Rates and Russia Wallop Market
February 11th, 2022
Investors had the momentum coming into the week, but inflation data and comments from St. Louis Fed President James Bullard ultimately caused markets to fumble. Thursday’s CPI report showed that prices grew at an annualized rate of 7.5% in January. This is their fastest pace since 1982, which rippled into the treasury market and caused the 10-year treasury to rise above 2.00% for the first time since July of 2019. The prospects of higher borrowing costs, inflation, and late week geopolitical concerns combined to sack equity markets on Thursday and again Friday, resulting in the S&P 500 losing -1.82% on the week.
Inflation Higher Again
Thursday’s Consumer Price Index (CPI) report showed that inflation continues to broadly impact consumers. From the grocery store aisle to the car lot, no place seems immune to higher prices. The index rose 0.60% in January, pushing the annual inflation rate to 7.50%. Core inflation, which excludes volatile food and energy prices, was up a hefty 6.00% year-over-year (yoy). January’s top-line CPI figure was fueled by a 0.90% increase in both food and energy categories. Year-over-year, prices in each of those specific categories were up 27% and 7%, respectively. The rate at which car prices are rising is even more astounding with used car prices rising 1.50% for the month and 40.50% yoy. In many cases, new cars purchased as much as six years ago can be sold today for more than what they were purchased for at the time – more than offsetting the depreciation normally attributed to new car purchases. The rate of shelter costs continued to ease somewhat in January, rising 0.30%. This is their smallest gain since August 2021 and slightly below December’s increase. However, year-over-year shelter costs have still risen 4.40%. Most economists continue to believe inflation will ease on its own but given its magnitude, and its stubbornness due to recurring supply-chain hiccups, the Fed is increasingly looking like it may be more aggressive than it had previously signaled, which has worried markets.
Consumer Buying Spree Lifts Trade Deficit to Record High
Computers, games, furniture, autos—you name it and they bought it. The U.S. trade deficit rose 27% last year, reaching an all-time high of $859.1 billion. This deficit – representing the gap between what the U.S. imports from foreign countries versus what we export – managed to shatter the previous record of $763.53 billion set in 2006. The combination of direct-to-consumer stimulus checks, robust business demand for capital goods, and higher energy and food prices all contributed to the massive spending. The trade gap can be interpreted a number of different ways. One is to view it as a measure of excess domestic consumption that goes to benefit our economic rivals, and China in particular. While that is true, it is important to note that the current reading was skewed by the suppressed consumption of services, which is the dominant component of the US economy. With that in mind, 2021 is likely to represent a near-term, high-water mark for the trade deficit as capital goods consumption declines and as both domestic service consumption and service exports normalize as we continue to emerge from the pandemic.
Inflation and interest rates have been contributing to market anxiety for some time now. The market had managed to set those concerns aside for the past couple of weeks, but they couldn’t be expected to do so in a week where you have the marquee inflation gauge reading released and a hawkish Fed governor say…well…hawkish things. Nothing about this week fundamentally changes what we know to be true, which is that there is high inflation presently, and the Fed is going to raise rates. Even the debate about whether the Fed raises 0.25% or 0.50% in March is probably meaningless in terms of how much the Fed ultimately decides to tighten during this cycle. The concern is that the Fed makes a mistake and tightens too much. If you are raising in 0.50% increments, you certainly run a greater risk of doing so, but if we’re talking about the Fed’s first rate increase there’s just not much of an issue there. This week’s volatility really comes down to the market fretting again about rising rates on a week when rate and inflation measures were on display. If that were it alone, then it is likely markets would have been flat or even slightly higher for the week. However, rising tensions between Ukraine and Russia threw the session into a “risk-off” mode as we headed into the weekend, making Friday’s volatility truly meaningless in terms of what it says about fundamentals as we see it.
The Week Ahead
With consumer prices at a 40-year high, will consumers hit the brakes on spending? We’ll find out when the January retail sales report is released next week. Producer prices will also be in the hot seat with traders pouring over the numbers for signs of inflation easing at the factory gate.
