Tag Archives: consumer price index

Interest rates surged last week on the back of a hotter-than-expected inflation report that wasn’t actually that bad (see below). Not that my – or your – opinion about these things matters all that much to the market. In the short run, all that matters is what the majority believes is the truth. What they believed last week was that inflation isn’t falling fast enough and the Fed will not be cutting rates anytime soon. That was enough to send the bond market into a...

And just like that, snap of the fingers, it’s gone. Without a “bad” Treasury auction, there was no stopping the bond market today from retracing all of yesterday’s (modest) selloff and then some. This despite the huge CPI estimates released before the prior session’s trading, and now PPI figures that are equally if not more obscene. The BLS reports today that its main producer price index (PPI), the one for finished goods, was up 9.19% year-over-year in June 2021....

Gold hedges massive ongoing devaluation of U.S. Dollar 46th anniversary of ‘Tricky Dicky’ ending Gold Standard (see video) Savings destroyed by currency creation and now negative interest rates Long-term inflation figures show gold a hedge against rising cost of fuel, food and cost of living $20 food and beverages basket of 1971 cost $120.17 in 2017 Household items increased by average of 2000% and oil by 5,373% since...

Of the economic releases of the past two weeks the one that got the most attention was the employment report. That report is seen by many market analysts as one of the most important and of course the Fed puts a lot of emphasis on it so the press spends an inordinate amount of time dissecting it. I don’t waste much time on it myself because it is subject to large revisions and has little predictive capability. In...

After a tumultous week in the world of politics, with non-stop Trump drama in the US, a disastrous for Theresa May general election in the UK, and pro-establishment results in France and Italy, this is shaping up as another busy week ahead with multiple CB meetings, a full data calendar and even another important Eurogroup meeting for Greece. Wednesday’s FOMC will be the main event, with the Fed expected to hike 25bp...

It’s been really busy as of late to cover all of the topics I have wanted to address. One topic, in particular, is the bond market and the ongoing concerns of a “bond bubble” due to historically low interest rates in the U.S. and, by direct consequence, historically high bond prices. Bob Bryan, via Business Insider, recently penned the following note: “Bond yields are low. Historically low. Yields on government bonds...

  Calculation Problem What is the real interest rate? It is the nominal rate minus the inflation rate. This is a problematic idea. Let’s drill deeper into what they mean by inflation. You can’t add apples and oranges, or so the old expression claims. However, economists insist that you can average the prices of apples, oranges, oil, rent, and a ski trip at St. Moritz. This is despite problems that prevent them from...

What is the real interest rate? It is the nominal rate minus the inflation rate. This is a problematic idea. Let’s drill deeper into what they mean by inflation. You can’t add apples and oranges, or so the old expression claims. However, economists insist that you can average the prices of apples, oranges, oil, rent, and a ski trip at St. Moritz. This is despite problems that prevent them from agreeing on what should...

  Time the Taskmaster DUBLIN – “Today’s money,” says economist George Gilder, “tries to cheat time. And you can’t do that.” It may not cheat time, but it cheats far easier marks – consumers, investors, and entrepreneurs. It took us a moment to understand what Gilder meant. Then we realized he’s right. Time is the ultimate limitation… the ultimate truth… the ultimate fact. You’ll recall. There are facts and there are...

Faking It   Under a gold standard, the amount of credit that an economy can support is determined by the economy’s tangible assets, since every credit instrument is ultimately a claim on some tangible asset. […] The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit. — Alan Greenspan, 1961 He was in it for the power...