fully phased in, a 65-year old on Social Security will receive $136 a year less. At age 75 the reduction will be $560 annually, and at 85 it will be $984 less.

In addition, as wages increase at the real inflation rate, entitlement programs won’t keep pace. Gradually, fewer people will be eligible for programs like food stamps, Medicaid, heating allowances, and Head Start.

###

A Tax Increase

The chained CPI is a tax increase for much the same reason. Many income tax brackets and deductions are indexed to inflation. Smaller annual adjustments to the brackets because of the lower CPI will push more people into higher tax brackets.

Tweaking the CPI is nothing new. Politicians from both parties have done so for years to give the illusion of a lower CPI than that calculated by previous methods.

ShadowStats.com, run by John Williams, calculates the current unemployment and inflation rates using the formulas from the 1980s. According to that methodology, the unemployment rate (U-6) is 15% and the CPI is 9%. Yet the government has tweaked the CPI so much that today the official CPI is 2.5%. Under this newest proposal, inflation would be 2.2%.

The Results

You may think understating the current CPI by 0.3% isn’t any big deal, but it is. The decrease represents a 12% drop in the inflation rate, which understates the increase in our cost of living. If your employer reduced your wages by 12%, you’d probably see it as a big deal.

Assessment

Proponents figure the newest CPI adjustment will save $200 billion in spending increases and raise $65 billion in new taxes over ten years. It doesn’t matter whether you call it inflation, chained CPI, or plain old gimmickry. A tax increase by any other name is still a tax increase.

Macro-Economics and What the ‘Chained CPI’ Could Mean for Social Security?

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Macro-Economics and What the ‘Chained CPI’ Could Mean for Social Security?

Posted on December 21, 2012 by Dr. David Edward Marcinko MBA

Definition of Chain-Weighted CPI

By Dr. David Edward Marcinko MBA

An alternative BLS measurement for the Consumer Price Index (CPI), removing the biases associated with new products, changes in quality and discounted prices.

The chain weighted CPI incorporates the average changes in the quantity of goods purchased, along with standard pricing effects. This allows the chain weighted CPI to reflect situations where customers shift the weight of their purchases from one area of spending to another.

Investopedia Example:

The chain weighted CPI incorporates changes in both the quantities and prices of products. For example, let’s examine clothing purchases between two years. Last year you bought a sweater for $40 and two t-shirts at $35 each. This year, two sweaters were purchased at $35 each and one t-shirt for $45.

Standard CPI calculations would produce an inflation level of 13.64%

((1 x 35 + 2 x 45)/ (1 x 40 + 2 x 35)) =1.1364

The chain weighted approach estimates inflation to be 4.55%

((2 x 35 + 1 x 45)/ (1 x 40 + 2 x 35)) =1.0455.

Using the chain weighted approach reveals the impact of a customer purchasing more sweaters than t-shirts.

BLS Application

What is the C-CPI-U and when did the Bureau of Labor Statistics (BLS) begin publishing it?

BLS began publishing the Chained Consumer Price Index for All Urban Consumers effective with the release of July 2002 CPI data. Designated the C-CPI-U, the index supplements the existing indexes already produced by the BLS: the CPI for All Urban Consumers (CPI-U) and the CPI for Urban Wage Earners and Clerical Workers (CPI-W).

The C-CPI-U employs a formula that reflects the effect of substitution that consumers make across item categories in response to changes in relative prices.

Read more: C-CPI-U data can be found on the BLS web site at http://data.bls.gov/cgi-bin/surveymost?su

Substitution Bias

What is substitution and substitution bias? And does the C-CPI-U eliminate it?

Traditionally, the CPI was considered an upper bound on a cost-of-living index in that the CPI did not reflect the changes in consumption patterns that consumers make in response to changes in relative prices.

Since January 1999, a geometric mean formula has been used to calculate most basic indexes within the CPI; this formula allows for a modest amount of substitution within item categories as relative price changes.

The geometric mean formula, though, does not account for consumer substitution taking place between CPI item categories. For example, pork and beef are two separate CPI item categories. If the price of pork increases while the price of beef does not, consumers might shift away from pork to beef. The C-CPI-U is designed to account for this type of consumer substitution between CPI item categories. In this example, the C-CPI-U would rise, but not by as much as an index that was based on fixed purchase patterns.

With the geometric mean formula in place to account for consumer substitution within item categories, and the C-CPI-U designed to account for consumer substitution between item categories, any remaining substitution bias would be quite small.