Turf Trivia for Sunday’s Big Game
The big game is this Sunday, February 13th. If you are among the millions of Americans who will be tuning in for the matchup between the Los Angeles Rams and the Cincinnati Bengals, below are 50 trivia questions for your game day enjoyment. The answers are at the bottom, but no peeking if you plan to play fairly.
1. What team has participated in the most Super Bowl games?
2. What two teams are tied with the most Super Bowl wins?
3. Which two teams have the most Super Bowl losses?
4. How many people watched the Super Bowl in 2021?
5. How many fans will watch this year’s Super Bowl LVI from the stadium?
6. Which year was the most watched Super Bowl?
7. Which two teams played in the most watched Super Bowl ever?
8. Has there ever been a year without a Super Bowl?
9. Which city has hosted the most Super Bowl games?
10. Which starting quarterback won Super Bowls with two different teams?
11. How much money do Super Bowl players make for playing in the big game?
12. How much do the Super Bowl rings cost?
13. What company makes the Super Bowl trophy?
14. What is the Super Bowl trophy called?
15. How much does the Super Bowl trophy weigh?
16. What does the Super Bowl trophy cost?
17. Who won last year’s Super Bowl (2021)?
18. Who sang the national anthem at last year’s Super Bowl?
19. What two teams played in the first Super Bowl?
20. In what city was the first Super Bowl held?
21. Which two teams played in the Super Bowl where the electricity went out for 34 minutes?
22. What city hosted the Super Bowl where the electricity went out for 34 minutes?
23. Which singers were performing the halftime show during the famous Super Bowl wardrobe malfunction?
24. Where is Super Bowl 2023 scheduled to be played?
25. What was the estimated cost of a 30-second commercial during the Super Bowl this year?
26. Who is the only quarterback to be named Super Bowl MVP without throwing a touchdown?
27. Who is the oldest starting quarterback in Super Bowl history?
28. many teams have never made a Super Bowl appearance?
29. Which teams have never made a Super Bowl appearance?
30. Which is more, the amount of money spent on chips or the amount spent on beer and cider on Super Bowl Sunday?
31. Who had the longest national anthem performance in Super Bowl history?
32. Who was the first singer to perform at a Super Bowl Halftime Show?
33. How many pizzas get eaten on Super Bowl Sunday?
34. How many wings are consumed on Super Bowl Sunday?
35. Which college football program has produced the most Super Bowl quarterbacks?
36. What is the average cost of a ticket to the Super Bowl?
37. How many footballs are used in the Super Bowl?
38. How many footballs are produced for the NFL each season?
39. How many pounds of chips will be consumed on Super Bowl Sunday?
40. How many pounds of guacamole will be consumed on Super Bowl Sunday?
Super Bowl Trivia
Questions and Answers
1. What team has participated in the most Super Bowl games?
New England Patriots (11)
2. What two teams are tied with the most Super Bowl wins?
Pittsburg Steelers and New England Patriots (6 each)
3. Which two teams have the most Super Bowl losses?
New England Patriots and Denver Broncos (5 each)
4. How many people watched the Super Bowl in 2021?
96.4 million viewers. It was the lowest watched Super Bowl since 2007.
5. How many fans will watch this year’s Super Bowl LVI from the stadium?
70,000
6. Which year was the most watched Super Bowl?
2015 with 114.4 million viewers
7. Which two teams played in the most watched Super Bowl ever?
The Seattle Seahawks and the New England Patriots
8. Has there ever been a year without a Super Bowl?
No
9. Which city has hosted the most Super Bowl games?
Miami has hosted the most with 11 games, followed by New Orleans’ 10. The Los Angeles area’s total is third with seven.
10. Which starting quarterbacks won Super Bowls with two different teams?
Tom Brady and Peyton Manning. Brady led the Tampa Bay Buccaneers to a Super Bowl win in 2021 and previously won six Super Bowls with the New England Patriots. Manning won Super Bowl XLI with the Indianapolis Colts (2006) and Super Bowl 50 with the Denver Broncos (2015).
