US Inflation Summary

[MongiIG]

 

US inflation have hit the highest level since 1990, with a CPI reading of 6.2% continuing the upward trajectory of prices faced by consumers. Coming off the back of an overnight Chinese PPI figure of 13.5%, the correlation between the two highlights how rising input prices faced by manufacturers remain a core driver of inflation globally. Looking into the figures, it is evident that much of the upside has been driven by energy prices and used cars, which should alleviate much of the fears around potential FOMC action. Markets are still pricing a first rate hike in June 2022, but we are starting to see a disconnect with the dot plot given that markets now also expect a second hike later into next year. Nonetheless, with the Fed only recently implementing the $15 billion per month tapering policy, it is unlikely we will see a shift in language anytime soon. As such, the pullback in stocks looks unlikely to last with the wider bullish trend well established. Joshua Mahony (IG Senior Market Analyst).

Source: DailyFX economic calendar

 

Share your thoughts and views on the US inflation numbers.

All the best - MongiIG

[skyreach]

The key question is, Hyperinflation or Deflation?

The FED wants stability in the Economy, no doubt. They introduced QE and the take over  of private banks toxic debts in the recent past. The fed reasons that dishing out free digital money printing into the banking system will somehow magically solve the problems. The ingrained fixed ideas they have is that you will avoid booms & bursts, as even Ben .B. (ex-FED chief) was promoting in the past

End result:  Hyperinflation in all asset prices and hyperbolic rise in debt.

Covid temporarily screwed up the economic life cycle, but that is NOT A CAUSE of economic woes that arose much earlier. It just added to the continuing degradation of the GDP Growth and debt build up over the longer term, since the 2007-2009 market crash.

All FED Policy actions have NOT SOLVED the economic & financial duress that has taken place.

Now the FED has released their SEMI-ANNUAL STABILITY REPORT. They point out several major financial factors that may unstablise the system. QUOTE:  "Asset prices remain vulnerable to significant declines should investor risk sentiment deteriorate."

Their evaluation is interesting.

WE HAVE BEEN DOWN THIS ROAD IN THE PAST TOO. SO ALL THE "SOLUTIONS" APPLIED SHOULD HAVE WORKED AND WE SHOULD NOT BE IN THIS PROBLEM, ESPECIALLY IF THE FED NEW WHAT THEY WERE DOING  or THAT THE KEY PROBLEMS, THE WHYS, WERE TRULY UNDERSTOOD.

IT DOES NOT OCCUR TO THE FED AND MANY IN THE FINANCIAL WORLD THAT  MONETARY POLICY and TRILLIONS OF DOLLARS in QE LINKS TO THOSE SEVERAL MAJOR FINANCIAL FACTORS, e.g. emerging market sovereign and corporate debt. Chinese real estate sector, US Housing market, etc...

The deliberate very low interest rates introduction encouraged the above factors to flourish and with the disregard to good  common sense and empirical practices of the past, were tossed to one side.

Is every one in the shadow of the FED and not able to recognise the Fed policy and its timely "actions" that should have solved the financial problems over the decades, have not been solved at all but made it worse than ever before?

QE has fueled the financial market rises to extreme highs. It IS NOT THE ORGANIC GROWTH (FOR MOST, EXCEPT THE TECH & BIOTECH SECTORS) that is doing it.

Most companies are in highest ever debts. If they were run well, were making money and financially prudent than companies should not be in huge debts.

 

 

[MongiIG]

On 12/11/2021 at 12:11, skyreach said:

The key question is, Hyperinflation or Deflation?

The FED wants stability in the Economy, no doubt. They introduced QE and the take over  of private banks toxic debts in the recent past. The fed reasons that dishing out free digital money printing into the banking system will somehow magically solve the problems. The ingrained fixed ideas they have is that you will avoid booms & bursts, as even Ben .B. (ex-FED chief) was promoting in the past

End result:  Hyperinflation in all asset prices and hyperbolic rise in debt.

