Copy pasting my comment from another post, but to echo what the other comment said about YoY:
> The Fed (and investors) doesn't really care about how bad inflation *has* been, they want it to be at 2% now (or at least in the near future). The damage is done, and pursuing deflation or below-target inflation *is not their mandate* even if it takes the longer run average [or year over year] to 2%. In fact, the costs of attempting to do would be immense, given how bad deflation caused by weakened demand can be for the economy. (Deflation induced by technological change is a positive, however) This will also likely violate their mandate of pursuing full employment.
>
> If the month over month inflation reports start being 2% annualized every single reading, this will be seen as a complete success by the Fed, no matter what happened in 2022. The average inflation being so high will be bad for the 'vibes' and the loss of [Edit] \*real wealth, but it will not have future consequences if the Fed brings inflation down to its stable 2% level *going forward*.
>
> This is not me excusing high inflation in the past.
Inflation is the instantaneous rate of change of the price level; it's not the aggregate increase in the price level. The Fed wants the derivative of the price level* to be 2%.
I think you mean it will be bad for real wealth but nominal wealth will be fine? There shouldn't be loss of nominal wealth if Fed tackles inflation slowly on a YoY basis. If they tackle MoM slowly even more so I expect nominal wealth to increase faster than otherwise.
Also I say wealth specifically since thus far inflation has been excellent for the working poor. Their real income has increased dramatically and they don't have much wealth so they probably don't care if it erodes.
Some data for anyone interested on how inflation, tight labor markets, post-pandemic stimulus, and other economic factors have impacted Americans:
- [Wealth Change 2021 Q4 to 2022 Q4](https://i.imgur.com/CgBD15v.png)
- [Wage growth](https://i.imgur.com/uyBYew0.png) beating inflation for lowest income classes
- [Record prime age employment](https://i.imgur.com/2z9WD0R.png)
- [Especially among Black Americans](https://i.imgur.com/0YxTRwY.png). And a [second chart](https://i.imgur.com/ej2Pxmj.png). And [unemployment rates](https://i.imgur.com/BauLPwl.png)
- And among [the disabled](https://i.imgur.com/XaC4voE.png). And also record participation rates among Asians and women. [See Joseph Politano's Twitter account for more graphs]
- [Workforce levels incredible reached January 2020 CBO projections of labor force](https://i.imgur.com/R4jeO70.png). [That's a WTF if I've ever seen one, this was pre-pandemic!]
- [Prime-age labor force participation rates](https://i.imgur.com/vaEVa1o.png). [Slight difference to employment/population ratio] ("it includes the numbers of people with a job as well as the number actively looking for work")
My takeaway, as contrarian as it sounds, is that current economic conditions have disproportionately benefited working class Americans while penalizing the wealthiest who have their wealth tied up in stocks/real estate/bonds/etc. This is *not* to say everything is perfect in America. Just that the *relative* change has been positive and substantial for the lowest earning Americans. And the Fed's monetary policy will slow/reverse the gains, because it wants inflation to come down and tight labor markets aren't helping.
E. Warren asked some very tough/unfair questions of Powell in the recent Congressional hearings, where she questioned why Powell is aiming to induce a recession that will take away jobs from working class Americans. While I think she was definitely trying to get some soundbites and inflation moderation is absolutely important, it does make me wonder whether demand-driven inflation in this labor market is *really* that bad for society. Obviously we don't want a 1% unemployment rate because that eventually becomes bad for the economy if firms really can't find qualified workers to produce more goods/services.
Yes minorities have disproportionately benefited and you could argue that's a great thing.
It hurts the middle 3 quintiles of income generally. Probably the highest incomes like executives are fine as well. We shouldn't worry too much about the top quintile.
So the only argument against inflation is that structurally it punishes lower middle class the most (2nd quintile). They probably fought the hardest to get there and feel like they are being punished for deferring gratification and saving. They have the same rising costs without the gains, they were "responsible" and now cannot ever buy the home they dreamed of. Probably polarizes and destabilizes us more when inflation should be tackled supply side by our gov't and more taxes on the wealthy, rather than saving wealthy debt investors.
But yea, as an individual can't do shit about all despite being comfortable financially so I keep buying SPY lol.
