Here's the deflation breakdown for August 2024 — in one chart

The observed deflation in physical goods suggests a reduction in consumer demand for these items and potentially lower profit margins for companies in these sectors. Investors may want to be cautious with companies heavily invested in durable goods and automotive sectors, anticipating continued price pressure.

Conversely, companies in the e-commerce space or those that import lower-cost goods could benefit from cheaper goods and a strong dollar, which could boost their margins. Investors might consider exposure to these sectors as a hedge against falling prices in traditional retail.

The overall economic signals imply a stabilization in mortgage and loan demand due to lower inflation pressures, potentially making mortgage lenders more attractive in a cooling market. Therefore, investing in financial services focused on real estate might offer moderate positivity.