If it was not clear in our recent piece Bail Out, I am not a fan of bail outs. Sunday's Fed action was a bail out, plain and simple. So much for Capitalism. Since 2009 the Fed has done as much to damage Capitalism as FDR's New Deal, Nixon's taking the U.S. off of the … Continue reading Fed Bail Out Creates Enormous Moral Hazard
Tag: price inflation
Core CPI accelerated month-to-month to 0.5% (from 0.4% in January), as "Shelter" accelerated to 0.8%. Our view is that the Fed will continue to hike rates but may slow the pace of QT, particularly as it relates to Treasuries. The Fed says it will maintain interest rate hikes as the Banking sector stumbles. More importantly, … Continue reading Price Inflation Persists. Now What?
Look to the late 1970's and early 1980's in the U.S. or look at what is happening in Europe today - inflation tends to persist. Today's EU release: Year-over-year price increases in the Energy sector slowed, yet price increases for all items excluding Energy experienced accelerated increases. Food, alcohol and tobacco experienced a 15.0% Y-O-Y … Continue reading Inflation Will Persist In The U.S.
The sooner the Fed gets to where it is going, the sooner it may pause and observe. In addition, Treasury yields remain negative across the yield curve which is not long-term healthy for the economy. The Effective Fed Funds rate range stands at 4.25-4.50%. If the Fed believes that the upper bound should sit at … Continue reading Why The Fed Should Hike By 50 BPS
Headline CPI came in at 6.5% year-over-year and down -0.1% for the month of December. Core CPI was up 5.7% year-over-year and up 0.3% for December, up from 0.2% in November. Readers know how we feel about price inflation - it is higher than what the government reports. Take "eggs" for example which we recently … Continue reading CPI: A Long Way To Go To 2%
The problem with the Biden Administration's $76 billion CHIPS Act is that the Federal Government is expert at creating damage and waste. So, what may go wrong with the CHIPS act? Price inflation. Those Trillions of Dollars of COVID stimulus checks were the very cause of price inflation. Any time a Central Bank prints money, … Continue reading Chip Bonanza Or Money Trap?
Price inflation was the story of 2021 and 2022. Price inflation is apparent in the Personal Income figures below (see table). The below table includes raw data from the Bureau of Economic Analysis combined with TEK2day analysis. Goods and Services price increases and Interest Expense increases significantly outpaced Personal Income growth. (See the links below … Continue reading Price Inflation Ate Savings
The Cleveland Fed estimates 6.3% Core CPI for November. CPI data will be published on Tuesday. The 6.3% Core CPI estimate sounds about right. One would expect Core CPI to be flat to slightly down in November. I would expect the Fed to push its Fed Funds Rate north of 5% in 1H 2023 and … Continue reading CPI Week: Price Inflation Remains Too High
The soft-landing narrative that has started to make a comeback in recent weeks does not make sense. The damage is done. The economic slowing will continue. The global economy is a slow-motion car crash in the making with the U.S., Western Europe and China all suffering the consequences of radical fiscal spending policy combined with … Continue reading No Soft Landing Ahead
CPI figures are due Thursday morning. CPI is a blunt tool at best. We have written on a number of occasions as to why we are not fans of the Government-reported CPI data. To summarize why we dislike the CPI measure: CPI is not a comprehensive measure of price inflation. Much of the price inflation … Continue reading CPI Data Quality Is Low