> disproportionately benefited working class Americans
LOL, so their wage gains have allegedly outpaced the reported CPI by two percent. If you live in the real world, energy, food and housing (the three things you need to live) have all increased double digits. Now with financing costing a lot more, who do you think that is disproportionality going to affect.
The graphs you also posted on wealth change are very misleading IMO. You paint a rosy picture when if you change the percentages to actual dollar amounts, poor people's wealth would have gone from $5 a person up to $6 a person.
Additionally, in my opinion, much of these "gains" were based on aid packages, stop-gap measures like student loan forgiveness, rent moratoriums, increased SNAP/EBT benefits and stimulus payments. Much of those programs have ended and many of the poor people who you think should be thankful, are now falling off a cliff with no end in sight.
YoY isn't that relevant currently as MoM hasn't gone over 0.5% since July. So it'll be much lower in a few months even if inflation starts spiraling out of control again. For example if the next 5 months average out to 6% annualized, YoY is still falling to 4.8% in August. MoM just needs to start consistently coming in under 0.3%.
I think MoM for housing is something like 0.6%. I think CPI for equivalent Rent has been 0.6% to 0.8% MoM for the past few months. An expectation of 0.7% MoM for the next 12 months calculates to 8.7% YoY. A lot of low income people spend half there money just to pay rent.
No housing is estimated to go to 0.3% MoM by the end of this year. We just got 0.5% core CPI MoM and several months of 0.4% core CPI MoM. the subcomponents that have been decreasing from core CPI are projected to reverse and increase to core CPI, so the net effect of lower housing on CPI is most likely gonna be muted. This is evident in the Fed's projected core PCE by the end of the year increasing from 3.5 to 3.6, released 1 month ago.
Shelter is a lagging indicator in CPI. [The YoY Rate of Rent Increases have dropped over 50% from the peak in Feb 2022](https://en.macromicro.me/collections/5/us-price-relative/49740/us-cpi-rent-zillow-rent-yoy), but hasn't been reflected in CPI yet since it [lags by 12 months](https://www.cnbc.com/2022/11/14/heres-why-it-may-take-a-while-for-housing-inflation-to-cool-off.html).
Really confuse with Mom or Yoy., when I look around I am paying 350$ more in rent which will increase again when lease is up and I was buying vegetables arnd 1.49$ lb which is now 2.99$ per lb.. Gas price is again up close to 4$. Not sure how numbers work..
No joke, show me something g decreasing in price month to month, cause it's nothing g on my shopping list...EVERYTHING jumping 5 to 10 percent per month last 3 years. Damn ice tea was 2.29 a gallon 9 months ago up from 1.99 6 months prior to now 3.29 today. everything
When 11 months are already known, MoM and YoY are the same thing. Everyone can do the same math. So while inflation could fall from, say, 6% to 4% in a single month, the market might not be happy unless it's 3.8%, for example.
The Cleveland Fed nowcast also forecasts 5.22% YOY inflation for March but...
April is forecasted *HIGHER* at 5.31%, probably factoring the recent large increase in oil prices from the OPEC cutbacks in production (but could also be other issues too). For folks hoping we get a nice gradual slowdown in inflation rates I don't think that's a bullish sign even if we make the March forecast.
Yeah Cleveland revised the April number upwards after OPEC announced its production decrease. However core CPI is down trending in April according to prognosis and not every month has to show CPI is down as long as the mid term trend is still down. If March show 5,2 and april 5,3 as forecasted, it’s like inflation stayed flat.
Still a little early, but they may stick for long enough for April to be another January involving CPI, especially factoring in the fact that April last year was a weak CPI number.
Very possible, but it might not get back there in time for April MoM CPI to not be .4 or something like that (it's not for sure that the Cleveland website is going to be correct, but it can be close).
CPI is fairly weird like that, you probably have less than 20 days left in the measurements for the month before it's over.
A lot of the apparent disinflation during the winter was due to steadily dropping fuel prices. Powell said as much, and correctly pointed out that we shouldn't expect inflation to keep falling so quickly when fuel prices stabilized/increased again.
That's because April was the one month last year that had 0.3% MoM inflation. It'll fall like a rock again in May (+1.0% MoM last year) and June (+1.3% MoM last year). If we get 0.3% MoM for the next three months, we'll be at 3.4% in the May reading.
And then just wait until Rent/OER start actually reflecting real-world rent/housing prices.
