SEVERE WX : Frost Advisory View Alerts
STREAMING NOW: Watch Now

Inflation is back. Don't panic

Quest's Profitable MomentFor the past five years, the search has been on for any signs of inflation. Month aft...

Posted: Feb 16, 2018 11:54 AM
Updated: Feb 16, 2018 11:55 AM

Quest's Profitable Moment

For the past five years, the search has been on for any signs of inflation. Month after month, in the United States, the UK and the Eurozone, inflation appeared becalmed if not dormant. More recently in the US, of course, core inflation numbers have risen toward the Fed's 2% target, prompting the five interest rate hikes that began in December 2015. The US federal funds rate now stands at 1.5%, with the prospect of up to four more rate hikes this year, potentially taking rates to 2.5%.

Sign up for the weekly Quest newsletter in your inbox

The Fed has said time and again that rates are "likely to remain, for some time, below levels that are expected to prevail in the longer run." Translated, that means interest rates will top out considerably lower than during previous economic expansions.

Even the Bank of England has warned that rates will rise more aggressively than previously thought. The message to the market is: Be calm. Don't panic. Inflation has started to awaken. Rates are going to have to rise.

Blankfein worries the economy could overheat

Is President Trump pouring lighter fluid on an already hot economy? That's the fear of Lloyd Blankfein. The Goldman Sachs CEO told CNN that Washington's spending spree - $1.5 trillion in tax cuts, $300 billion in extra spending - could be "too much of a good thing." Echoing Wall Street's inflation jitters, Blankfein said, "The odds of a bad outcome have gone up." Blankfein conceded that the economy looks good, and he credited Trump with lifting it "higher" than Hillary Clinton would have. "What could possibly go wrong?" he joked. "I haven't felt this good since 2006."

-- Matt Egan

Calm returns to Wall Street

Wall Street has stabilized after one of its worst weeks since the 2008 financial crisis. The Dow turned positive on the year again this week and is back above 25,000. Investors are slowly adjusting to higher volatility, rising bond yields and creeping signs of inflation. Fear of inflation and higher interest rates sparked the market sell-off that began February 2, when the Labor Department reported that wages grew at the fastest pace in nine years. The Dow tumbled 1,000 points twice last week. While the Federal Reserve will keep its toolkit handy in case inflation takes off, the strong economic backdrop hasn't changed much, and corporate profits are strong.

-- Nathaniel Meyersohn

Warren Buffett dumps IBM, buys a drugmaker

Warren Buffett is making another big bet on health care. His company Berkshire Hathaway has taken a $358 million stake in Teva Pharmaceutical, an Israeli company that makes generic drugs. It makes sense for Buffett to beef up his pharmaceutical portfolio: Last month, Berkshire, Amazon and JPMorgan Chase announced they would form a company to give their U.S. workers and their families better health insurance. It's also no surprise that Buffett is shedding more IBM stock. Last May, he said he had gotten rid of a third of his IBM shares. IBM has run into "some pretty tough competitors," he told CNBC.

-- Danielle Wiener-Bronner

Trump hints at 'reciprocal tax' as trade actions soar 81%

Trump revived fears of a trade conflict this week. He promised a "reciprocal tax" on imports, seemingly from any nation that runs a trade surplus with the United States. Although the White House later said nothing formal was in the works, Trump's remark spoke to the White House's fixation on trade. The Trump administration has launched 94 trade investigations in its first year, an 81% increase from the final year of the Obama administration.

-- Patrick Gillespie

Unilever sends stern warning to Facebook and Google

Unilever is threatening to pull its advertising from digital platforms it says have become a "swamp" of fake news, racism, sexism and extremism. The company said objectionable content on social media - and a lack of protections for children - is eroding social trust, harming customers and undermining democracies. Brands and publishers are increasingly under the thumb of Facebook and Google because they provide massive audiences. Unilever may be all bark and no bite, but it's a significant escalation in the power play between online advertisers and Silicon Valley.

-- David Goldman

Quick takes

Nearly a third of Main Street businesses say it's a good time to expand, the highest level on record.

Oxfam is facing tough questions from its investors following reports of sex crimes-by the charity's workers in Haiti and Chad.

Alibaba signed a deal to stream more than 1,000-Disney-movies and TV episodes in China on its Youku video platform.

McDonald's went McVegan-in Europe and cheeseburgerless in U.S. Happy Meals. And it's sponsoring its last Olympic games.

Japan is in its-longest uninterrupted growth streak since the booming 1980s. But economists say it may get left behind from the global rally.

