Economic update for the week

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Airline companies saw a record 2.5 million passengers in one day on Friday May 24th.

Simply put, the three day holiday weekend beckoned travelers to take to the air and go somewhere else. 

In an egg-in-the face-moment for this analyst who wrote airline passengers were dwindling based on a previous report some 9 months ago on Yahoo finance, apparently the reduction in tickets sold last year has, at least on May 24th, morphed back up to a record day.

So much for being right all the time. This turnaround in airline passengers in contrast to what looked to me a drop off in ticket sales according to the Yahoo finance article, attests to the lack of predictability of markets and how difficult it sometimes is to know just what is occurring when it comes to the behavior of consumers.

Meanwhile home sales fell for the second month in a row and homebuilder stocks dropped in response. High interest rates coupled with higher home prices put the kibosh on would be home buyers. With the Federal Reserve (FED) possibly backing off their assumed reduction of interest rates in the near future because of stubborn inflation data, investors continued to punish the home builder sector.

Whereas some analysts were predicting the FED would begin a gradual reduction in the interest rates they control, a persistent rise in the prices of certain sectors now puts in question those prognostications. 

Tariffs are back in the news again. Tariffs are fees by the government put on foreign goods or services to make U.S. goods more competitive. Readers might recall my articles way back when President Trump initiated tariffs on some Chinese goods. Berating the Don for such actions being a contributor to higher inflation, the current administration is making the same mistake. My opinion of course but I explained why tariffs are inflationary fuel for consumer prices.  (Contact me for the articles on tariffs written back in 2018/2019). The tariffs are to address what the Biden Administration called unfair and non – market practices. My take on tariffs continue to be governments can protect U.S. companies against such practice by instead of applying tariffs to foreign goods coming into the U.S., offer a tax CREDIT to U.S. companies making the same goods. The difference is Tariff fees go straight into government coffers, which does nothing for the consumer buying those goods. Tariffs also make all goods more expensive. Tax credits meanwhile allow for U.S. companies to sell things for less,  allowing prices to drop, which saves consumers money.

On the energy front, the all-electric vehicle (EV) is taking a back seat to the hybrid. Hybrids use a combination of gas and electricity by utilizing a traditional gas engine coupled with a self-charging battery system to extend overall miles per gallon. The difference is hybrids use traditional gas stations.  EV’s need an electric charging station which are far and few between and take much longer to fully charge the car versus filling up a tank of gas. Hertz Rent-A-Car was the first to start bailing out of the EV selling a large part of its EV fleet while Mercedes announced it will halt production on its EV and instead promote the better selling hybrids and traditional gas engine vehicles. 

Earnings season for Wall Street stocks is coming to a close. Once again chip maker NVIDIA blasted skyward on its earnings, topping a thousand dollar stock price and reaching a market valuation of over 2.5 trillion. Being the leader in the hottest sector going, its artificial intelligence product line (AI) is light years ahead of its competitors. 

Wishing you all a profitable and healthy week.

Watching the markets so you dont have to    

This article expresses the opinion of Marc Cuniberti and is not meant as investment advice, or a recommendation to buy or sell any securities, nor represents the opinion of any bank, investment firm or RIA, nor this media outlet, its staff, members or underwriters. Mr. Cuniberti holds a B.A. in Economics with honors, 1979, and California Insurance License #0L34249 His insurance agency is BAP INC. insurance services.  Email: [email protected] 

Marc Cuniberti

Marc Cuniberti

Marc Cuniberti
Host of Money Matters Radio on 67 radio stations nationwide, Financial and insurance columnist for the Union and 5 other statewide newspapers, owner BAP insurance and registered financial advisor representative at Vantage Financial. California Insurance License OL34249 and feature on ABC and NBC television and a host of TV documentaries on his financial insights.