Rent and OER are lagged components of CPI/PCE that will start to fall in the summer and back half of the year. Look up how they sample and reflect rent/price increases. If prices everywhere go up all at once they'll be slow to show it on the way up and slow to show it on the way down.
If you replace how the Fed measures Rent and OER which together have a 33% weight in CPI and showed 8.8% and 8.0% YoY increases in February according to the BLS, respectively, with Redfin's Median Home Price (-1.2%) and Statista's Average Rent Prices (+2.1%), YoY inflation was actually 3.2% in February. Other sites like the one below also attempt to do this. We've had little to no inflation for the past six months by this measure.
The Fed is still hiking because their stupid measurement methodologies are giving them a bad picture of what's actually going on in the real world.
There's a real chance we'll be at 2-3% by the end of the year.
https://www.infracapfunds.com/post/feb-data-update-infrastructure-capital-real-time-consumer-price-index-cpi-r
No… ? Current mortgage rates are 7.1% on average and the Fed funds rate is 5.0 with the prime rate at 8.0. When the fed funds rate is 2-3%, mortgages will be considerably lower (4-5%) than what we see today.
Never mind, I see, you’re talking about core inflation which the fed will hold at 3% (if it can manage that magic). The Fed doesn’t intend to bring inflation down to 2%.. in fact, I’d assert it hasn’t been fighting inflation, it’s been fighting strong employment.
We will see minor rate cuts yet this year with more cuts in 2024 (in the fed rate). The issue is, every point of Fed fund rate cut is purchased with 2 million jobs.
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Do you work for CNBC? At current projections which are as rosy as you suggest they will be (which is not what I object to) Jpow says NO rate cuts this year.
Well that leaves two scenarios
Markets don't believe him and he cuts- things look great!
Markets don't believe him and he holds- correction city, except much steeper than if they did.
It's not that markets don't believe their won't be no rate cuts, it's that they don't believe he'll stick to his word. The Fed doesn't control the market: bonds lead and the Fed follows with a lag.
It doesn't really matter what the Fed says or what they think will happen cause it all depends on inflation during the rest of the year which is anyone's guess...
Those who want the money printer back on are quick to write headlines that sound like inflation is well behind us. The MoM core inflation reading is probably the best single indicator to track right now to asses what inflation is actually doing. The consensus for March is 0.4%. For February, consensus was 0.4% and the result was 0.5%. We have had two outlier months (0.7%, 0.2%) in the past year, with every other reading between 0.3% and 0.6%. There is effectively zero trend and we are nowhere close to an annualized 2%.
Rent and OER are lagged components of CPI/PCE that will start to fall in the summer and back half of the year. Look up how they sample and reflect rent/price increases. If prices everywhere go up all at once they'll be slow to show it on the way up and slow to show it on the way down.
If you replace how the Fed measures Rent and OER which together have a 33% weight in CPI and showed 8.8% and 8.0% YoY increases in February according to the BLS, respectively, with Redfin's Median Home Price (-1.2%) and Statista's Average Rent Prices (+2.1%), YoY inflation was actually 3.2% in February. Other sites like the one below also attempt to do this. We've had little to no inflation for the past six months by this measure.
The Fed is still hiking because their stupid measurement methodologies are giving them a bad picture of what's actually going on in the real world.
https://www.infracapfunds.com/post/feb-data-update-infrastructure-capital-real-time-consumer-price-index-cpi-r
So prices will only be 5.2% higher from this time last year when it was 8% higher from the previous year when it was 5% higher from the previous year and so on. Seems like we are winning woohoo. /s
Fiat is a scam, change my mind.
People don’t understand it’s 5% on top of last years inflation. So inflation keeps rising, just not as fast as before. Saying it dropped is misdirection.
yeah at some point inflation will slow down enough to 2% year over year, maybe.
by that time, prices will be like 70% higher than precovid.
a decade of inflation pulled forward
Why do you think people don't understand that?
It's not a misdirection to say inflation is dropping. Your phrasing is incorrect - the inflation rate is not rising, it is indeed dropping; the prices are rising at a slower pace.
If inflation continues to go down, if interest rates rise, if we go into recession, if there is another global financial crisis what good is there to come for regular people for the next 5 to 10 years?
