To The Moon

My investing muse - PCE, BRICS and de-dollarisation, PCE & banking

PCE & other economic data recap

Economic calendar for the week ending 31 Mar 2023

The table above details the critical economic data for the week ending 31 Mar 2023. here are some observations:

• CB consumer confidence is much stronger (104.2) compared to the forecast of 101.0. This implies that there is much more optimism from consumers.

• Crude oil inventory saw a bigger drawdown of -7.489M barrels - this can typically imply a more bullish outlook.

• Pending home sales came out much better than expected.

• Initial jobless claims came out worse than expected.

• However, it is the Core PCE price index of 0.3% (compared to the forecast of 0.4%) that sent the market into a rally as this trusted inflation figure came out to be lower than expected. With this, there is more hope for a sooner Fed pivot though we are still a distance away from the target of 2.0% inflation rate.

The dangers of AI?

News article calling for a 6-month pause on AI development

There is a call from various business leaders including Elon Musk on the development of AI.

AI can make things better or worst. The risk of progress and degradation MUST be managed with proper regulations, ethics, security, governance and safety protocol. We could see major productivity and innovations met with a similar magnitude of crimes and exploitation. There would be a dark side that rises building threats next to opportunities that they bring.

Unfortunately, I am afraid that profits should push through its agenda over a regulated, controlled development. I rather err on caution but I am sure that there would be others who do not share the same sentiments.

Banking & TikTok

It seems that the banking storm has subsided with the market rally last week. I do not think that it is appropriate for us to put our concerns aside as the recent rise of interest would have led to more unrealized losses for banks holding on to bonds. There need to be fundamental changes but that must NOT be government overreach as it is contrary to the idea of a “free market”.

We can count on mainstream media to provide reduced coverage for these matters to stamp out fears. However, the people deserve to be assured as the path forward remains uncertain.

Talking about overreach, the next topic on my mind would be of TikTok. Coming from the US, a country that champions free speech and a free market, the tactics deployed seemed more similar to those of communist and socialist states. While the claim is that of security and safety, is it just a geopolitical move with economic benefits?

If this is about security, all the requirements imposed on TikTok should also be applied to all social media companies and some of the Big Tech. I would prefer for them to spend more time on controls and regulations

Conclusion

The market remains volatile and the government needs to put in the right structure in place. I guess a review of our banking system is not a bad start and let common sense prevail. This is a time for us to work together and not against.

As such, I recommend caution in the coming weeks. The earnings and outlook may lead to more disappointment. Let us do our own due diligence before investing.

@TigerStars

$Invesco KBW Bank ETF(KBWB)$