Covid temporarily screwed up the economic life cycle, but that is NOT A CAUSE of economic woes that arose much earlier. It just added to the continuing degradation of the GDP Growth and debt build up over the longer term, since the 2007-2009 market crash.

All FED Policy actions have NOT SOLVED the economic & financial duress that has taken place.

Now the FED has released their SEMI-ANNUAL STABILITY REPORT. They point out several major financial factors that may unstablise the system. QUOTE:  "Asset prices remain vulnerable to significant declines should investor risk sentiment deteriorate."

Their evaluation is interesting.

WE HAVE BEEN DOWN THIS ROAD IN THE PAST TOO. SO ALL THE "SOLUTIONS" APPLIED SHOULD HAVE WORKED AND WE SHOULD NOT BE IN THIS PROBLEM, ESPECIALLY IF THE FED NEW WHAT THEY WERE DOING  or THAT THE KEY PROBLEMS, THE WHYS, WERE TRULY UNDERSTOOD.

IT DOES NOT OCCUR TO THE FED AND MANY IN THE FINANCIAL WORLD THAT  MONETARY POLICY and TRILLIONS OF DOLLARS in QE LINKS TO THOSE SEVERAL MAJOR FINANCIAL FACTORS, e.g. emerging market sovereign and corporate debt. Chinese real estate sector, US Housing market, etc...

The deliberate very low interest rates introduction encouraged the above factors to flourish and with the disregard to good  common sense and empirical practices of the past, were tossed to one side.

Is every one in the shadow of the FED and not able to recognise the Fed policy and its timely "actions" that should have solved the financial problems over the decades, have not been solved at all but made it worse than ever before?

QE has fueled the financial market rises to extreme highs. It IS NOT THE ORGANIC GROWTH (FOR MOST, EXCEPT THE TECH & BIOTECH SECTORS) that is doing it.

Most companies are in highest ever debts. If they were run well, were making money and financially prudent than companies should not be in huge debts.

 

 

Hi @skyreach

US Treasury secretary Janet Yellen said controlling Covid-19 was key to taming inflation, as Joe Biden’s administration tries to stop rising prices derailing the US economic recovery and the president’s legislative agenda.

By Aime Williams in Washington. Financial Times 

[MongiIG]

Yellen says quashing Covid-19 is key to lowering inflation

‘If we want to get inflation down, I think continuing to make progress against the pandemic is the most important thing we can do,’ she said.

By Christopher Condon and Yueqi Yang, Bloomberg 15 Nov 2021 US Inflation

[skyreach]

Janet Yellen says quashing Covid-19 is key to lowering inflation

I do not rightly see how COVID IS TO BLAME, I.E. THE ROOT CAUSE OF HIGHER INFLATION.

Sure, COVID Entered, Economy was stooped, MORE QE measures were applied to support governments, hence more possible inflation to come down the road.

There are several Inflation measures and hence meanings that apply to them ( otherwise you cannot have different measures of it).

We also had commodities prices shooting high. If raw energy prices alone go shooting upwards and remain in the very high range then means most costs go up as the buying prices are costlier. Hence higher inflation, even leaving other items out. Should the energy prices fall big time then prices should deflate, hence lower inflation.

Leaders like Yellen have to look at many parameters / metrics and her advisers come to  certain outcome conclusions with several possible outcomes. One is chosen.

The problem IS THAT MANY MODELS ARE BASED ON ASSUMPTIONS  WHICH IF NOT QUITE RIGHT CAN LEAD TO WRONG EVALUATIONS. SECONDLY, MOST MODELS ARE BASED ON LINEAR OR "BEST FIT CURVES" AND THAT OFTEN LEADS TO MIS-EVALUATIONS.

Afterall their knowledge base was based correctly on principles of the subject why then we be able to apply a propper fix and it would solve it. Wouldn't it?