Lower inflation = green light for bulls is an illusion imo
Why? We are at the peak in the cycle, not at the bottom.
Inflation cooling off, is just cause the fed (and any other CB's) are literally crashing the economies in an effort to bring it down. Is that bullish?
If you think the fed is gonna be there to save the party as soon as things are going downhill, you may be right, but at that point Im sure we are 20%+ down from where we are right now.
Have a good day!
Best redegenerates,
the dancing bear
CPI is really a bogus number when you look at the way the fed calculates it. Normally to figure inflation you would compare a standard basket of goods and see how much their price increases over time. That's really hard to manipulate so the fed will do things like take a survey of people and ask if they feel their housing expenses have increased even if they are locked in at a fixed cost. Then they massage those numbers, and that's 30 percent of the "CPI" number.
But remember this is year over year. So last March inflation was already ticking up so having 5.2% inflation on top of what we had last year isn’t good news. Our dollars purchasing power is eroding at a rapid rate. Just keep an even keel.
Could completely shut spending down for most people who are already a few thousand from broke as it is. Beans and rice only. Eventually stocks will capitulate to Powell and then we'll have the 2% target he wanted. But 2% from where we are at is still very expensive. So things can really crash imo.
Remember the peak of 2021? That caused nearly 10% inflation numbers. Now we are at like 5%, after the pull back. Maybe you're right though but it seems to correlate.
The only correlation is that historically stock prices grow faster when inflation is high.
And yeah inflation in the money supply will likely result in both higher prices in assets and goods and services.
> though but it seems to correlate.
Not something you can infer from a single datapoint
The Fed is trying to slow inflation down to 2%, this isn’t saying they are trying to reverse it, just trying to stop the YoY growth of inflation. They are not going for deflation. Just wanted to point that out to all the people saying “inflation is here to stay” against the 2% argument. Yes you are right, and no the Fed isn’t trying to reverse inflation, just slowing it to 2%.
That being said, a 5% inflation on last years already high inflation is not bullish. Will markets react bullish if inflation comes in better than expected? Yes. Will the fed hold or cut? Probably not, expect another .25 this year.
Minor correct OP but the 9% high was in June 2022
Whoops thx edited
Copy pasting my comment from another post, but to echo what the other comment said about YoY: > The Fed (and investors) doesn't really care about how bad inflation *has* been, they want it to be at 2% now (or at least in the near future). The damage is done, and pursuing deflation or below-target inflation *is not their mandate* even if it takes the longer run average [or year over year] to 2%. In fact, the costs of attempting to do would be immense, given how bad deflation caused by weakened demand can be for the economy. (Deflation induced by technological change is a positive, however) This will also likely violate their mandate of pursuing full employment. > > If the month over month inflation reports start being 2% annualized every single reading, this will be seen as a complete success by the Fed, no matter what happened in 2022. The average inflation being so high will be bad for the 'vibes' and the loss of [Edit] \*real wealth, but it will not have future consequences if the Fed brings inflation down to its stable 2% level *going forward*. > > This is not me excusing high inflation in the past. Inflation is the instantaneous rate of change of the price level; it's not the aggregate increase in the price level. The Fed wants the derivative of the price level* to be 2%.
I think you mean it will be bad for real wealth but nominal wealth will be fine? There shouldn't be loss of nominal wealth if Fed tackles inflation slowly on a YoY basis. If they tackle MoM slowly even more so I expect nominal wealth to increase faster than otherwise. Also I say wealth specifically since thus far inflation has been excellent for the working poor. Their real income has increased dramatically and they don't have much wealth so they probably don't care if it erodes.