What's next

Food earnings bonanza:-Coca-Cola, Campbell Soup, Kraft Heinz and Smucker are all reporting earnings on Friday. Coke will try to outduel Pepsi, which reported much lower North American beverage sales earlier this week.

Walmart earnings: Walmart was among the first companies to provide tax cut bonuses to its employees. It will reveal how much it expects to benefit when it reports earnings on Tuesday.

Fed minutes:-The Federal Reserve didn't raise rates last month, but its meeting minutes, to be released Wednesday, may provide a sense of the board's economic outlook.

Huntsville/Redstone
Partly Cloudy
52° wxIcon
Hi: 52° Lo: 37°
Feels Like: 52°
Muscle Shoals
Clear
56° wxIcon
Hi: 56° Lo: 37°
Feels Like: 56°
Huntsville/Madison
Partly Cloudy
52° wxIcon
Hi: 51° Lo: 37°
Feels Like: 52°
Decatur
Partly Cloudy
54° wxIcon
Hi: 55° Lo: 39°
Feels Like: 54°
Fort Payne
Partly Cloudy
49° wxIcon
Hi: 52° Lo: 38°
Feels Like: 44°
WAAY Radar
WAAY WAAY-TV Cam
WAAY Temperatures

Alabama Coronavirus Cases

Cases: 523955

Reported Deaths: 10798
CountyCasesDeaths
Jefferson755821496
Mobile40234800
Madison34153500
Tuscaloosa25423444
Montgomery24084573
Shelby23241242
Baldwin20764302
Lee15642166
Calhoun14365311
Morgan14171274
Etowah13707348
Marshall12015220
Houston10418279
Elmore10023202
Limestone9866148
Cullman9514191
St. Clair9498236
Lauderdale9286233
DeKalb8767183
Talladega8123173
Walker7149277
Autauga6773106
Jackson6769110
Blount6548133
Colbert6237132
Coffee5434113
Dale4782111
Russell431339
Franklin421482
Chilton4132110
Covington4083115
Tallapoosa3928148
Escambia390375
Dallas3529150
Chambers3523122
Clarke347460
Marion3080100
Pike306776
Lawrence296995
Winston273272
Bibb256961
Marengo248561
Geneva246575
Pickens233359
Barbour227555
Hale218775
Butler213868
Fayette210360
Henry188644
Cherokee182745
Randolph178041
Monroe173440
Washington165938
Macon156949
Clay150556
Crenshaw149557
Cleburne147041
Lamar140034
Lowndes137653
Wilcox124927
Bullock122140
Conecuh109828
Perry107726
Sumter103332
Coosa100228
Greene91434
Choctaw59024
Out of AL00
Unassigned00

Tennessee Coronavirus Cases

Cases: 836563

Reported Deaths: 12096
CountyCasesDeaths
Shelby931861591
Davidson88121924
Knox49873624
Hamilton43438487
Rutherford42361422
Williamson27569216
Sumner23515342
Montgomery19661224
Wilson18496229
Out of TN1793495
Unassigned16772133
Sullivan16211287
Blount15194194
Bradley14633148
Washington14197243
Maury13242169
Sevier13182175
Putnam11185173
Madison10810241
Robertson9615129
Anderson8633171
Hamblen8509171
Greene7739152
Tipton7227103
Coffee6832121
Dickson6735109
Cumberland6577128
Carter6472156
Bedford6430129
Gibson6406144
McMinn637097
Roane6193102
Jefferson6082123
Loudon601969
Lawrence580986
Hawkins5790106
Monroe571495
Warren551581
Dyer5365104
Franklin508988
Fayette492577
Obion450296
Cheatham445254
Cocke444198
Rhea431475
Lincoln430763
Marshall411858
Campbell409962
Weakley403563
Giles395799
Henderson373075
Macon358477
Carroll357682
White355468
Hardin349866
Hardeman346464
Lauderdale314344
Henry312575
Marion310546
Claiborne306173
Scott305345
Overton297461
Wayne294334
Hickman280746
McNairy276854
DeKalb275653
Smith274938
Haywood268361
Grainger259449
Trousdale249022
Morgan246039
Fentress238446
Johnson231738
Bledsoe209911
Chester209451
Crockett201248
Polk200024
Unicoi194849
Cannon188931
Union186234
Grundy178233
Humphreys174222
Lake169526
Sequatchie166928
Benton163140
Decatur157438
Lewis156226
Meigs134724
Stewart130828
Jackson130035
Clay109331
Houston108533
Perry105728
Moore100117
Van Buren83621
Pickett75724
Hancock55112

Community Events