💰 Inflation returns

and stocks fall

Good morning investors! The market went downhill yesterday with almost all major names closing lower and Bitcoin again falling below $50,000.

Today we cover:

  • Inflation comes higher than expected.

  • Stocks fall as earnings arrive.

  • Remember these tips for a secure financial life - Part II

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🔈 Audio version: Apple Podcasts | Spotify | YouTube

📊 Economy and News 

Inflation data is here – numbers grow higher than expected

The consumer price index increased 0.3% in January, slightly higher than expected. Analysts had expected a monthly increase of 0.2% and an annual gain of 2.9%. On a 12-month basis, that came out to 3.1%, down from 3.4% in December.

Food got more expensive as well, jumping 0.4%. Shelter prices were the largest contributor, jumping 0.6% on the month, contributing more than two-thirds of the headline increase. On a 12-month basis, shelter rose 6%.

Some other items also got more expensive:

  • Electricity costs rose 1.2%

  • Airline fares increased 1.4%.

  • Eggs jumped 3.4%.

On the plus side, energy fell 0.9% mainly due to a decrease of 3.3% in gas prices. Some other items also got cheaper:

  • Used vehicle prices declined 3.4%

  • Apparel costs fell 0.7%

  • Ham prices fell 3.1%

  • Medical commodities declined 0.6%.

However, it's vital to note that inflation-adjusted hourly earnings increased 0.3% for the month. Similarly, real average hourly earnings rose 1.4% from a year ago.

The annual target remains at 2%, which the Fed hopes will be achieved this year.

Global hits:

📈 Stocks

S&P 500 4,953.17 (-1.37%)
DJIA 38,272.75 (-1.35%)
NASDAQ 17,600.42 (-1.58%)
BRENT CRUDE 82.58 (-0.01%)
* Prices as of Feb 13rd, 12:20 AM UTC

Stocks fell as earnings continued

Stocks dropped yesterday after the inflation report came out. Investors are worried that the Federal Reserve will keep rates higher for longer than anticipated.

Tuesday’s selloff comes after the Dow on Monday notched a record-high close.

On the other hand, bonds also sold off. The yield on the 10-year Treasury note jumped to 4.32%, its highest level since late November.

Earnings:

  • Toys are getting expensive and toy companies are facing the heat. Hasbro (HAS, -1.35%) reported a 20% hit to its fourth-quarter revenue and provided poor guidance. The company lost $1.06 billion in the quarter, higher than the numbers reported in 2022. The company now expects to cut $750 million in costs by the end of 2025.

  • Biogen (BIGN, -7.39%) reported fourth-quarter revenue and profit that shrank from a year ago. Dropping its controversial Alzheimer’s drug Aduhelm had a major impact on the company. Plus, its biggest drug category, multiple sclerosis therapies, also saw a dip. The results come amid the rollout of Biogen and Eisai’s Leqembi, the first drug found to slow the progression of Alzheimer’s to win FDA approval.

  • Coca-Cola (KO, -0.59%) met expectations thanks to higher prices despite lower volume in North America shrinking by 1%. For comparison, rival PepsiCo saw volume for its North American beverage unit fall 6% in the fourth quarter. The company now is anticipating a 4% headwind from currency exchange rates on its comparable revenue.

Also, Nvidia is now worth more than Google and Amazon thanks to the AI chip boom.

Super Bowl: Super Bowl LVIII sets a record with a staggering 123.4 million viewers, American TV’s biggest audience since the moon landing. However, Paramount Global is planning to lay off 800 employees after record ad revenue and ratings.

Also check: Boeing orders, deliveries dry up in January as plane-maker grapples with the latest Max crisis.

Warning: DoubleLine’s Jeff Gundlach warns that stocks are as ‘overvalued’ as early 2022

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💵 Personal Finance

Remember these tips for a secure financial life - Part II

Here are some more tips to improve your financial situation:

Budget and stick to it

Once you have gone through some personal finance guides or videos, sit down and create a budget. These days, it's easier than ever thanks to budgeting apps like Mint and YNAB.

These apps come with both paid and free features and can make your life easier. They allow users to perform a variety of tasks such as setting financial goals, managing investments, categorizing spending, and more.

Those who do not want to use an app can stick to the traditional method or use tools like Excel and Microsoft Word.

Save and make money

The only way to grow wealth is to save what you make and earn more. Here’s what you need to do

  • Find a better job and don’t be afraid of asking for a raise. If you think you deserve it then you probably do.

  • Look for side gigs. Freelancing can be a great way to earn money with many freelancers making over $50 per hour.

  • Start an emergency fund and use it only for emergencies. Also, try to keep at least 6x of your monthly expenses in your emergency funds.

Don’t be afraid of trying new ways to earn and save money. For example, you can automative savings, invest in stocks, etc.

t’s never too early to save for retirement so start today with your retirement savings plan.

Understand taxes and insurance

Taxes and insurance are two very complicated areas. However, it’s important that you understand each to be able to save money and stay away from legal issues.

Pay taxes but be smart. Know how you can save tax money. There are tax incentives and rebates that can reduce your tax burden. Similarly, go for insurance as it can protect you in case of a mishap.

This is important even when insurance is not mandatory.

Now that you know what to do to manage money, we suggest you watch this video to know what not to do:

💰 Be a Better Investor

“As in roulette, same is true of the stock trader, who will find that the expense of trading weights the dice heavily against him.”

Benjamin Graham

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