TIME WILL SHOW IF INFLATION REMAINS THE BIG ISSUE OR  DEFLATION TAKES OVERALL CONTROL AS ITS METRICS GIVE INDICATIONS OF (AS IN THE PAST HISTORY).

 

 

[MongiIG]

On 16/11/2021 at 13:31, skyreach said:

Janet Yellen says quashing Covid-19 is key to lowering inflation

I do not rightly see how COVID IS TO BLAME, I.E. THE ROOT CAUSE OF HIGHER INFLATION.

Sure, COVID Entered, Economy was stooped, MORE QE measures were applied to support governments, hence more possible inflation to come down the road.

There are several Inflation measures and hence meanings that apply to them ( otherwise you cannot have different measures of it).

We also had commodities prices shooting high. If raw energy prices alone go shooting upwards and remain in the very high range then means most costs go up as the buying prices are costlier. Hence higher inflation, even leaving other items out. Should the energy prices fall big time then prices should deflate, hence lower inflation.

Leaders like Yellen have to look at many parameters / metrics and her advisers come to  certain outcome conclusions with several possible outcomes. One is chosen.

The problem IS THAT MANY MODELS ARE BASED ON ASSUMPTIONS  WHICH IF NOT QUITE RIGHT CAN LEAD TO WRONG EVALUATIONS. SECONDLY, MOST MODELS ARE BASED ON LINEAR OR "BEST FIT CURVES" AND THAT OFTEN LEADS TO MIS-EVALUATIONS.

Afterall their knowledge base was based correctly on principles of the subject why then we be able to apply a propper fix and it would solve it. Wouldn't it?

TIME WILL SHOW IF INFLATION REMAINS THE BIG ISSUE OR  DEFLATION TAKES OVERALL CONTROL AS ITS METRICS GIVE INDICATIONS OF (AS IN THE PAST HISTORY).

 

 

Hi @skyreach

Analysis-Investors bet Powell's Fed will get more aggressive on inflation

By David Randall, 23rd November 2021

NEW YORK (Reuters) - Investors are betting that newly renominated Federal Reserve Chairman Jerome Powell will need to step up the pace at which the central bank is normalizing monetary policy to better grapple with surging consumer prices.

Full article: Investing.com

[skyreach]

We seem to be at VERY important junction.

Yes, to some degree of control over Inflation is required. The FED & the BoE have failed to keep inflation to about its 2% average.

In fact as the Office for National Statistics clearly shows that from February to May a steep rise was taking place (to above 2%). And it has continued to do do overall. The expectation is that the re-start of the economy from covid will average out. CPI is 4.2% & RPI is 6% , in the UK. Similar problems in the USA.

Some say  HEY, Hyperinflation. The Fed says inflation should come lower, wait and see.

WHAT IS MISSED?

FACT:  Hyperinflation has been taking place for a decade plus. Few realised it. IT IS IN THE HYPERINFLATED ASSET PRICES. SHORT-TERM PLANNING AND GREED HAVE A GOOD WAY TO ENTRAP THE LONGER TERM FINANCIAL HEALTH SURVIVAL OF ANY COUNTRY.

FACT: WHAT IS NOT FULLED RECOGNISED BY MANY IS THE HIGHEST EVER DEBTS BUILT UP IN HISTORY, BY COMPANIES, GOVERNMENTS AND INDIVIDUALS. OH, SURE, THE FED AND THE BoE IS AWARE OF IT AND CONSIDERS A DEBT WRITE OFFs, POSSIBLY IN THE FUTURE (AS HAS BEEN DONE IN PAST HISTORY) BUT ALL THIS UNBALANCES THE FINANCIAL INDUSTRY AND THE ECONOMY - AND NOT TO FORGET THE LIVELIHOOD OF MILLIONS.

We seem to have our attention off the FACT that someone has to pay for all the debts created, one way or another.

