Tags Posts tagged with "Inflation"


Artificial Intelligence. Pixabay photo

By Michael E. Russell

Michael E. Russell

Two weeks ago I had the scary experience of watching 60 Minutes on CBS. The majority of the telecast pertained to A.I. (artificial intelligence). Scott Pelley of CBS interviewed Google CEO Sandar Pichai. His initial quote was that A.I. “will be as good or as evil as human nature allows.” The revolution, he continued, “is coming faster than one can imagine.”

I realize that my articles should pertain to investing, however, this 60 Minutes segment made me question where we as a society are headed.

Google and Microsoft are investing billions of dollars into A.I. using microchips built by companies such as Nvidia. What CEO Sundar has been doing since 2019 is leading both Google and its parent company Alphabet, valued at $1.3 trillion. Worldwide, Google runs 90% of internet searches and 70% of smartphones. It is presently in a race with Microsoft for A.I. dominance. 

Two months ago Microsoft unveiled its new chatbot. Google responded by releasing its own version named Bard. As the segment continued, we were introduced to Bard by Google Vice President Sissie Hsiao. The first thing that hit me was that Bard does not scroll for answers on the internet like the Google search engine does.

What is confounding is that with microchips built by companies such as Nvidia, they are more than 100 thousand times faster than the human brain. In my case, maybe 250 thousand times faster! 

Bard was asked to summarize the New Testament as a test. It accomplished this in 5 seconds. Using Latin, it took 4 seconds.  I need to sum this up. In 10 years A.I. will impact all aspects of our lives. The revolution in artificial intelligence is in the middle of a raging debate that has people on one side hoping it will save humanity, while others are predicting doom. I believe that we will be having many more conversations in the near future.

Okay folks, where is the economy today?  Well, apparently inflation is still a major factor in our everyday life. The Fed will probably increase rates for a 10th time in less than 2 years.

Having been employed by various Wall Street firms over the past 4 decades, I have learned that high priced analysts have the ability to foresee market direction no better than my grandchildren.

Looking back to May 2011, our savvy elected officials increased our debt-ceiling which led to the first ever downgrade of U.S. debt from its top triple A rating from S&P. This caused a very quick 19% decline in the S&P index.  Sound familiar?

It appears that the only time Capitol Hill tries to solve the debt ceiling impasse is when their own portfolio is affected.

This market rally has been led by chatbot affiliated companies. These stocks have added $1.4 trillion in stock market value this year. Keep in mind that just 6 companies were responsible for almost 60% of S&P gains.  These are the 6 leaders: Microsoft, Alphabet, Amazon, Meta Platform, Salesforce and of course, Nvidia.

In the meantime, the Administration states that inflation has been reined in.  What stores are they shopping in? Here is the data release from Washington. Year over Year changes March 2022-March 2023:

• Food and non-alcoholic beverages up 8.1%

• Bread and cereal products up 10.8%

• Meat and seafood up 4.3%

• Electricity up 15.7%

When 1 pound of hot dogs rises from $3.25 to $7.50, that is not 8.1%. When Froot Loops go from $1.89 to $5.14 we are in trouble. The bureaucrats in D.C. make up numbers worse than George Santos.

On a positive note, the flowers are starting to bloom, the grass is starting to grow and we live in a special place. Of historic significance, we happen to be home to the second oldest active Episcopal Church in the United States. This year Caroline Church in Setauket will be celebrating its 300th anniversary. Congratulations.

Michael E. Russell retired after 40 years working for various Wall Street firms. All recommendations being made here are not guaranteed and may incur a loss of principal. The opinions and investment recommendations expressed in the column are the author’s own. TBR News Media does not endorse any specific investment advice and urges investors to consult with their financial advisor. 

Insomnia. METRO photo

By Leah S. Dunaief

Leah Dunaief

Have you been waking up thinking at night? There is so much to think about, even to be deeply concerned about. There is COVID-19, of course. No one wants to get the disease, and if you already had it, you don’t want to get it again, as some people reportedly have. You also don’t want any of the long-hauler symptoms to afflict you: fatigue, brain fog, aches and pains, trouble breathing, dizziness, headache, and at least nine more on a reported list. In fact, the list is so comprehensive, it’s enough to give you anxiety, especially if you already have had the illness. Oh yes, and anxiety is also one of the symptoms.

