Three Data Points to Summarize the Week Ending 3.31.23
Inflation PCE Came is Better than Expected. We removed rent/housing to focus on the most topical data.
Instagram Reels Climbing. Search activity for Instagram Reels continues to grow.
Freight Rates Lowest Ever in FBX Index. Only $16 away from $1,000. Remember this touched $20k.
TREND IS YOUR FRIEND. THE LOWEST CORE PCE SERVICES EX-RENT PRINT SINCE LAST JULY.
Inflation remains a headline topic. This morning we got PCE, the federal reserves preferred metric to measure inflation. The core PCE reading came in at 4.6% (which is overstated) relative to estimates of 4.7% and the month-over-month reading came in at .3% vs .4% estimates. As shown above, when you remove rent/housing what we see is a clear trend lower in core PCE. We highlight this metric as it strips out the very lagged housing data point inside these official reports.
Long story short, this is good news for everyone.
INSTAGRAM REELS SEARCH ACTIVITY IS ABOVE 2022 LEVELS AT THIS POINT IN THE YEAR.
Meta's latest offering, Instagram Reels, is a new format designed to adapt to the evolving habits of social media users. The popularity of short-form videos among both creators and consumers makes the success of this format critical to the company's short-term and long-term future. We closely monitor search trends for "Instagram Reels" and have observed that its popularity has exceeded 2022 levels at this point in the year. This trend indicates that Instagram Reels has gained traction and is resonating with users. We also spoke this week with Meta's Head of Monetization Applied Research and concluded the same thing. That Reels is doing well.
FREIGHT RATES ARE $16 AWAY FROM DROPPING BELOW $1,000, THE LOWEST RATES RECORDED IN THE FREIGHTOS FBX INDEX GOING BACK TO 2016.
As you know we have been covering freight costs for a long time now, and have followed their journey higher ie $20,000 to today. The current ocean freight rates from Asia to the West Coast are only $16 away from falling below $1,000, the lowest rates ever recorded since the FBX was launched in 2016. This data is significant because freight rates influence inflation. Lower freight rates are generally considered to be good for future inflation as they lead to reduced shipping costs and lower prices for imported goods. In contrast, higher freight rates can lead to increased costs for manufacturers and retailers, which is exactly what happened post covid. Therefore, the downward trend in rates is a positive sign for the future of inflation, as it suggests that prices may remain stable or even decrease in the future.
Disclaimer: Not a recommendation to purchase or sell any securities mentioned. This is for educational purposes only.