11. How much money do Super Bowl players make for playing in the big game?
Players on the winning team will receive $150,000, and players on the losing team will receive $75,000.
12. How much do the Super Bowl rings cost?
The NFL typically pays for 150 rings for the winning team that are given to players, coaches, and team executives. They are reported to cost a total of $5 million. The Tampa Bay Buccaneers’ ring from 2021 had 319 diamonds weighing 15 carats total. You can view a gallery of NFL rings here.
13. What company makes the Super Bowl trophy?
Tiffany & Co.
14. What is the Super Bowl trophy called?
The Vince Lombardi Trophy. It was initially called the World Professional Football Championship Trophy but it was renamed the Vince Lombardi Trophy in 1970 after the coach of the Green Bay Packers.
15. How much does the Super Bowl trophy weigh?
About 7 pounds
16. What does the Super Bowl trophy cost?
$50,000
17. Who won last year’s Super Bowl (2021)?
Tampa Bay Buccaneers
18. Who sang the national anthem at last year’s Super Bowl?
The national anthem was performed as a duet with country music singer Eric Church and R&B singer Jazmine Sullivan.
19. What two teams played in the first Super Bowl?
Green Bay Packers and Kansas City Chiefs
20. In what city was the first Super Bowl held?
Los Angeles
21. Which two teams played in the Super Bowl where the electricity went out for 34 minutes?
Baltimore Ravens and San Francisco 49ers
22. What city hosted the Super Bowl where the electricity went out for 34 minutes?
New Orleans, LA
23. Which singers were performing the halftime show during the famous Super Bowl wardrobe malfunction?
Justin Timberlake and Janet Jackson
24. Where is Super Bowl 2023 scheduled to be played?
Los Angeles
25. What was the estimated cost of a 30-second commercial during the Super Bowl this year?
NBC set a record deal for 2022 Super Bowl ads, asking for $6.5 million per 30-second commercial, an increase from the $5.5 million asked for in 2021.
26. Who is the only quarterback to be named Super Bowl MVP without throwing a touchdown?
Joe Namath
27. Who is the oldest starting quarterback in Super Bowl history?
Tom Brady at 44 years old
28. How many teams have never made a Super Bowl appearance?
Four
29. Which teams have never made a Super Bowl appearance?
Cleveland Browns, Detroit Lions, Houston Texans, Jacksonville Jaguars
30. Which is more, the amount of money spent on chips or the amount spent on beer on Super Bowl Sunday?
Leading up to last year’s game, consumers spent $224 million on tortilla chips and $1.3 billion on beer and cider.
31. Who had the longest national anthem performance in Super Bowl history?
Alicia Keys holds the record for the longest recorded anthem in Super Bowl history at two minutes and 35 seconds.
32. Who was the first singer to perform at a Super Bowl Halftime Show?
Carol Channing in 1970 at Super Bowl IV
33. How many pizzas get eaten on Super Bowl Sunday?
An estimated 12.5 million pizzas were sold last year on game day
34. How many wings are consumed on Super Bowl Sunday?
According to the National Chicken Council’s 2022 Wing Report, it is predicted that 1.42 billion wings will be eaten during the big game.
35. Which college football program has produced the most Super Bowl quarterbacks?
University of California at Berkeley leads with five quarterbacks
36. What is the average cost of a ticket to the Super Bowl?
As of this week, the average ticket price is $8,772
37. How many footballs are used in the Super Bowl?
120 footballs
38. How many footballs are produced for the NFL each season?
700,000 footballs are manufactured each year by Wilson, and according to the NFL, they supply each team with approximately 780 game balls, which are equivalent to about 24,960 balls.
39. How many pounds of chips will be consumed on Super Bowl Sunday?
More than 11.2 million pounds of potato chips are consumed on Super Bowl Sunday alone, followed closely by 8.2 million pounds of tortilla chips.
40. How many pounds of guacamole will be consumed on Super Bowl Sunday?
More than 8 million pounds
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