Then there is the Ukraine. Normally a country that was somewhere in Eastern Europe, in the same general area as “Fiddler on the Roof,” now its whereabouts as Russia’s western neighbor are known around the world. We watched as Putin sent more than 100,000 soldiers to overrun its borders. Poor little Ukraine, horrid bully Russia. We are sending them an unprecedented amount of money and military aid, and we have lowered our national oil and gas supplies. Will we have enough resources if we are attacked? Even as we cheer the valiant resistance and success of the victims of naked aggression, we worry about Putin’s possible use of nuclear arms. He has over 2000 small such weapons, apparently, and it’s the Cold War all over again.

The problem of immigration was brought right to our door with the arrival of immigrants sent by southern governors of border states. They have been literally deposited here by the thousands via buses, and they have been humanely received, if we are to accept what we are told by the media. As I have written in this column before, they can represent an opportunity as well as a challenge for areas in need of Help Wanted. Indeed, I am now reading that some of the immigrants are put to work cleaning up the devastation wrought by hurricane Ian in Florida. They are even being sent back down there to help. Who knows what to believe?

If you are going into New York City, how likely are you to ride the subway? The reports of incidents underground are frightening. So are horrible, unprovoked attacks on the streets. Now, I grew up in the city, and I am used to all sorts of miserable statistics concerning crime there, but I somehow never felt fearful. With some eight million people, crime is unfortunately inevitable. And NYC isn’t even statistically the worst. New Orleans is. But somehow, these recent incidents seem more violent.

Climate change has finally penetrated national conversation. The destruction and deaths in Puerto Rico and now in Florida and the Carolinas caused by the last two hurricanes have made those of us who live on islands and along the shores more conscious of future threats. While there have always been hurricanes, some with even legendary force, the prospect of more and stronger blasts due to climate change has prompted scary instruction about emergency bags and escape routes.

Inflation and its direction are also of grave concern. Going to the supermarket now seems to net about half as many bags of groceries for the usual food budget. Restaurants have decidedly become more expensive, as they have to pay more to function. And home values seem to have stopped rising and begun to cool. The stock market, while it is not the economy, has dropped like a rock. That negates the “wealth effect” homeowners and investors feel that encourages them to spend more freely.

Heck, I even worry about the New York Yankees. Yes, they have won their division, and you might say, “handily.” That’s exactly the problem. The last time they won by a big margin, they lost their competitive edge, along with the series, remember? It even happened this year right after the All-Star break. Teams do better when they have to fight until the last minute.

Awww, forgeddaboutit! Go back to sleep.

Gas pump. METRO photo

By Michael E. Russell

Michael E. Russell

The state of our economy reminds me of the skit performed by Bud Abbott and Lou Costello in the 1950s. Who’s on first, what’s on second, I don’t know who is on third! What a mess!

Treasury Secretary Janet Yellen admits to a series of mistakes by her department and by the Federal Reserve. President Biden is now going to Saudi Arabia to ask them to pump more oil while shutting down our own pipelines. I find it difficult to believe that inflation is only up 8.6% year over year, a statistic issued by the Fed. Gas at the pump is up 60%, meat up 62%, vegetables up 55%, air travel up 34%; I just don’t get it.

I feel like a grandparent who tries to help the kids with their math homework. It is somewhat confusing to me that 2 + 2 no longer adds up to 4, etc., etc. I guess our kids are all going to become economists and work for the Federal Reserve.

I do not want to be the bearer of bad news, but I think a reality check would be in order. I will use the Federal Reserve number even though they exclude food and housing. Really! On inflation, there can be no dispute. Friday’s report that consumer prices shot up by the highest number in 40 years cannot be considered a surprise. Reports issued by the University of Michigan’s consumer confidence survey showed the most downbeat sentiment on record, mainly due to historically low unemployment and soaring prices. 

It appears that notes from the Federal Open Market Committee (FOMC) indicate that Fed Chairman Jerome Powell intends to raise rates one-half percent this month and again in July. Futures also indicate another half percent increase in September.

The change in attitude at the FOMC since March is extremely troubling. The inflation numbers caught them completely by surprise.  Why didn’t they just ask people who were filling their gas tanks and shopping for food?  They sure knew that inflation was running rampant. Just a few more statistics, because Washington D.C. makes me crazy.

