Broker Check

Mosaic Asset Partners - A Stubborn Inflationary Environment

April 12, 2024

Stubborn / adjective:
unreasonably obstinate; obstinately unmoving: a stubborn child.
fixed or set in purpose or opinion; resolute: a stubborn opponent of foreign aid.

I think that just about sums up the state of the inflationary environment right now – stubborn and resolute! On Wednesday morning, the consumer price index for March was released (CPI). The CPI, which is a broad measure of goods and services costs across the economy, rose 0.4% for the month, putting the 12-month inflation rate at 3.5%, or 0.3 percentage point higher than in February. Economists surveyed by Dow Jones had been looking for a 0.3% gain and a 3.4% year-over-year level. Shelter and energy costs were the main drivers of a higher-than-expected number. Expectations for shelter-related costs to decelerate through the year have been a key element to the Fed’s thesis that inflation will cool enough to allow for interest rate cuts. For now, that sentiment is not playing out as expected. Food prices were only up 0.1% which should help our wallets, but energy prices including gasoline have been on a steady increase as of late. Just when things were looking like they were moving in the right direction, we get a curveball. That seems to be the way things are for now.

Thursday brought along the release of the March PPI numbers (producer price index, a measure of wholesale prices). The PPI increased 0.2% for the month, less than the 0.3% estimate from the Dow Jones consensus and not as much as the 0.6% increase in February, according to a release Thursday from the Labor Department’s Bureau of Labor Statistics. As opposed to the CPI data, this could provide some potential relief from worries that inflation will hold higher for longer than many economists have expected. In reality, these data points somewhat oppose each other only casting more cloudiness of how things might look over the next few months.

Another, perhaps even more important economic and geopolitical event we are watching in the near-term, are the events unfolding between Israel and Iran.  West Texas Intermediate futures (oil futures) rallied above $87 on multiple media reports that Israel is preparing for an imminent attack by Iran. These types of moves in the underlying prices of oil will likely have an immediate and direct impact on the prices we will pay at the pump. As we all know too well, anytime tensions flare up in the Middle East like this, the impact felt at home can be significant. Energy prices had already been steadily climbing higher over the last several weeks and this latest news will only add to that uncertainty. Let’s all hope that cooler heads prevail, and things settle down for all of those impacted.

If you have any last-minute tax needs from us, don’t hesitate to reach out. I know we are all ready for this annual rite of passage to be over! As the trees and plants around us start to spring to new beginnings, I hope you are able to enjoy some better weather for the coming weekend. I will be spending some time myself working in the yard and hopefully viewing some of the action from the Masters Tournament.  Enjoy!

https://www.cnbc.com/2024/04/10/cpi-inflation-march-2024-consumer-prices-rose-3point5percent-from-a-year-ago-in-march.html
https://www.dictionary.com/browse/stubborn#google_vignette
https://www.cnbc.com/2024/04/10/the-supercore-inflation-measure-shows-fed-may-have-a-real-problem-on-its-hands.html?__source=iosappshare%7Ccom.apple.UIKit.activity.Mail
https://www.cnbc.com/2024/04/11/ppi-inflation-report-march-2024-wholesale-prices-rose-0point2percent-in-march.html
https://www.cnbc.com/2024/04/12/crude-oil-prices-today.html?__source=iosappshare%7Ccom.apple.UIKit.activity.Mail

Christopher E. Wasson, CFP®

President

Mosaic Asset Partners, LLC

1122 Kenilworth Drive, Suite 310

Towson, MD  21204

410.821.0089         fax 410.821.5993

MosaicAssetPartners.com  

Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Mosaic Asset Partners, LLC is not affiliated with Kestra IS or Kestra AS.  Investor Disclosures: https://www.kestrafinancial.com/disclosures

The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra IS or Kestra AS. The material is for informational purposes only. It represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. It is not guaranteed by Kestra IS or Kestra AS for accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security.