CNBC Daily Open: US stocks don’t seem to be bothered by inflation, ignoring the jump in retail sales

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• US retail sales in January jumped 3%, versus the 1.9% expected. The number handily beat the 1.1% drop in December. Separately, industrial production was flat in January. Analysts had expected a gain of 0.4%.

• US stocks rose on Wednesday, regaining ground after a brief drop that followed the retail sales report. Asia-Pacific markets traded higher on Thursday, with Hong Kong’s Hang Seng up 2.31%. Japan’s Nikkei 225 rose 0.71% despite the country’s trade deficit rising to a record high of 3.5 trillion yen ($26 billion). Bitcoin jumped to $24,633.31, its highest level since August 2022.

• “BYD is so much ahead of Tesla in China… it’s almost ridiculous,” said Charlie Munger, vice president of Berkshire Hathaway. The Chinese electric car maker called its all-time favorite stock. Berkshire doesn’t seem to like TSMC much anymore, however, and it dumped roughly 86% of those shares between the third and fourth quarters of 2022.

• forefront Investors are “not only fighting back, but also mocking the Fed,” said Marko Kolanovic of JPMorgan, who correctly described. He warned that a sell-off in stocks may occur soon.

It is as if investors are not worried about inflation and high interest rates anymore. Strength in the US economy – which would involve further interest rate hikes – translated into gains in the markets.

I mentioned yesterday how sustainable consumer spending can support the economy. In fact, the annual increase in retail sales for January — 6.4% — is exactly the same number as the annual rise in the CPI. The prospects for sustainable economic growth appear to be injecting optimism into stocks as well. The Dow Jones Industrial Average rose 0.11%, the S&P 500 rose 0.28%, and the Nasdaq Composite rose 0.92%.

Recent economic activity and market movement is forcing economists and investors to reconsider the impact of interest rates. A higher cost of borrowing usually slows economic growth by reducing spending and increasing unemployment which in turn leads to lower inventories. However, “monthly reports on industrial production, retail sales and jobs were generally better than expected and point to a recovery in economic activity in early 2023 after a weak correction in late 2022,” said Bill Adams, chief economist at Comerica Bank. , He. She.

This topsy-turvy relationship between rising interest rates and picking up economic activity has some investors, like Satori Fund founder Dan Niles, speculating that the Fed could raise rates above 6%. And what if the price of everything continues to rise until then? It’s hard to imagine what the Fed will do next.

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