Larry Summers, who served as Treasury Secretary from 1999-2001, issued an economic research paper this past week. To quote, “In order to bring down core CPI to the 2% range would require the same extreme monetary restraint exerted by former Fed Chairman Paul Volcker which resulted in back-to-back 1980s recessions.” Once again there are plenty of smart people out there who have been stating that the Fed is way behind the eight ball. Example:  former Alliance Bernstein chief economist Joseph Carson has been screaming for more than a year, “The Federal Reserve is missing the boat.”

Let’s talk about stocks. The Standard and Poor’s P/E has dropped from 21 to 16. This number, 16, is normally considered to be a reasonable P/E to purchase stocks. However, if interest rates are still too low and earnings forecasts drop, don’t be surprised if there is more damage done to the stock market. The market is down 10 out of the last 11 weeks. I blame the Fed’s ineptitude in dealing with inflation, plus the war in the Ukraine and the lasting effects of the pandemic.

What do we buy? Drugs! Not street drugs, but great drug companies. The pandemic and the need to stay home and eat and eat and eat have caused a lot of us to get fat. So, let’s look at companies that make insulin. Why?  It manages blood sugar levels which help weight control. Eli Lilly (LLY) just received FDA approval for Tirzepatide for diabetes apparently with good results. Novo Nordick (NVO), a Danish company is the world’s top maker of insulin. Novo’s drug sales for obesity doubled year over year to $480 million. They are projecting a nine-fold increase in sales.

Some news that hit the wire this past week:

1. Twitter agreed to share data on false accounts with Elon Musk, thus putting the $44 billion takeover back on track.

2. Jet Blue airlines increased its offer to purchase Spirit Airlines.

3. Kohls is in talks to be purchased by Franchise Group for $8 billion.

As our parents told us, “if you don’t have anything good to say, stop talking.” On that note, please enjoy our wonderful weather. If any of our readers know how to keep the geese off the front lawn and the deer out the garden, please let me know. 

Michael E. Russell retired after 40 years working for various Wall Street firms. All recommendations being made here are not guaranteed and may incur a loss of principal. The opinions and investment recommendations expressed in the column are the author’s own. TBR News Media does not endorse any specific investment advice and urges investors to consult with their financial advisor. 

Stock photo

By Michael Ardolino

Michael Ardolino

The experts were right. U.S. Federal Reserve System Chair Jerome Powell recently said that raising interest rates 50-basis-points, which converts to .5%, is on the table for the central bank’s May meeting.

The May rate increase will follow the Fed’s decision to raise rates in March. It would be the first time since 2006 that rates were raised in back-to-back meetings. And, the half-point increase would be the first in 22 years.

Mortgage rates

Since January, mortgage rates for a 30-year fixed mortgage have climbed from an average of 3.11% to a current 5.35%. It’s the first time that the rate has gone above 5% in a decade. We’ve mentioned in several past articles that experts have always projected rising interest rates spread across 2022, even though they are still on the low side.

Mortgage rates on the rise and inflation fluctuating may prompt people to question where the housing market is leading. People may also wonder how home prices and home unit sales will be affected.

According to Sam Khater, Freddie Mac’s chief economist, mortgage rates increased for seven consecutive weeks. “While springtime is typically the busiest homebuying season, the upswing in rates has caused some volatility in demand,” Khater said. “It continues to be a seller’s market, but buyers who remain interested in purchasing a home may find that competition has moderately softened.”

This softening makes sense as many potential buyers may start looking for houses in a lower price range or take a break from looking at homes.

Debunking some myths

Some buyers may want to wait until home prices and mortgage rates decrease, which isn’t a financially-savvy move. It’s imperative to keep in mind that rates and prices will continue to rise, so the longer you wait, the more it will cost you.

Homeowners, don’t think you can set the asking price at whatever amount you want because of a seller’s market. Your house still needs to be priced appropriately. Real estate professionals have seen homes that have remained on the market for months, even though most properties have sold in days around them. It’s all about pricing.

Despite memories from the early 2000s, the housing market is not in a bubble ready to pop. The 2006-08 bust happened because of the foreclosures that flooded the market due to purchasers who weren’t qualified for the mortgage they had and homeowners using the equity in their homes as if it was an ATM.

What has happened in the real estate market the last few years has happened naturally and hasn’t been generated by financial institutions easing lending requirements. Today’s market is continuing as a seller’s market with homes continuing to appreciate due supply and demand, because the pandemic increased the number of people who realized the importance of having their own home, especially in the suburbs.


A recent article in The New York Times, “The Sky-High Pandemic Housing Market Finds Gravity Does Exist,” summed up the current real estate market best.