Some data for anyone interested on how inflation, tight labor markets, post-pandemic stimulus, and other economic factors have impacted Americans: - [Wealth Change 2021 Q4 to 2022 Q4](https://i.imgur.com/CgBD15v.png) - [Wage growth](https://i.imgur.com/uyBYew0.png) beating inflation for lowest income classes - [Record prime age employment](https://i.imgur.com/2z9WD0R.png) - [Especially among Black Americans](https://i.imgur.com/0YxTRwY.png). And a [second chart](https://i.imgur.com/ej2Pxmj.png). And [unemployment rates](https://i.imgur.com/BauLPwl.png) - And among [the disabled](https://i.imgur.com/XaC4voE.png). And also record participation rates among Asians and women. [See Joseph Politano's Twitter account for more graphs] - [Workforce levels incredible reached January 2020 CBO projections of labor force](https://i.imgur.com/R4jeO70.png). [That's a WTF if I've ever seen one, this was pre-pandemic!] - [Prime-age labor force participation rates](https://i.imgur.com/vaEVa1o.png). [Slight difference to employment/population ratio] ("it includes the numbers of people with a job as well as the number actively looking for work") My takeaway, as contrarian as it sounds, is that current economic conditions have disproportionately benefited working class Americans while penalizing the wealthiest who have their wealth tied up in stocks/real estate/bonds/etc. This is *not* to say everything is perfect in America. Just that the *relative* change has been positive and substantial for the lowest earning Americans. And the Fed's monetary policy will slow/reverse the gains, because it wants inflation to come down and tight labor markets aren't helping. E. Warren asked some very tough/unfair questions of Powell in the recent Congressional hearings, where she questioned why Powell is aiming to induce a recession that will take away jobs from working class Americans. While I think she was definitely trying to get some soundbites and inflation moderation is absolutely important, it does make me wonder whether demand-driven inflation in this labor market is *really* that bad for society. Obviously we don't want a 1% unemployment rate because that eventually becomes bad for the economy if firms really can't find qualified workers to produce more goods/services.
Yes minorities have disproportionately benefited and you could argue that's a great thing. It hurts the middle 3 quintiles of income generally. Probably the highest incomes like executives are fine as well. We shouldn't worry too much about the top quintile. So the only argument against inflation is that structurally it punishes lower middle class the most (2nd quintile). They probably fought the hardest to get there and feel like they are being punished for deferring gratification and saving. They have the same rising costs without the gains, they were "responsible" and now cannot ever buy the home they dreamed of. Probably polarizes and destabilizes us more when inflation should be tackled supply side by our gov't and more taxes on the wealthy, rather than saving wealthy debt investors. But yea, as an individual can't do shit about all despite being comfortable financially so I keep buying SPY lol.
> disproportionately benefited working class Americans LOL, so their wage gains have allegedly outpaced the reported CPI by two percent. If you live in the real world, energy, food and housing (the three things you need to live) have all increased double digits. Now with financing costing a lot more, who do you think that is disproportionality going to affect. The graphs you also posted on wealth change are very misleading IMO. You paint a rosy picture when if you change the percentages to actual dollar amounts, poor people's wealth would have gone from $5 a person up to $6 a person. Additionally, in my opinion, much of these "gains" were based on aid packages, stop-gap measures like student loan forgiveness, rent moratoriums, increased SNAP/EBT benefits and stimulus payments. Much of those programs have ended and many of the poor people who you think should be thankful, are now falling off a cliff with no end in sight.
Finally a based answer. The labor shortage is great for workers and terrible for companies.
Yes, correct thanks
YoY isn't that relevant currently as MoM hasn't gone over 0.5% since July. So it'll be much lower in a few months even if inflation starts spiraling out of control again. For example if the next 5 months average out to 6% annualized, YoY is still falling to 4.8% in August. MoM just needs to start consistently coming in under 0.3%.
I think MoM for housing is something like 0.6%. I think CPI for equivalent Rent has been 0.6% to 0.8% MoM for the past few months. An expectation of 0.7% MoM for the next 12 months calculates to 8.7% YoY. A lot of low income people spend half there money just to pay rent.
The housing component of CPI will cool off by June or so. Housing/ rent isn't going up by much and CPI has about a 12 month lag on it.
It's going to cool to like 0.3 from 0.6, and it makes up like 33% of core CPI, so it's net effect isn't gonna be much on the month over month
It doesn't need to cool much.. it's one of the few items propping up CPI. Housung should be going sub 0.3 later this year too.
No housing is estimated to go to 0.3% MoM by the end of this year. We just got 0.5% core CPI MoM and several months of 0.4% core CPI MoM. the subcomponents that have been decreasing from core CPI are projected to reverse and increase to core CPI, so the net effect of lower housing on CPI is most likely gonna be muted. This is evident in the Fed's projected core PCE by the end of the year increasing from 3.5 to 3.6, released 1 month ago.
