Tag Archives: inflation

While the world fixated on the US CPI, it was other “inflation” data from across the Pacific that is telling the real economic story. Having conflated the former with a red-hot economy, the fact American consumer prices aren’t tied to the actual economic situation has been lost in the shuffle of the FOMC’s hawkishness, with markets obliged to price wrong-way Jay. The short end of the yield curve (USTs and elsewhere) is plotting like FOMC dots, whenever oil and crude...

Markets got aggressive long before the FOMC did. Everything, and I mean everything, has been trending the other way. Jay Powell says inflation risks are most pressing when markets have consistently priced the opposite for a whole lot longer. It’ll be revised history when ultimately the mainstream attempts to write it over the months ahead, many will try to snatch some limited victory from the jaws of defeat. Should recession happen and bring an end to the...

It wasn’t exactly a secret, though the raw data doesn’t ever tell you why something might’ve changed in it. According to the Bureau of Economic Analysis, confirmed by industry sources, US new car sales absolutely tanked in May 2022. At a seasonally-adjusted annual rate of 12.7 million, it was a quarter fewer than sales put down in May 2021 and 13% below the not-great level from the month prior in April 2022. Such puny results have typically been reserved for those...

The BLS’s most recent labor market data is, well, troubling. Even the preferred if artificially-smooth Establishment Survey indicates that something has changed since around March. A slowdown at least, leaving more questions than answers (from President Phillips). That as much because of the other employment figures, the Household Survey. April and May, in particular, not just a slowdown but a drop in overall employee count. As I pointed out last Friday, a 2-month...

Three G7 central banks meet in the coming days, and they dominate the macro stage. The Federal Reserve's meeting concludes on Wednesday, the Bank of England on Thursday, and the Bank of Japan on Friday. The market recognizes a strong consensus has emerged at the FOMC for 50 bp hikes in June, but the unexpectedly strong CPI report before the weekend saw the market price in about a 50% chance of a 75 bp hike in July. Some Fed officials have been understandably...

It isn’t just semantics, nor some trivial, egotistical use of quotation marks. There is an actual and vast difference between inflation and “inflation.” And in the final results, that difference isn’t strictly or even mainly about consumer prices. Who cares, most people wonder. After all, what does it really matter why prices are going up so far? The pain this causes is pain regardless of any post hoc pedantry. Insisting on proper terminology, however, is an attempt...

The Volcker Myth is simple because there isn’t math for it just voodoo economics (to borrow George HW Bush’s phrase). In theory, the FOMC finally realized after more than a decade of currency devastation and its economic, financial, and social consequences, hey, inflation and money. Once Paul Volcker took over in ’79, he acted on the belated realization, seeking to get the Great Inflation under control by restricting, well, something that seems like money. All the...

May 2022’s payroll estimates weren’t quite the level of downshift President Phillips had warned about, though that’s increasingly likely just a matter of time. In fact, despite the headline Establishment Survey monthly change being slightly better than expected, it and even more so the other employment data all still show an unmistakable slowdown in the labor market. What’s left open for argument and concern is now a matter of how much of a downside there might end...

The fact that German retail sales crashed so much in April 2022 is significant for a couple reasons. First, it more than suggests something is wrong with Germany, and not just some run-of-the-mill hiccup. Second, because it was this April rather than last April or last summer, you can’t blame COVID this time. Something else is going on. . In America, the Fed Cult is out to take credit for this brewing downturn (Jay Powell seeking his place alongside Volcker, which...

After months of consumer price increases and after countless working households found themselves in dire financial straits struggling to make ends meet, in the late May, President Biden finally revealed his grand plan to fight inflation in an op-ed for the Wall Street Journal. The much-anticipated response to the cost of living crisis that has been ravaging the nation sadly did not contain the silver bullet that so many Americans were hoping for. Instead, it consisted of obvious...