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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 12:54 PM
Updated: Feb 16, 2018 12:55 PM

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%.

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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.

Indiana Coronavirus Cases

Data is updated nightly.

Cases: 767409

Reported Deaths: 13980
CountyCasesDeaths
Marion1054251805
Lake569191030
Allen42938698
St. Joseph37313568
Hamilton37298426
Elkhart29749470
Tippecanoe23479230
Vanderburgh23201405
Porter19573327
Johnson18822392
Hendricks18072321
Madison13548346
Clark13533198
Vigo12834256
LaPorte12566225
Monroe12546178
Delaware11143198
Howard10672237
Kosciusko9777124
Hancock8740150
Bartholomew8262157
Warrick8069157
Floyd8027182
Grant7366181
Wayne7233201
Boone7184105
Morgan6910143
Marshall6332116
Dubois6274118
Cass6090111
Dearborn601278
Noble599290
Henry5947111
Jackson516377
Shelby510898
Lawrence4922127
Gibson462696
Montgomery458192
Clinton455255
DeKalb455285
Harrison453577
Whitley415745
Huntington415582
Steuben410660
Miami405573
Jasper401155
Knox388391
Putnam385062
Wabash369083
Adams352956
Ripley351271
Jefferson341886
White339654
Daviess3090100
Wells303581
Greene293485
Decatur292593
Fayette286364
Posey281735
Scott280058
LaGrange277572
Clay273348
Washington254037
Randolph247783
Jennings239449
Spencer238731
Fountain235250
Starke229859
Owen222659
Sullivan221343
Fulton208345
Jay202932
Carroll197322
Orange191156
Perry189739
Vermillion180844
Rush177527
Tipton172747
Franklin171935
Parke155216
Pike141734
Blackford138032
Pulaski123648
Newton123036
Benton109715
Brown106043
Crawford105616
Martin92515
Warren87715
Switzerland8348
Union73610
Ohio58111
Unassigned0428

Ohio Coronavirus Cases

Data is updated nightly.

Cases: 1123964

Reported Deaths: 20490
CountyCasesDeaths
Franklin1304331493
Cuyahoga1172542263
Hamilton824421261
Montgomery535421062
Summit489021014
Lucas43747834
Butler40000614
Stark33837939
Lorain26029510
Warren24919312
Mahoning22710613
Lake21472396
Clermont20391261
Delaware19143138
Licking16863227
Trumbull16801492
Fairfield16793207
Medina15861276
Greene15528254
Clark14352308
Portage13432218
Wood13343201
Allen12049245
Richland11740213
Miami11019228
Wayne9258228
Columbiana9204236
Muskingum9133137
Pickaway8750123
Tuscarawas8718255
Marion8710140
Erie8135166
Ashtabula7281179
Hancock7048135
Ross7024165
Geauga6962153
Scioto6701108
Belmont6222179
Lawrence5947104
Union590949
Jefferson5725162
Huron5638122
Sandusky5488130
Darke5444131
Seneca5377128
Washington5371111
Athens526960
Auglaize507487
Mercer491185
Shelby482797
Knox4614113
Madison447566
Ashland444898
Defiance438799
Fulton436375
Putnam4354104
Crawford4114111
Brown409662
Preble3949107
Logan392179
Clinton390766
Ottawa375881
Highland366068
Williams356678
Champaign349660
Guernsey330554
Jackson321354
Perry298850
Morrow294743
Fayette289150
Hardin279365
Henry277167
Coshocton272961
Holmes2725102
Van Wert252265
Adams249858
Gallia249850
Pike244737
Wyandot235257
Hocking222963
Carroll201249
Paulding179942
Meigs151240
Monroe137945
Noble137739
Harrison115238
Morgan111624
Vinton87317
Unassigned04
Fort Wayne
Partly Cloudy
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Hi: 85° Lo: 68°
Feels Like: 73°
Angola
Partly Cloudy
75° wxIcon
Hi: 83° Lo: 67°
Feels Like: 75°
Huntington
Partly Cloudy
74° wxIcon
Hi: 84° Lo: 65°
Feels Like: 74°
Decatur
Partly Cloudy
73° wxIcon
Hi: 85° Lo: 66°
Feels Like: 73°
Van Wert
Partly Cloudy
73° wxIcon
Hi: 84° Lo: 66°
Feels Like: 73°
A complex system brings the potential for strong to severe thunderstorms to the region early Thursday morning.
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