ILLUSTRATION:    Grroup A creates huge debts,  get a subsidy in some form, the central bank takes it toxic debts off its shoulder so GROUP A then continues to practice its old bad habit practices until more new debts is built up.

Or GROUP A gets to write off its losses against tax payments (indirect subsidies) - a great existing legal setup - so the government has less income as a result.

Or GROUP A GETS BOUGHT OUT BY A BIGGER GROUP called BIG. WHY, THEY WILL SHOULDER THIS DEBTS AND CLAIM ITS ASSETS and they can write off against taxes too. Isn't indirect subsidies fun!!! Free money courtsey of the government law.

Well I could give more examples but WHAT IS MISSED IS THE DEBT TIME BOMB.

FACT: THOSE WHO TOOK ON EXCESS DEBTS ARE NOT PENALISED  AND TOLD THAT THEIR PERFORMANCE WAS EXTREMELY BAD AND COST HUGE AMOUNT TO THE GOOD WORKINGS OF THE ECONOMY OF THE COMPANY, AND THE GENERAL ECONOMY.  SO GO TO JAIL AN D OR ARE BANNED FROM PRACTISING IN THAT FIELD AGAIN.

AND NOTE:   NO POLICING ACTIONS TO PREVENT THAT IS EVER CONSIDERED ANYWHERE. Whatever regulating bodies that exist are either powerless in law or have a different mission and so "fail" to see the consequences ahead or to handle it. In the aftermath all wonder WHAT WENT WRONG?.

TO SOLVE A PROBLEM IN TRUTH MEANS THAT A SOLUTION PROVIDED WILL CREATE A GOOD BALANCED OUTCOME, NOT A DESTRUCTIVE MAYHEM AFTERWARDS.  THE LATTER take away peoples money who were not responsible for CREATING THAT MESS BECAUSE OF THE LAWS THAT ALLOW  indirectly via tax system operations MONEY CONFISCATIONS.

PAST SOLUTIONS BY THE SAME PEOPLE WHO REALLY FAILED TO SOLVE "IT" CANNOT BEEN SEEM TO BE GOOD MODELS TO FOLLOW AS IT WILL NOT GIVE RISE TO ANY BETTER SOLUTIONS IN THE FUTURE.  ---   ISN'T THAT WHY ALL COMPANIES MEASURE THE PERFORMANCE OF INDIVIDUALS IN COMPANIES?

WHY CAN WE THEN NOT MEASURE THE PERFORMANCE OF COMPANIES AND THEIR CHIEFS?

 

[MongiIG]

On 25/11/2021 at 14:14, skyreach said:

We seem to be at VERY important junction.

Yes, to some degree of control over Inflation is required. The FED & the BoE have failed to keep inflation to about its 2% average.

In fact as the Office for National Statistics clearly shows that from February to May a steep rise was taking place (to above 2%). And it has continued to do do overall. The expectation is that the re-start of the economy from covid will average out. CPI is 4.2% & RPI is 6% , in the UK. Similar problems in the USA.

Some say  HEY, Hyperinflation. The Fed says inflation should come lower, wait and see.

WHAT IS MISSED?

FACT:  Hyperinflation has been taking place for a decade plus. Few realised it. IT IS IN THE HYPERINFLATED ASSET PRICES. SHORT-TERM PLANNING AND GREED HAVE A GOOD WAY TO ENTRAP THE LONGER TERM FINANCIAL HEALTH SURVIVAL OF ANY COUNTRY.

FACT: WHAT IS NOT FULLED RECOGNISED BY MANY IS THE HIGHEST EVER DEBTS BUILT UP IN HISTORY, BY COMPANIES, GOVERNMENTS AND INDIVIDUALS. OH, SURE, THE FED AND THE BoE IS AWARE OF IT AND CONSIDERS A DEBT WRITE OFFs, POSSIBLY IN THE FUTURE (AS HAS BEEN DONE IN PAST HISTORY) BUT ALL THIS UNBALANCES THE FINANCIAL INDUSTRY AND THE ECONOMY - AND NOT TO FORGET THE LIVELIHOOD OF MILLIONS.

