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Inflation Beyond the Stars Thread for April 12


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2022 Apr 12, 12:49am   144,805 views  1,493 comments

by AmericanKulak   ➕follow (8)   💰tip   ignore  

Since we know the numbers are going to suck since Peppermint Patty is leading the Amen Corner Media to blame Putin for it:
https://patrick.net/post/1344548/2022-04-11-putin-s-price-hike-failing-administrati

Frankly, I prefer my spaceship to have big tits and not fake inflated ones.

EDIT - numbers drop:
America goes back to the 80s: Surging gas prices and higher rents push inflation to 41-year high of 8.5% as White House blames it on Putin invading Ukraine
The consumer price index rose 8.5% in March from a year ago, the fastest increase since December 1981
Housing costs, which make up about a third of the index, have escalated and show no signs of cooling
Gasoline prices soared 49% in March from a year ago as the war in Ukraine rocked energy markets
Biden's administration tried to get ahead of the dire inflation news by blaming Russian leader Vladimir Putin
But Republicans place the blame for soaring prices on 'Democrats' reckless spending and failed policies'

https://www.dailymail.co.uk/news/article-10711311/Inflation-soars-new-41-year-high-8-5.html?source=patrick.net

« First        Comments 520 - 559 of 1,493       Last »     Search these comments

520   AD   2023 Oct 25, 10:42am  

.

so much for asset (i.e., stocks, ETFs and mutual funds) appreciation ...

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522   AD   2023 Oct 27, 4:19pm  

PumpingRedheads says


https://wolfstreet.com/2023/10/27/powells-gonna-have-a-cow-when-he-sees-the-pce-inflation-spikes-in-core-services-housing-and-non-housing-core-services/


I look forward to reading more about this on Wolfman's website.

Overall inflation measured in terms of Personal Consumption Expenditure (PCE) is tracking down and is steady around 3.4% for last 12 months

I think this statistic will slowly track down to 3% within next 6 months and the "new accepted norm" will be annual inflation at or below 3.25%

https://www.bea.gov/news/2023/personal-income-and-outlays-september-2023

,,,,
523   AD   2023 Oct 27, 4:26pm  

The S&P 500 is at 4117 and its peak before the pandemic was in February 2020 at 3380.

Inflation has been about 20% since February 2020, so the S&P 500's real return is 21.8% minus 20% or 1.8% since February 2020 :-/

QE and a Fed Funds rate at 5.5% (the highest in 23 years) is appearing to have an effect on asset inflation in regards to the stock market.

Also see below as if you factor out the top 10 companies like Google, Microsoft and Apple, the S&P 500 would be faring a lot worse.
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524   DemocratsAreTotallyFucked   2023 Oct 27, 4:46pm  

ad says

Overall inflation measured in terms of Personal Consumption Expenditure (PCE) is tracking down and is steady around 3.4% for last 12 months

I think this statistic will slowly track down to 3% within next 6 months and the "new accepted norm" will be annual inflation at or below 3.25%


That's a bogus stat.
525   AD   2023 Oct 27, 6:03pm  

PumpingRedheads says

ad says

Overall inflation measured in terms of Personal Consumption Expenditure (PCE) is tracking down and is steady around 3.4% for last 12 months

I think this statistic will slowly track down to 3% within next 6 months and the "new accepted norm" will be annual inflation at or below 3.25%

That's a bogus stat.


It at least provides a trend in regards to the direction of consumer inflation.

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527   AD   2023 Oct 29, 1:25am  

We are in a conundrum as far as avoiding debt crisis ... look at it interest payments almost doubling since 2020 from ~$500 billion to ~$980 billion :-(

Going to have to make cuts such as to entitlements and maybe raise taxes as well ... the smartest they could do is just increase spending by 1/2 of the inflation rate for the next 4 years to see if this leads to any fiscal improvement such as with debt to GDP ratio...

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528   AD   2023 Oct 31, 9:41am  

Not enough workers and inflation causing the first McDonald's in Panama City, Florida to shut down : https://www.mypanhandle.com/news/local-news/bay-county/panama-city/first-bay-county-mcdonalds-location-closing-its-doors/

Also the budget-minded hotels (i.e., at least 4 miles from Panama City's beach) are having problems finding workers: https://www.wjhg.com/2023/10/30/panama-city-hotels-struggling-with-worker-shortages/

These service industries (fast food and budget-minded hotels) need to figure out fast how to innovate to increase productivity. They need to streamline. This means less workers but at much higher compensation, for example. Offer performance bonuses, profit sharing, etc.

Chili's restaurant has been innovating and I read it is faring a lot better than TGI Fridays and Applebees as far as holding down costs and earning profits.

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529   Misc   2023 Nov 1, 4:50am  

Arizona (we've had a huge amount of Californians flee to my state) has gone down California's pathway to madness because the transplants vote in the failed policies they are fleeing from. Arizona raised its minimum wage from $10.50/hr in 2018 to $13.85/hr in 2023. Funny enough that inflation has been high in the rest of the country, but since policy changes don't happen in a vacuum. it has been even higher in Arizona.

