Data, Data, Data… Plus Crypto and Cannabis!

Happy Friday, dear readers! This week certainly buzzed by quickly — probably because of all the goings on in the world and markets.

Let’s get to it!

This Week’s Data Dump

There was plenty of data on the state of the U.S. economy released this week. In particular, economists were eyeing the Producer Price Index (PPI) February report from the Bureau of Labor Statistics (BLS), as well as the Census Bureau’s retail sales report for last month.

First, the PPI, which measures the prices producers of goods and services receive. These aren’t the prices that consumers pay; rather, they’re the wholesale prices. The PPI can be a good indicator of future consumer prices because it measures upstream costs. If the PPI runs high, we can expect consumer prices — such as those measured by the Consumer Price Index (CPI) — to be higher in the near future.

Anyway, the BLS reported that the PPI rose by 0.6% last month. That’s higher than the 0.3% analysts had been expecting, according to Dow Jones. It’s also higher than the 0.3% uptick recorded for January.

On a year-over-year basis, the PPI jumped by 1.6%. That’s the biggest increase since last September. Analysts had expected the BLS to report an annual gain of just 1.1%.

Stripping out volatile food and energy costs, the so-called “core” PPI rose by 0.3%. Experts had expected a 0.2% increase.

According to the BLS, roughly two-thirds of the increase in the headline PPI came courtesy of a 1.2% rise in the cost of wholesale goods. That’s the largest increase recorded since August 2023.

The bulk of the growth came courtesy of energy prices, which rose by 4.4% in the index’s “final demand” measure. At the same time, wholesale prices for gasoline jumped by 6.8%.

The PPI report followed close on the heels of a CPI report that likewise indicated that inflation is still a sticky issue.

The Federal Reserve, which has been targeting inflation through an unprecedented series of aggressive interest rate hikes, is clearly not ready to start cutting rates just yet.

“This is certainly a sign that we’ve got more work to do if we’re going to get inflation closer to the Fed’s [2%] target rate,” Kyle Anderson of Indiana University’s Kelley School of Business told CNN this week.

“This is definitely a signal that, on all ends, both core and otherwise, we’re still facing challenges.”

As for retail sales, according to new Census Bureau data, they rose 0.6% in February. Although this was a reversal of the 1.1% decline reported for January, it was lower than the 0.8% gain economists had been expecting.

“The modest rebound in retail sales in February suggests that consumer spending growth slowed in early 2024,” Oxford Economics’ Michael Pearce said.

Excluding auto and gas retail sales, February’s numbers indicated a 0.3% increase. That’s about what economists had expected.

The biggest gains were seasonal: Sales of garden equipment and building materials — the kind of stuff you get at Home Depot (NYSE: HD) — rose by 2.2%.

Meanwhile, automobile parts stores saw a 1.6% gain, while electronics and appliance dealers enjoyed a 1.5% boost.

The biggest drop — of 1.1% — occurred among furniture stores.

Of course, our friends at the Federal Reserve — especially the members of the Federal Open Market Committee (FOMC), which determines the central bank’s monetary policy — are digesting all of these reports this week.

According to the CME Group’s Fed WatchTool, the futures markets are now pricing in a 99% chance that the Fed will hold its benchmark rate steady when it meets this month. Just a few months ago, that percentage had been a lot lower.

“The retail sales report this month supports our view that the economy is strong but cooling,” Morgan Stanley (NYSE: MS) economist Ellen Zentner wrote in a note.

“There is no reason for the Fed to rush the next move in rates. We expect the Fed to first cut the funds rate in June, once the Fed has enough data to feel confident that inflation is moving sustainably toward the 2% target.”

Now onto the “good” stuff… cannabis and crypto…

The World’s Biggest Weed Market

Estimates from Statista Market Insights project that non-medical cannabis sales here in the U.S. will grow by 74% from now until 2028. That means sales will rise from $20.2 billion (this year’s forecast) to $35.1 billion.

Although the feds have yet to end marijuana prohibition, the U.S. is the world’s largest market for non-medical cannabis. And our sales dwarf those of the next on the list, Canada. This year, our neighbors to the north are expected to spend $3.2 billion on pot.

Take a look:

Infographic: Which Countries Have a Legal Cannabis Market? | Statista You will find more infographics at Statista

Of course, sales in Europe are expected to receive a boost once Germany makes adult consumption legal on April 1. But it’s not the only country with billion-dollar cannabis markets: The Netherlands, which has traditionally been a destination for stoners, is expected to reap $200 million in cannabis sales, while Spain is projected to see $500 million.

Record Inflows for the Bitcoin ETFs

On Tuesday, spot Bitcoin (BTC) ETFs saw a record day of inflows. According to BitMEX Research, the ETFs took in 14,706 BTC — more than $1 billion — in net inflows. The previous record for a single day occurred in February, with $673 million.

BlackRock’s (NYSE: BLK) ETF was the winner of the day, with a record $849 million in inflows.

According to some analysts, this is evidence that institutional investors are finally “biting.”

“The intraday nature of the move is reminiscent of the behavior of large institutional traders, with trading algorithms intercepting the move and retail traders often joining in,” FxPro’s Alex Kutsikevich told CoinDesk.

“Either way, the overall trend remains bullish, and Bitcoin is back toward its highs as we head into early European trading.”

Since the SEC gave Bitcoin ETFs the green light on January 11, inflows have zoomed to $11.1 billion.

According to The Block, spot Bitcoin ETFs now command 90% of the daily trading volume market share for Bitcoin-related funds. By comparison, Bitcoin futures ETFs control just 10% of the market share.

“The U.S. spot Bitcoin ETFs have been widely successful well beyond even the most optimistic expectations,” GSR Research’s Brian Rudick said. “Their $10 billion-plus of inflows in just two months is approaching what most thought they would do in the first year, and there are arguments for why inflows may increase from here, like greater issuer sales efforts, their addition to wealth manager product offerings, and normalizing… outflows.”

It’s clear that every portfolio should have exposure to crypto. However, you need to be informed, to make the right choices. Pick the right crypto asset and you can reap huge gains in a short amount of time. Pick the wrong one, and you can lose your shirt.

The good news is, in our coverage of the crypto market, we separate fact from myth, the wheat from the chaff. Start receiving our FREE e-letter, Crypto Investing Daily. Click here now!