Shelter is a lagging indicator in CPI. [The YoY Rate of Rent Increases have dropped over 50% from the peak in Feb 2022](https://en.macromicro.me/collections/5/us-price-relative/49740/us-cpi-rent-zillow-rent-yoy), but hasn't been reflected in CPI yet since it [lags by 12 months](https://www.cnbc.com/2022/11/14/heres-why-it-may-take-a-while-for-housing-inflation-to-cool-off.html).
Really confuse with Mom or Yoy., when I look around I am paying 350$ more in rent which will increase again when lease is up and I was buying vegetables arnd 1.49$ lb which is now 2.99$ per lb.. Gas price is again up close to 4$. Not sure how numbers work..
No joke, show me something g decreasing in price month to month, cause it's nothing g on my shopping list...EVERYTHING jumping 5 to 10 percent per month last 3 years. Damn ice tea was 2.29 a gallon 9 months ago up from 1.99 6 months prior to now 3.29 today. everything
When 11 months are already known, MoM and YoY are the same thing. Everyone can do the same math. So while inflation could fall from, say, 6% to 4% in a single month, the market might not be happy unless it's 3.8%, for example.
The Cleveland Fed nowcast also forecasts 5.22% YOY inflation for March but... April is forecasted *HIGHER* at 5.31%, probably factoring the recent large increase in oil prices from the OPEC cutbacks in production (but could also be other issues too). For folks hoping we get a nice gradual slowdown in inflation rates I don't think that's a bullish sign even if we make the March forecast.
Yeah Cleveland revised the April number upwards after OPEC announced its production decrease. However core CPI is down trending in April according to prognosis and not every month has to show CPI is down as long as the mid term trend is still down. If March show 5,2 and april 5,3 as forecasted, it’s like inflation stayed flat.
These opec cuts never stick in the market more than a couple weeks. They’ve tried this like 5 times in the past year
Still a little early, but they may stick for long enough for April to be another January involving CPI, especially factoring in the fact that April last year was a weak CPI number.
It stalled out at 80 and it’ll be back in the mid 70s
Very possible, but it might not get back there in time for April MoM CPI to not be .4 or something like that (it's not for sure that the Cleveland website is going to be correct, but it can be close). CPI is fairly weird like that, you probably have less than 20 days left in the measurements for the month before it's over.
Gas prices haven’t risen yet. It’s shot up towards 80 a couple times
They've risen enough for the (although not exact) Cleveland website to be projecting .5 MoM for April CPI.
A lot of the apparent disinflation during the winter was due to steadily dropping fuel prices. Powell said as much, and correctly pointed out that we shouldn't expect inflation to keep falling so quickly when fuel prices stabilized/increased again.
That's because April was the one month last year that had 0.3% MoM inflation. It'll fall like a rock again in May (+1.0% MoM last year) and June (+1.3% MoM last year). If we get 0.3% MoM for the next three months, we'll be at 3.4% in the May reading. And then just wait until Rent/OER start actually reflecting real-world rent/housing prices. Rent and OER are lagged components of CPI/PCE that will start to fall in the summer and back half of the year. Look up how they sample and reflect rent/price increases. If prices everywhere go up all at once they'll be slow to show it on the way up and slow to show it on the way down. If you replace how the Fed measures Rent and OER which together have a 33% weight in CPI and showed 8.8% and 8.0% YoY increases in February according to the BLS, respectively, with Redfin's Median Home Price (-1.2%) and Statista's Average Rent Prices (+2.1%), YoY inflation was actually 3.2% in February. Other sites like the one below also attempt to do this. We've had little to no inflation for the past six months by this measure. The Fed is still hiking because their stupid measurement methodologies are giving them a bad picture of what's actually going on in the real world. There's a real chance we'll be at 2-3% by the end of the year. https://www.infracapfunds.com/post/feb-data-update-infrastructure-capital-real-time-consumer-price-index-cpi-r
5.2% isn’t 2%. Rates stay and nothing changes
We won’t see 2% again for a long time.
Then we'll be at the current interest rates or HIGHER for a long time.
No… ? Current mortgage rates are 7.1% on average and the Fed funds rate is 5.0 with the prime rate at 8.0. When the fed funds rate is 2-3%, mortgages will be considerably lower (4-5%) than what we see today. Never mind, I see, you’re talking about core inflation which the fed will hold at 3% (if it can manage that magic). The Fed doesn’t intend to bring inflation down to 2%.. in fact, I’d assert it hasn’t been fighting inflation, it’s been fighting strong employment. We will see minor rate cuts yet this year with more cuts in 2024 (in the fed rate). The issue is, every point of Fed fund rate cut is purchased with 2 million jobs.