We seem to have our attention off the FACT that someone has to pay for all the debts created, one way or another.

ILLUSTRATION:    Grroup A creates huge debts,  get a subsidy in some form, the central bank takes it toxic debts off its shoulder so GROUP A then continues to practice its old bad habit practices until more new debts is built up.

Or GROUP A gets to write off its losses against tax payments (indirect subsidies) - a great existing legal setup - so the government has less income as a result.

Or GROUP A GETS BOUGHT OUT BY A BIGGER GROUP called BIG. WHY, THEY WILL SHOULDER THIS DEBTS AND CLAIM ITS ASSETS and they can write off against taxes too. Isn't indirect subsidies fun!!! Free money courtsey of the government law.

Well I could give more examples but WHAT IS MISSED IS THE DEBT TIME BOMB.

FACT: THOSE WHO TOOK ON EXCESS DEBTS ARE NOT PENALISED  AND TOLD THAT THEIR PERFORMANCE WAS EXTREMELY BAD AND COST HUGE AMOUNT TO THE GOOD WORKINGS OF THE ECONOMY OF THE COMPANY, AND THE GENERAL ECONOMY.  SO GO TO JAIL AN D OR ARE BANNED FROM PRACTISING IN THAT FIELD AGAIN.

AND NOTE:   NO POLICING ACTIONS TO PREVENT THAT IS EVER CONSIDERED ANYWHERE. Whatever regulating bodies that exist are either powerless in law or have a different mission and so "fail" to see the consequences ahead or to handle it. In the aftermath all wonder WHAT WENT WRONG?.

TO SOLVE A PROBLEM IN TRUTH MEANS THAT A SOLUTION PROVIDED WILL CREATE A GOOD BALANCED OUTCOME, NOT A DESTRUCTIVE MAYHEM AFTERWARDS.  THE LATTER take away peoples money who were not responsible for CREATING THAT MESS BECAUSE OF THE LAWS THAT ALLOW  indirectly via tax system operations MONEY CONFISCATIONS.

PAST SOLUTIONS BY THE SAME PEOPLE WHO REALLY FAILED TO SOLVE "IT" CANNOT BEEN SEEM TO BE GOOD MODELS TO FOLLOW AS IT WILL NOT GIVE RISE TO ANY BETTER SOLUTIONS IN THE FUTURE.  ---   ISN'T THAT WHY ALL COMPANIES MEASURE THE PERFORMANCE OF INDIVIDUALS IN COMPANIES?

WHY CAN WE THEN NOT MEASURE THE PERFORMANCE OF COMPANIES AND THEIR CHIEFS?

 

Hi @skyreach

Federal Reserve Chairman Jerome Powell’s retirement of the term “transitory” to describe inflation could have an unexpectedly bleak knock-on effect on risk assets, according to Cole Smead, president and portfolio manager at Smead Capital Management.

Full article by CNBC

[MongiIG]

On 03/12/2021 at 10:39, MongiIG said:

Hi @skyreach

Federal Reserve Chairman Jerome Powell’s retirement of the term “transitory” to describe inflation could have an unexpectedly bleak knock-on effect on risk assets, according to Cole Smead, president and portfolio manager at Smead Capital Management.

Full article by CNBC

Heading into 2022, the Federal Reserve is stuck in a game of chicken with the U.S. economy. Sectors such as energy and autos are hitting double-digit inflation rates, which are piling costs on for consumers.

The central bank first said the eye-popping inflation figures reported in late 2021 are “transitory,” although it is now dropping that word from the messaging. Earlier in the year, the global supply chain was brought to its knees as traffic jams piled up along trade routes. Meanwhile, early retirements picked up and younger workers started to quit their jobs at the fastest pace on record.

Full article: CNBC