So, to combat the scourges of inflation on the vulnerable populations (those 750000 families in the lower income brackets), the Arizona State government in its glorious wisdom has decided to send them "free money". It is going to send them $750 to each family in those lower income brackets, I'm sure that if this causes prices to rise even higher...why even more "free money" will be sent.
530   HeadSet   2023 Nov 1, 8:08am  

ad says

These service industries (fast food and budget-minded hotels) need to figure out fast how to innovate to increase productivity. They need to streamline. This means less workers but at much higher compensation, for example. Offer performance bonuses, profit sharing, etc.

All business are trying to find way to increase productivity, good times or bad. Telling a business to "increase productivity" is like advising a drowning person "you need to find a way to get some air."
531   AD   2023 Nov 1, 10:44am  

Economy is slowing down. Less likelihood for another Fed Funds rate hike.

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

ISM Manufacturing Plunges to 46.7 Percent. New Orders, Backlogs in Contraction

Economists expected the ISM® manufacturing PMI® to hold steady at 49.0. Instead, it went into significant contraction with a steep drop in employment
533   AD   2023 Nov 1, 12:30pm  

.

Federal Reserve announced today it is not raising the Fed Funds rate this month. The current rate 5.5% and at a 23 year high.

https://www.usatoday.com/story/money/2023/11/01/feds-interest-rates-live-updates/71343892007/
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534   HeadSet   2023 Nov 1, 3:01pm  

ad says

Federal Reserve announced today it is not raising the Fed Funds rate this month.

Unfortunate.
535   AD   2023 Nov 1, 4:56pm  

HeadSet says

ad says

Federal Reserve announced today it is not raising the Fed Funds rate this month.

Unfortunate.


Not so since there are signs the economy is slowing.

Beside the ISM's recent manufacturing report which shows a slowdown (and trucking industry in a major slump), this is another indicator of a slowing economy:

https://www.bloomberg.com/news/articles/2023-10-27/how-many-jobs-should-i-apply-to-candidates-aim-for-500-in-cooling-labor-market

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537   Misc   2023 Nov 2, 5:56pm  

I've been working out some. I can now carry over $200 groceries from the car to the kitchen in ONE trip.
538   AD   2023 Nov 3, 10:33am  

"The US economy added 150,000 jobs in October 2023, undershooting the 180,000 reading expected, with auto industry strikes a factor, the Bureau of Labor Statistics said. The unemployment rate ticked higher to 3.9%." (source: Yahoo Finance)

I forecast CPI for October 2023 will be between 0.15% and 0.3% for last 30 days and 3.2% for last 12 months.

Service jobs market (from car washes to restaurants to hotels) is loosening in Panama City, Florida (compared to last few years).

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539   AD   2023 Nov 3, 11:08am  

Keeping the Fed Funds rate at 5.5% and at a 22 year high is enough to reduce inflation because of the Fed's quantitative tightening (QT).

I wonder if the Fed will continue QT when inflation reaches below 2% annually, or will it hold steady its balance sheet of federal government bonds and mortgage backed securities.

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540   HeadSet   2023 Nov 3, 12:05pm  

ad says

I wonder if the Fed will continue QT when inflation reaches below 2% annually, or will it hold steady its balance sheet of federal government bonds

If the Fed "holds steady" that will mean when the low interest bonds mature the Fed must then sell the much higher rate bonds to keep up the balance sheet. Interesting to see if there is enough demand for new bonds without even higher rates.
541   AD   2023 Nov 3, 12:28pm  

Not a surprise as far as post pandemic economic news such as with the trucking industry: https://www.cnn.com/2023/11/03/business/maersk-layoffs-shipping-boom-bust/index.html

And this being reported yesterday on CNBC: Target CEO says shoppers are pulling back, even on groceries

That is why I see high probability that inflation will remain tamed and the Fed will not raise the Fed Funds rate anymore as it sits at 5.5% and at a 22 year high.
542   AD   2023 Nov 3, 1:05pm  

HeadSet says

If the Fed "holds steady" that will mean when the low interest bonds mature the Fed must then sell the much higher rate bonds to keep up the balance sheet. Interesting to see if there is enough demand for new bonds without even higher rates.


I would expect they would just hold the bonds to expiration, even the longer term bonds. I am not sure what they hold as far as bonds with duration greater than 7 years. I meant hold steady as far as not sell any bonds (and not buy any replacement short duration bonds).

So their total assets will decrease as the short term bonds expire and not replaced with newer short term bonds.

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543   HeadSet   2023 Nov 3, 5:31pm  

ad says

So their total assets will decrease as the short term bonds expire and not replaced with newer short term bonds.

That would be the QT you mentioned, not holding steady.
545   AD   2023 Nov 4, 8:16am  

HeadSet says


ad says

So their total assets will decrease as the short term bonds expire and not replaced with newer short term bonds.

That would be the QT you mentioned, not holding steady.