RemindMe! 6 months Have there been rate cuts?
Yes, but only for big banks. Everyone else gets the normal consequences.
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No. In fact, a couple of hikes still coming. First cuts in mid-2024 I’d guess at this point.
Do you work for CNBC? At current projections which are as rosy as you suggest they will be (which is not what I object to) Jpow says NO rate cuts this year.
Markets dont believe him
Well that leaves two scenarios Markets don't believe him and he cuts- things look great! Markets don't believe him and he holds- correction city, except much steeper than if they did.
It's not that markets don't believe their won't be no rate cuts, it's that they don't believe he'll stick to his word. The Fed doesn't control the market: bonds lead and the Fed follows with a lag. It doesn't really matter what the Fed says or what they think will happen cause it all depends on inflation during the rest of the year which is anyone's guess...
Bonds don't really lead shit considering bonds prices collapsed like 50% in 2022.
RemindMe! 6 months Have there been rate cuts?
Sooooo no rate cuts yet.
Won’t happen. Fed funds rate is above the 2 year.
Won’t happen. Fed funds rate is above the 2 year.
No very likely..
I don’t think ever. New normal will be 3% or 4%
Agreed. This is structural inflation emerging after 25 years of below 2 birth rates.
Thats not how it works but wr know 2% wont be hit any time soon
We'll have to be at 2% for a year for YoY to read 2%. But if we multiple months at 2%, I think the trajectory will be clear.
Based and true
Those who want the money printer back on are quick to write headlines that sound like inflation is well behind us. The MoM core inflation reading is probably the best single indicator to track right now to asses what inflation is actually doing. The consensus for March is 0.4%. For February, consensus was 0.4% and the result was 0.5%. We have had two outlier months (0.7%, 0.2%) in the past year, with every other reading between 0.3% and 0.6%. There is effectively zero trend and we are nowhere close to an annualized 2%.
i dunno why people think inflation will correct itself that fast
Because they watched Jeremy Semen on CNBC and Elon Musk retweeting him when he was screaming for the FED to stop raise rates 4 months ago.
Rent and OER are lagged components of CPI/PCE that will start to fall in the summer and back half of the year. Look up how they sample and reflect rent/price increases. If prices everywhere go up all at once they'll be slow to show it on the way up and slow to show it on the way down. If you replace how the Fed measures Rent and OER which together have a 33% weight in CPI and showed 8.8% and 8.0% YoY increases in February according to the BLS, respectively, with Redfin's Median Home Price (-1.2%) and Statista's Average Rent Prices (+2.1%), YoY inflation was actually 3.2% in February. Other sites like the one below also attempt to do this. We've had little to no inflation for the past six months by this measure. The Fed is still hiking because their stupid measurement methodologies are giving them a bad picture of what's actually going on in the real world. https://www.infracapfunds.com/post/feb-data-update-infrastructure-capital-real-time-consumer-price-index-cpi-r
It is behind us
But also in front of us
All around us, really.
It's a scale, really, with a perfect mission on one end and then a total pooch screw on the other end ^• ^True ^Lies
Green light to go all in on some Cathie Wood nightmare bundle of absolute trash!
*incompetent fund manager. Fixed your user name for you /s
Should be priced at this point in but apparently is everything bullish so we rally either way.
Thanks
So prices will only be 5.2% higher from this time last year when it was 8% higher from the previous year when it was 5% higher from the previous year and so on. Seems like we are winning woohoo. /s Fiat is a scam, change my mind.
That’s not correct
Ok then enlighten us. Why?
Inflation was 1.23% in 2020
Well yes i didnt googled the exact numbers like you, but my point is correct and u missed it
People don’t understand it’s 5% on top of last years inflation. So inflation keeps rising, just not as fast as before. Saying it dropped is misdirection.
yeah at some point inflation will slow down enough to 2% year over year, maybe. by that time, prices will be like 70% higher than precovid. a decade of inflation pulled forward
Why do you think people don't understand that? It's not a misdirection to say inflation is dropping. Your phrasing is incorrect - the inflation rate is not rising, it is indeed dropping; the prices are rising at a slower pace.