“By any standard that prevailed before 2020, this would be a hot real estate market.” While demand is subsiding slightly, home prices remain high, with economists predicting a continued rise in the near future.

So … let’s talk.

Michael Ardolino is the Founder/Owner-Broker of Realty Connect USA.

METRO photo

By Michael Christodoulou

Michael Christodoulou
Michael Christodoulou

As an investor, your own decisions will be the biggest factor in your success. Nonetheless, you’ll always want to consider the potential power of external events. And today is no different — with the lingering effects of the pandemic, the geopolitical situation in Ukraine, the impact of inflation and the rise in interest rates, you might be grappling with feelings of uneasiness. How should you respond?

First of all, remember that the financial markets have shown great resilience through wars, recessions, natural disasters and political crises — events as serious as what’s going on now.

Nonetheless, you could still feel some discomfort when you’re bombarded by anxiety-producing news of the day. But you don’t have to go it alone. Many people have found support and guidance from a financial professional to be especially valuable in turbulent times. 

In fact, more than three-fourths of investors who work with a financial advisor are very or somewhat confident in their knowledge of the impact on the economy on their financial situations, according to a recent survey from Morning Consult, a research and data analysis company. By comparison, the same survey found that only about half of the adults in the general population have this degree of confidence.

Specifically, a financial professional can help you:

Reduce the tendency toward emotion-driven investing. It’s usually not a good idea to let emotions be a primary driver of your investment decisions. For example, if you let fear drive your choices, you could end up selling quality investments — ones that still have good prospects and are still suitable for your needs — when their prices have fallen, just to “cut losses.” A financial professional can help you make informed moves appropriate for your goals.

Put investment results in context. You may wonder why your investment portfolio’s performance doesn’t track that of a major index, such as the S&P 500. But if you maintain a diversified portfolio — and you should — you’ll own investments that fall outside any single index. So, instead of using an index as a benchmark, you should assess whether your portfolio’s performance is keeping you on track toward your individual goals. A financial professional can help you with this task and suggest appropriate changes if it appears you are falling behind.

Recognize investment trends and patterns. If you invest for several decades, you’ll likely see all kinds of event in the financial markets. You’ll see “corrections,” in which investment prices fall 10 percent or more in a short period of time, you’ll see “bear markets,” in which the downturn is even greater, and you’ll see bull markets, in which prices can rise, more or less steadily, for years at a time. A financial professional can help you recognize these trends and patterns — and this knowledge can make it much easier for you to maintain a long-term perspective, which lead to informed decision-making.

Gain feelings of control. Most important of all, a financial professional can enable you to gain a feeling of control over your future by helping you identify your important goals and recommending strategies for achieving them.

The world, and the financial markets, will always be full of events that can be unsettling to investors. But by getting the help you need, you can reduce the stress from your investment experience — and you’ll find it’s easier to keep moving in the direction you want to go.

Michael Christodoulou, ChFC®, AAMS®, CRPC®, CRPS® is a Financial Advisor for Edward Jones in Stony Brook. Member SIPC.

Pixabay photo

By Leah S. Dunaief

Leah Dunaief

Who typically thinks about inflation?

Inflation is one of those words that cuts both ways. Low inflation is considered a desirable thing by borrowers and the Federal Reserve. A lot of inflation can be a disaster for the financial markets and for everyone’s pocketbook. 

Those who deal with money and work in finance keep an eye on inflation. After all, inflation refers to a general increase in the price of goods and services in the economy over time that corresponds with a decrease in what you can buy with the same amount of money. And if your money is going to be devalued, best keep that eye. 

Years ago, I learned a simple definition for inflation: too many dollars chasing too few goods. Because of disruptions in the supply of goods, demand has currently outstripped supply. You can tell that from some of the empty shelves at the stores. Consequently, when products or services are scarce, we pay more for what we can still get.

When that happens suddenly, we all pay attention to inflation. Pull up at the gas pump and fill your tank. What do you know? The price for the exact same gas that you used last month has gone up. Go into a restaurant and order your favorite dish. It now costs a little more. The proprietor has no choice but to charge more because he or she had to pay more for the ingredients, due to disruption in delivery. That’s inflation. The government tracks inflation with the Consumer Price Index, or CPI. They leave gas and food out of the Core Index because those tend to be more volatile from one month to the next. But we can’t leave them out. We have to pay for them.

So how are we doing with inflation now?