True, as the balance sheet would show a reduction in assets (or holdings of US Treasuries) as part of Quantitative Tightening.

I just hope the Fed does not lose a lot of money if they are selling US Treasuries before their expiration date.

https://www.axios.com/2023/10/11/us-treasury-bond-yields-china-federal-reserve

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546   AD   2023 Nov 4, 8:21am  

Booger says






Good point Booger, as I ask is it going to be the same Big Mac or are they going to reduce the size of the hamburger meat by 3% each year during the coin's acceptance period ?

Is the coin's acceptance period for a limited time such as 3 years after issuance ?

This is akin to a silver 25 cent coin maintaining its value as far as equivalence to a gallon of gasoline: https://patrick.net/post/1344893/2022-05-01-silver-dime-buys-gallon-of-gas

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547   AD   2023 Nov 4, 11:38am  

Nonunion Toyota boosts hourly wages 9.2%, cuts progression time as UAW votes await

Toyota Motor North America told its nonunion production workers it was boosting hourly wages in its plants, distribution and logistics centers to $34.80 (a top wage level), effective Jan. 1, marking the third increase in less than a year.

Toyota Motor North America raised hourly wages for its U.S. manufacturing, distribution center and logistics employees yesterday for the third time this year, upping the top wage to $34.80 per hour, cutting the number of years to reach that wage, and boosting paid time off for all employees, a spokesman confirmed.

November 01, 2023 12:08 PM
Automotive News
https://www.autonews.com/manufacturing/toyota-boosts-hourly-pay-92-detroit-3-uaw-workers-wait-vote
548   Booger   2023 Nov 4, 2:43pm  

ad says

I just hope the Fed does not lose a lot of money if they are selling US Treasuries before their expiration date.


I suspect that they are doing what they are doing with MBS's in that they are really not selling, just not buying letting the value drop as people pay down / pay off / refinance their loans.
549   AD   2023 Nov 4, 2:47pm  

Booger says

ad says

I just hope the Fed does not lose a lot of money if they are selling US Treasuries before their expiration date.

I suspect that they are doing what they are doing with MBS's in that they are really not selling, just not buying letting the value drop as people pay down / pay off / refinance their loans.


True as far as the Fed reducing its assets by MBS's being paid down each month by the home owners, and not buying any more MBS.

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554   AD   2023 Nov 11, 4:54pm  

.

https://markets.businessinsider.com/news/stocks/us-economic-outlook-recession-markets-wall-street-stocks-interest-rates-2023-11

'The hard part is over': Here's what Goldman Sachs sees in the year ahead as markets and the economy return to pre-2008 conditions

Goldman Sachs said the economy and investing landscape is returning to a pre-2008 environment.

Strategists said the global economy has outperformed expectations in 2023, and disinflation should carry on.

Conditions are normalizing as the era of ultra-low rates ends.
555   AD   2023 Nov 11, 5:38pm  

.

Wolfman at WolfStreet website mentions about all the liquidity from the pandemic with ZIRP (zero interest rate policy) and all the stimulus spending. 0

It pumped up the median housing price about 40% from summer 2020.

Income hopefully will continue to increase at a greater rate than housing and the rest of the major aggregates of inflation (food, services, transportation, etc) over the next 4 years.

That is how the air from the liquidity bubble or balloon can slowly be released.

For example, houses seemed more affordable in 2013 as compared to 2006. The PE for the S&P 500 was relatively low in 2013 as compared to 2006,

.

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556   AD   2023 Nov 12, 12:48am  

.

Used car prices have fallen to their lowest levels since April 2021, down 18% from peak

The Manheim Used Vehicle Value Index has extended its maximum drawdown to -18%, the largest in index history.

Used car demand is waning as borrowing rates for used cars have surged to 7.3%, sparking an affordability crisis.

https://oilprice.com/Finance/the-Markets/Used-Car-Market-In-Turmoil-As-Prices-Collapse-And-Demand-Wanes.html

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558   AD   2023 Nov 13, 8:54pm  

From Yahoo Finance:

On Tuesday (14 November 2023), investors will digest one of the most important data points the Federal Reserve will consider in its next interest rate decision: October's Consumer Price Index (CPI).

The report, set for release at 8:30 a.m. ET, is expected to show headline inflation of 3.3%, a deceleration from September's 3.7% annual gain in prices, according to estimates from Bloomberg. Over the prior month, consumer prices are expected to have risen 0.1% in October, a slower clip than September's 0.4% monthly increase.

Lower energy costs are likely to have held the headline figures to a smaller gain. Bank of America anticipates a 1.8% month-over-month drop in energy prices, driven by lower gas prices, which fell sharply during the month of October.
559   AD   2023 Nov 13, 8:58pm  

2022 was the worst year for inflation since 1980. So in 2024, 12-month inflation will finally steady.

It may be slightly lower than 2023 price levels, so annual inflation in 2024 may steady between 2.5 % and 3.5%.

It may take until 2025 with the current Fed funds rate of 5.5% (at a 23 year high) for the annual inflation rate to drop below 2%.

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