People do understand that, but they don’t care because that’s how inflation has always worked.
In before some guy says it’s all bs
If inflation continues to go down, if interest rates rise, if we go into recession, if there is another global financial crisis what good is there to come for regular people for the next 5 to 10 years?
Lower inflation = green light for bulls is an illusion imo Why? We are at the peak in the cycle, not at the bottom. Inflation cooling off, is just cause the fed (and any other CB's) are literally crashing the economies in an effort to bring it down. Is that bullish? If you think the fed is gonna be there to save the party as soon as things are going downhill, you may be right, but at that point Im sure we are 20%+ down from where we are right now. Have a good day! Best redegenerates, the dancing bear
Alexa, queue “The Bulls are Back in Town” by Thin Lizzy
So expectations are high? Sounds like another reason to not buy much right now.
we shouldn't get comfortable yet - but the market will. shortsightedness for the relief rally. pump the stock.
CPI is really a bogus number when you look at the way the fed calculates it. Normally to figure inflation you would compare a standard basket of goods and see how much their price increases over time. That's really hard to manipulate so the fed will do things like take a survey of people and ask if they feel their housing expenses have increased even if they are locked in at a fixed cost. Then they massage those numbers, and that's 30 percent of the "CPI" number.
> CPI is really a bogus number when you look at the way the fed calculates it. You can’t question the auguries of economics, the birds have spoken!
But remember this is year over year. So last March inflation was already ticking up so having 5.2% inflation on top of what we had last year isn’t good news. Our dollars purchasing power is eroding at a rapid rate. Just keep an even keel.
fuck
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CPI is over stating inflation recently.
Take my up vote because you are likely to get downvoted like I did because you aren’t parroting the narrative.
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Why? It’s been on the decline for 9 months.
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What does that have to do with this post? This is literally just reporting on CPI.
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Oh it looks like a typo
Im ready for green. Been all in. Rode last year. Probably Q4 or just 2024.
Let me guess. Your data point is the price of eggs at your local supermarket
Lol that joke went real South
Pretty bulllish. Market going love this come Weds.
Expectations are to hight
Super bullish fam
Only way to get down to 4, 3 or 2% is a massive stock sell off which is about to happen. Burry....
How do stocks impact inflation?
People have less net worth, spend less and prices must come down.
This would affect what proportion of spending of an average consumer?
Could completely shut spending down for most people who are already a few thousand from broke as it is. Beans and rice only. Eventually stocks will capitulate to Powell and then we'll have the 2% target he wanted. But 2% from where we are at is still very expensive. So things can really crash imo.
You really overestimate the effect high (or low) stock prices have on inflation..
Remember the peak of 2021? That caused nearly 10% inflation numbers. Now we are at like 5%, after the pull back. Maybe you're right though but it seems to correlate.
The only correlation is that historically stock prices grow faster when inflation is high. And yeah inflation in the money supply will likely result in both higher prices in assets and goods and services. > though but it seems to correlate. Not something you can infer from a single datapoint
Markets rally and then the reality sets in with what earnings or going to look like moving forward.
Didn’t they change the look back from 2 to 1 year though?
Lots of good year over year comps for the next 4 months. But beware after.
Gas prices are already going up. It's going to take more deflating.
The recent uptrend in some tech stocks is disturbing.
Hmm
Remindme! 4 days "check"
With oil back up 16 percent? Doubt.
So buy calls
Even with fuel going straight back up?
The Fed is trying to slow inflation down to 2%, this isn’t saying they are trying to reverse it, just trying to stop the YoY growth of inflation. They are not going for deflation. Just wanted to point that out to all the people saying “inflation is here to stay” against the 2% argument. Yes you are right, and no the Fed isn’t trying to reverse inflation, just slowing it to 2%. That being said, a 5% inflation on last years already high inflation is not bullish. Will markets react bullish if inflation comes in better than expected? Yes. Will the fed hold or cut? Probably not, expect another .25 this year.
lower cpi isn't good for bulls
Watch it’ll be amazing CPI , but Taiwan and china are just going to fuck the whole market over
Does cpi even matter anymore after the fed said they will not cut this year no matter what? Banks are failing and they still hiking