Assessment

Link: What ‘chained CPI’ could mean for Social Security

White Paper: http://www.bls.gov/cpi/super_paris.pdf

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Filed under: Health Economics | Tagged: All Urban Consumers, BLS, Bureau of Labor Statistics, chained CPI, Consumer Price Index, CPI, macro-economics, social security, Urban Wage Earners and Clerical Workers, What 'chained CPI' could mean for Social Security | 6 Comments »

Understanding the Domestic Unemployment Numbers

Posted on October 24, 2012 by Dr. David Edward Marcinko MBA

How Can Unemployment Be Going Down?

By Rick Kahler MS CFP® ChFC CCIM www.KahlerFinancial.com

In an economy that isn’t exactly robust, how can unemployment be going down? The recent drop in the unemployment rate from 8.1% to 7.8% caught almost everyone, including me, by surprise. The GDP grew by only 1.5% in the first quarter, and its growth was under 2% for the last 12 years. To get the economy moving again we will need growth of 3% a year.

It isn’t surprising that many pundits were questioning the timing within minutes after the latest unemployment numbers were announced. After all, unemployment is one of the major issues in the Presidential election. Former General Electric CEO Jack Welch and several Fox News commentators even suggested the administration was cooking the books.

The BLS

I don’t believe the Bureau of Labor Statistics is manipulating unemployment data. The process of computing the data is straightforward and transparent. Two surveys go into projecting the unemployment rate, one covering 400,000 businesses and the other questioning 60,000 households. The surveys ask about the number of full-time and part-time employees, whether the part-time employees really want full-time employment, and whether those without a job have looked for a job within the last month.

Cooked Books?

But that doesn’t mean the books aren’t cooked. They are.

“The way the government derives the unemployment numbers has changed significantly over the last 30 years,” writes John Mauldin, editor of the economic newsletter Thoughts from the Frontline, in the October 8, 2012, issue. “Whatever administration is involved, the new equations for determining unemployment result in a lower unemployment rate than they would have if the 1980’s methodology were still in place.”

The Changes

One of the more bizarre changes in the unemployment rate calculation is that people are not considered unemployed unless they have looked for a job in the last 30 days, even if they currently receive unemployment benefits. Mauldin says there are probably many people who haven’t looked for a job in the last 30 days and that most, if not all, of them would consider themselves unemployed. “If you’re not disabled and you’re receiving unemployment or welfare benefits I think you should be counted as unemployed,” he says. He estimates our actual unemployment rate is well over 12%, which doesn’t take into account the 50% of college graduates who are underemployed.

Don’t Blame Obama

Before you blame the Obama administration for the dumbing down of the unemployment rate, this is the same way the Bush administration calculated unemployment.

It’s the same story with the Consumer Price Index, which the government has continually tweaked to give the illusion of a lower CPI than if the 1980’s formula was used.

ShadowStats.com, run by John Williams, calculates the current unemployment and inflation rates using the formulas from the 1980’s. According to that methodology, Williams calculates the unemployment rate (U-6) is 15% and the CPI is 9%.

Regaining Jobs?

The economy has currently regained about half of the jobs lost in the Great Recession of 2008-2009. According to the Liscio Report, it will take another 40 months to reach the level of employment we had prior to the recession. That is if we don’t have another recession, which is doubtful. If all the tax increases slated for January 1 go into effect, the Congressional Budget Office says GDP will shrink 2.9%, which guarantees a recession.

Assessment

So, what was behind the fall in the unemployment rate this month? According to Mauldin, the entire drop came from an increase in part-time workers. He says, “That such significant numbers of people can only find part-time work is not a sign of a strong and growing economy.”

When we look a little deeper, maybe the latest unemployment numbers aren’t such a surprise after all.

Conclusion

OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:

PRACTICES: www.BusinessofMedicalPractice.com
HOSPITALS: http://www.crcpress.com/product/isbn/9781466558731
CLINICS: http://www.crcpress.com/product/isbn/9781439879900
ADVISORS: www.CertifiedMedicalPlanner.org
FINANCE: Financial Planning for Physicians and Advisors
INSURANCE: Risk Management and Insurance Strategies for Physicians and Advisors
Dictionary of Health Economics and Finance
Dictionary of Health Information Technology and Security
Dictionary of Health Insurance and Managed Care

Filed under: Career Development, Funding Basics | Tagged: Bureau of Labor Statistics, CBO, Consumer Price Index, CPA, Domestic Unemployment Numbers, GDP, John Mauldin, John Williams, rick kahler, ShadowStats.com, unemployment rates | 2 Comments »

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