Initially, rising prices were thought of as transitory, the result of pent-up demand that was suddenly released with the drop in COVID cases and the increase in vaccinations, that would even itself out before long. But prices of goods and services are still up while supply continues to be disrupted. Additionally, people have had more money to spend on those goods and services as a result of the billions in government aid.

As of this week, the CPI was up 5.4%. That’s how much prices have increased in a year. This is well above the Fed’s targeted rate of two percent, but so far there seems little interest on their part to raise rates and slow inflation. Social security checks, which are intended to keep pace with inflation, will be up 5.9% next year, the most in four decades. When rates are raised, it costs more money to borrow, whether for business expansion or mortgages, and that works to slow down inflation and growth. It seems the Fed still believes present inflation will diminish when current disruptions fade. President Joe Biden (D) has announced plans to keep ports open 24/7 to try and ameliorate the supply delays. But trucks and truckers are also insufficient.

There are other, less obvious signs of inflation. I attended the New York Press Conference two weeks ago and stayed for three nights at a hotel in the center of Troy. For the same room rate, we had no room service, no one cleaned the bathroom or made the beds. Clean towels were left in a bag outside our door. Breakfast was included, but there was only coffee, some wrapped Danish and small containers of yogurt. When we asked for bread, we were told there had been no delivery for many days. So in essence, we were paying the same money but getting less, like the old trick of getting candy for the usual price but in a smaller box. That’s inflation, too.

What actions should we take?

We probably should do our holiday shopping now, while some of the gifts we want are still available and at current prices. We might want to nail down a mortgage rate soon if we are in the market. As for our investments, who ever knows?

By Elana Glowatz

Desperate times call for desperate budget measures.

For the first time in four years, a northern Suffolk County school district is taking aim at its tax levy cap, looking to bust through that state budget ceiling as more districts around New York do the same in tight times.

The New York State School Boards Association said the number of school districts seeking a supermajority of voter approval — 60 percent — to override their caps has doubled since last year. The group blames that trend on inflation.

tax-cap-graphicwThe state cap limits the amount a school district or municipality can increase its tax levy, which is the total amount collected in taxes, from budget to budget. While commonly referred to as a “2 percent tax cap,” it actually limits levy increases to 2 percent or the rate of inflation — whichever is lower — before certain excluded spending, like on capital projects and pension payments.

This year, the rate of inflation was calculated at just 0.12 percent and, after other calculations, the statewide average for an allowed tax levy increase will be 0.7 percent, according to NYSSBA.

“The quirks and vagaries of the cap formula mean it can fluctuate widely from year to year and district to district,” Executive Director Timothy G. Kremer said in a statement.

More school districts are feeling the pressure — a NYSSBA poll showed that 36 districts will ask voters to pass budgets that pop through their caps, double the number last year.

It may be easier said than done: Since the cap was enacted, typically almost half of proposed school district budgets that have tried to bust through it have failed at the polls. That’s compared to budgets that only needed a simple majority of support, which have passed 99 percent of the time since the cap started.

In 2012, the first year for the cap in schools, five districts on Suffolk’s North Shore sought to override it, including Mount Sinai, Comsewogue, Three Village, Rocky Point and Middle Country. Only the latter two were approved, forcing the others to craft new budget proposals and hold a second vote.

Middle Country barely squeaked by, with 60.8 percent of the community approving that budget, and Comsewogue just missed its target, falling shy by only 33 votes.

Numbers from the school boards’ association that year showed that more Long Island school districts had tried to exceed their caps and more budgets had failed than in any other region in the state.

But four years later, Harborfields school district is taking a shot.

Officials there adopted a budget that would increase its tax levy 1.52 percent next year, adding full-day kindergarten, a new high school music elective and a BOCES cultural arts program, among others. Harborfields board member Hansen Lee was “optimistic” that at least 60 percent of the Harborfields community would approve the budget.

“We’re Harborfields; we always come together for the success of our kids and the greater good,” Lee said.

The school boards’ association speculated that more school districts than just Harborfields would have tried to pierce their levy caps if not for a statewide boost in aid — New York State’s own budget increased school aid almost $25 billion, with $3 billion of that going specifically to Long Island.

Now that New York school districts have settled into the cap, Long Islanders’ eyes are on Harborfields, to see whether it becomes an example of changing tides.

Next Tuesday, Harborfields will see if it has enough public support to go where few Long Island districts have ever gone before, above and beyond the tax levy cap.