“One way to get the most out of life is to look upon it as an adventure.” – William Feather


Last week the equity markets declined with the S&P 500 down -1.07%, the Dow down -0.11% and the Nasdaq down -2.37%. This week as of Thursday, the markets are pretty much flat. The markets are really fighting the bad economics news far better than I expected so far this year. They are factoring in a soft landing for the economy. Based on what I see in the data, the odds of that happening are extremely low.

The big news this week was the Consumer Price Index Report (CPI) for January. The headline CPI was up +6.4% (Y/Y) year over year. The unexpected print was the (M/M) month over month +0.5%. Core CPI which takes out food and energy was up +0.4% M/M and up +5.6% Y/Y.

Shelter was up +0.7% M/M and accelerated to +7.8% Y/Y. Services ex-Shelter was up +0.6% M/M and +7.2% Y/Y.

I can go on with more statistics on the inflation report, but you get the picture. The Fed has a long way to go to get inflation down to their target of 2%.

The Fed in its announcements has been especially hawkish in saying that they are going to continue to raise rates and once they stop raising rates they will keep rates high until they reach their goal of 2% or something breaks in the financial system. Please believe them that they will do what they say. They are not going to ease off too early as past Feds have done and have inflation come roaring back.

The markets I think are delusional in thinking the Fed will pull off a soft landing. All the economic indicators are pointing down at an increasing rate. They have reached the point where in the past they have been a precursor to a recession. Whether it is a shallow recession or a deep recession we will certainly have a deep corporate earnings recession which will lead to lower stock prices. It happens every time.


 I found this interesting chart showing the Interstate Migration Trends for 2022. It is pretty much what I expected. The movement is away from high income tax states to low or no income tax states. There  also seems to be a movement from cold weather states to warm weather states.




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These are Larry Lof’s opinions and not necessarily those of Cambridge, are for informational purposes only and should not be construed or acted upon as individualized investment advice. Past performance is not indicative of future results. Due to our compliance review process, delayed dissemination of this commentary occurs.

The S&P 500 index of stocks compiled by Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. The Index includes a representative sample of 500 leading companies in leading industries of the U.S. economy. Indices mentioned are unmanaged and cannot be invested into directly.

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