🧑🏽‍🍳 Surprise Inflation, Gen-Z Jobs, Restaurant Investments

TL;DR: Inflation dips, but rates will be higher for longer, restaurants are suddenly a good investment, and the end of the petro-dollar agreement.

This week, we had an excellent inflation number come out (CPI), and the markets rejoiced and went up to new record highs. But the news was met with some resistance. Fed Chair Jerome Powell reminded us that one data point is not a trend and that rate cuts will only happen if there's an obvious pattern, so expect higher for longer, with economists now predicting one rate cut this winter.

Creating a pattern is more complicated than it seems. We may be seeing prices soften due to lower energy and transportation costs. Still, the stickest part of inflation remains in services, where prices have risen faster than prices for other commodities and merchandise.

Imagine this: you own a hair salon, and all the costs of managing and operating it have increased - anywhere from shampoo, rent, and electricity. You are left with no option but to charge more per haircut, and that's where inflation becomes sticky. That slight $5+ increase per haircut is now the baseline. Imagine that across every small and medium-sized business across the country.

What's next? We're already seeing patterns of slowdown as more people are slowing down their shopping habits. On Friday, consumer sentiment data reported a 7-month low because of inflation and weaker income. If there are any evident signs of trends, we suspect this one will be the one to watch.

 📈 This week, the S&P500 +1.31%, Nasdaq +3.31%, and the Dow is down at -1.05%.

🚨On the radar:

Americans Have More Investments Than Ever: The U.S. Commerce Department reports that Americans earn more investment income than ever. This means more money flowing for many, but it's not all sunshine and roses. Wealthier folks might benefit more; market swings could impact this income stream. This is due to a combination of factors, including rising asset values (like stocks and real estate) and higher interest rates. 

Foodies and Investments: Restaurants might be the new hotshot in commercial real estate. While retail is hurting in large cities, people eat out more than ever. A surge in investor interest in restaurant spaces suggests a potential comeback for the industry. This could mean exciting new dining experiences on the horizon. Let's see how this plays out for restauranteurs and a slowing economy. 

 Builders & Plumbers: Let's all agree that not everyone needs to get a college degree. The latest Gen Z trend is exciting: they are making blue-collar careers trendy. The rise in young people choosing skilled trades like plumbing and construction could help address labor shortages and redefine what a "cool" career looks like. Social media is helping Gen Z influencers showcase their work and financial independence, challenging the stigma against these essential jobs.

💰Crypto Corner

Petrodollars Out, Bitcoin In?
This week, the U.S.-Saudi Petrodollar Pact came to an end. This agreement, which ensured oil transactions were conducted in U.S. dollars, has played a critical role in solidifying the dollar's position as the world's reserve currency. With the pact's expiration, a question comes to mind: Is this the start of a new trend where more countries drop the dollar? And what are they going to use instead?

Venezuela, for instance, has been increasing its use of digital currencies like USDT for oil transactions to circumvent U.S. sanctions.

Now, let's talk about Bitcoin. Imagine a world where global trade isn't dominated by a single country's currency. For emerging economies, relying on Bitcoin could reduce their dependency on the U.S. dollar and provide a transparent alternative for international trade. 

This shift could benefit countries with unstable currencies, high inflation, or those facing economic sanctions, allowing them to participate in global trade on more equal footing and fostering economic growth. However, its volatility and regulatory challenges remain hurdles that need addressing.

Let's chat: How could this affect the US economy? Comment below and let us know!

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In Abundance,
Joyce and Laura