Why does inflation matter

10baggerbamm : it's a good question and the answer is the following for cash Rich companies that have no debt like Nvidia it truly does not matter for smaller cap companies that are in debt the inflation report is one of the key reports that chairman Powell the Federal reserve takes into consideration when determining at what point will he begin to lower interest rates. if inflation is falling then there's a very good chance in June he'll begin cutting rates why is this important because smaller cap companies and mid cap companies that carry debt now can refinance that debt at lower rates which gives them greater profits cuz if you're not paying interest that marginal difference now transfers to the bottom line which strengthens their balance sheet strengthens their earnings which ultimately better earnings lift stock prices okay so that's some of the answer. the next part of the answer goes back to a year ago almost to the date when silicon valley Bank tanked and took down regional Banks as well as the largest banks in the banking system and what was discovered by these geniuses that audit their books after the fact was because interest rates spiked as a result of inflation being at 9.3%

10baggerbamm : pt 2 Banks had loaned out the majority of their reserve ratio when interest rates were around 1 and 1/2 to 2% for 20 and 30 years they locked it up in treasuries and when interest rates shot up money markets were now at four four and a half 5% and banks are having to compete to pay those rates to depositors or risk losing the depositors monies to other banks that are offering higher interest rates the marginal difference of banks investing long at a low rate and having to pay short-term high rates created a loss for banks if you think they went out 20 or 30 years they were making 2% on depositors money but now they're paying depositors every 30 days 5% you can see they're losing money and while it doesn't sound like a lot times a billion dollars or 10 billion or 100 billion it's a lot of losses.. so when interest rates come down now Banks can pay depositors less money and the losses that they're carrying on their books because there's an inverse correlation with interest rates rise the value of that Bond declines so now when interest rates are falling the value goes up so what they call Mark the market the value of their portfolio bonds goes up. the solidity of the bank is more stable and they're able to lend more money out because I have a higher reserve ratio because the value of their bonds are now higher because interest rates fell.. and then there's a lot of other factors if interest rates are coming down it makes it easier for people to buy houses when people buy houses what do they do they buy furniture so Home Depot Lowe's their sales go up right it's a velocity of the dollar it goes around and around in the economy when people buy houses they hire landscapers they hire someone to cut trees down they hire painters to come in so it boosts the economy across the board..

10baggerbamm : 3 .. when interest rates come down people can refinance at a lower rate they can roll their credit cards 27-28% interest into their mortgage and save money they have more discretionary money left over and they can spend more. so that's econ 101 of wine inflationary report CPI matters hope this helps you.

70825143 : These data on inflation are just an excuse Wall Street can use to take the opportunity to smash a plate or tray. These black ones can be described as white, and the white ones can also be described as black. Before the data comes out, everyone should avoid it mainly because they are afraid of Wall Street's crooks

Prince NvidiaOP : Wow I had to google a lot of the terms you used … you went above and beyond on that response bro…. I truly appreciate you….