Jerome Powell, Rates, Realtors, Cocoa, Dollars and Change.
Interest Rates
Just like EF Hutton, when Jerome Powell talks, people listen.
And he spoke more than his normal 45 minutes last week.
You won’t get the transcription here, but I’ll give you the Reader’s Digest version.
First of all, Jerome Powell is the Chairman of the Board of Governors of the Federal Reserve.
Try fitting that on a business card.
So, what he says carries a lot of weight.
Powell felt that despite stronger economic growth and higher than anticipated inflation, the Fed is still on track for three rate cuts. The question is when.
He also stated that they expect bumps on the road to a 2% inflation rate, and what we are seeing now are just bumps.
Consequently, the S&P, NASDAQ, and Dow Jones all closed at record highs last Wednesday.
Powell talked, and Wall Street listened.
There are nine months left in the year, and there is a lot of conflicting information, so don’t hold your breath for a rate cut anytime soon.
The National Association of Realtors
Not a good week for these guys.
The background:
The National Association of Realtors was sued because their fee structure kept fees artificially high (that is very simplistic as there were other issues, but that’s the gist).
And they lost the suit in a HUGE way. As in a $1,800,000,000 way.
Historically, the seller of a home has stated in the sales contract what the buyer’s agent will get paid. And both agents got paid out of the sale proceeds.
The buyer had no say in it, and the sellers didn’t either, so they sued.
Now, the seller is under no obligation to pay the commission/fee for the buyer’s agent. But they can if they want to.
And in a buyer's market, they probably will.
It will just be part of negotiating the contract.
Commissions for the buyer’s agent will be affected since the buyer will have to pay that fee.
Of course, they can put it on the credit card and get the points, but I digress.
Ultimately, commissions will go down, particularly for the buyer’s agent, and I don’t think part-time agents will make as much.
The very good agents will always do well.
But that’s how business works. You get to charge what you are worth.
What’s up with Chocolate?
Prices.
Well, not chocolate, but the cocoa bean.
It’s not been this high since the premier of Star Wars in 1977.
Just in time for Chocolate bunnies.
What’s high? Cocoa usually trades in the range of $2000 to $3000 per metric ton.
That’s 2,204 pounds; another piece of trivia for you.
On Friday, it closed at $8,882.
I guess you won’t be breaking off another piece of that Kit Kat bar.
Evidently, weather last year was not conducive to the cocoa tree and the harvest this year was impacted by, of all things, El Nino.
It is in West Africa where a majority of the cocoa trees are grown and the beans are harvested.
Candy prices were up 5.8% year over year; while inflation was 3.2%.
Shrinkflation, anyone? Can a Snickers Bite-Size really get any smaller??!!
Have a Dollar?
Dollar Tree and Dollar General, that it.
Both chains report that their consumers are feeling the squeeze from inflation over the last two years.
That’s the real headline here.
Some background:
Dollar General still had a small 0.7% growth in same-store sales.
Dollar Tree’s Family Dollar stores saw same-store sales drop 1.2%.
The Family Dollar store generally caters to a lower-income customer. They will be closing 600 unprofitable stores.
Even prices are going up in the Dollar stores and people aren’t buying it.
Change… is good.
In our Thursday Business Breakfast Club, our non-profit member, Melissa Hughes, talked about her last seven years with Cedar House Life Change Center. As she described her experience there, it occurred to me that Cedar House is now 10 times more than what it was when she started, and not just because of her, although she has certainly played a large part, but also because the organization had just made a CEO change.
They hired Jamie Lamb, who was a real visionary. The funny part is that I didn’t realize she was a visionary at the time, but looking back, all those changes—and there were a lot—wouldn’t have occurred without her.
And that’s what being a business owner is all about.
The successful business owner/CEO knows where the business needs to go and inspires that change. If you started the business and are building it up employee by employee, I think it’s easier than if you come in as the new CEO. You’ll hear a lot of “That’s not the way we do it here.” And “we’ve never done it that way before.” Those folks don’t realize that their cheese has been moved (Google it).
The point of this segment is that as a leader, you have to push for change. If you find your customers pushing you for change, you are not changing fast enough, and at some point, they will pass you up for another supplier, distributor, or manufacturer, someone who will keep up with change. Your employees shouldn’t hem and haw, and neither should you.
Q1 is almost done. Are you above or below your projections? What have you changed that has worked? What have you changed that hasn’t? Or are you already 50% above where you thought you should be? Only you can answer that question. And if you can’t, I can point you to someone that can.
