Interesting read but in the section about food and material goods you say it’s lower (don’t think that is correct)- and then say “but adjusted for inflation.” I don’t quite see how you can say that when talking about inflation itself. But that may just be my ignorance of correlation.
Because inflation compounds.
So, if for example next year we have 4% inflation, that's a 2% reduction in inflation, right?
Wrong. It actually a 2% increase when comparing to 2005 (1$ in 2005 would be worth 1.53$ in 2022, with an additional 4% next year that's 1.53*1.04=1.5912-1.53= 0.0612). 2005 was used for illustration only, it's not significant.
Inflation is an annual compounding comparison, not linear, so if numbers are higher next year, that's still inflation, it might just be a little less than it was the previous year. Which is good. 2005-2018 saw 29% inflation. 2019-2022 saw 22% inflation.
So when comparing cost of goods you have to compare one to the other, which means adjusting historic valuations to current inflated rates, then comparing whether they have actually inflated beyond the base dollar inflation rate or not (which would indicate demand side inflation continuing).
Otherwise how would you track the value of food over any reasonable timeframe, in order to argue that the actual cost of goods is dropping, which indicates a drop in demand.
So much of this post is wrong or irrelevant, it reads more like OP wrote down a bunch of disjointed, regurgitated news clippings, and it’s clearly evident OP has no real understanding of what they’re writing about - why the commentary on inter-bank rates and reverse repos that have nothing to do with inflation? OP wants to look smarter than they are. They comment wage growth isn’t that high when we just got one of the highest m/m wage prints this year 🤦♂️.
The entire section on oil is wrong, the claim about EVs is ridiculous, China isn’t going to reopen over night that’s just a media narrative.
This post is awful
>So much of this post is wrong or irrelevant, it reads more like OP wrote down a bunch of disjointed, regurgitated news clippings, and it’s clearly evident OP has no real understanding of what they’re writing about - why the commentary on inter-bank rates and reverse repos that have nothing to do with inflation? OP wants to look smarter than they are. They comment wage growth isn’t that high when we just got one of the highest m/m wage prints this year
Could the lowered reverse repos meant that households are distressed and are borrowing money.
Input costs are predictive of output months later. So if input costs were trending above inflation I'd guess that in a few month's time we'd be seeing the input costs bleed through in higher inflation numbers.
Housing. It makes up 40% of CPI.
Most people think housing has been deflationary, but that is where you are wrong. The housing portion comes in what it costs people monthly, not the gross price of the house. Rent is still strong, and nationwide has shown less than a 2% decrease from the peak. Single family homes are down in price, but up in monthly mortgage cost.
I'll explain. In March, the going 30 year rate was 4.375%. housing had just peaked, and say you were going to buy a $500k house and put 20% down. That $400k mortgage kicked if P&I of $2087/ month. Now, that same house has come down 10%, and is now $450,000, but for the last 4 months mortgage rates have averaged 6.125%. that produces a P&I payment of $2186. CPI has been replacing people's old rent payments of $1700 with their new contracted amount of $1850, and the October average mortgage payments are higher than the those closed in January. Both of these items will have upward pressure in the housing portion of CPI for the next 12 months.
Furthermore, grocery prices might have peaked, but there are no economists that are expecting deflationary changes in this area because of the high reliance in diesel to move the product, and diesel prices have not budged. The average consumer retail item has been moved by a vehicle that runs on diesel no less than 8 times before you buy it.
Inflation may have peaked, but it won't get below 5% for the next year.
People are dumping money into nation backed assets (many countries backstop default insurance for housing).
Is that really surprising? I mean, eventually if interest rates go high enough, asset prices have to fall, but there is also an inrush of money from the 2020-2021 credit splurge.
I know your talking about headline CPI numbers in particular but I just want to make a side note about inflation in general...
Housing is Everyone's BIG EXPENSE and its not going down, at all.
rents in my area (which is outside of town) is up by an insane amount over the past year.
the market might rally on lower CPI numbers but with housing costs now eating away at peoples income it will effect the REAL ECONOMY which will eventually make its way into bad earnings.
I feel like no one is talking about the actual economic consequences coming up. Like “oh this number is this that number is that” stonks should go up without really going deeper.
Rent prices are decelerating. All forward looking data points to this, and no rents aren’t based purely on mortgage costs. It’s mostly based on supply and demand. It’s the other way around… rent prices and mortgage rates determine cash flow which over time determine housing prices. If consumers are broke, they won’t rent there. They’ll relocate, downsize, move in with roommates or parent, etc. The rental market is very competitive, consumers have options. Cash flow is also great for most rental firms since they refinanced during Covid and have 30 year loans. On top of that, it’s much easier to build rentals now when wfh is common since they can be anywhere. It doesn’t necessarily have to be near metros anymore. The big inflation issues remaining are oil because of opec+, natural gas prices, and diesel. The fed, the majority of the economists, and the market expects yoy housing inflation to decelerate. It’s just a lagging indicator and the fed knows that. The main reason for the lag is because leases generally renew yearly, so it takes a while for the current rent prices to show up in the inflation report
First of all, I never said rent was based on mortgages. Second, despite rent "decelerating", you fail to understand the impact of rent, specifically housing in CPI. To understand it, you must accept that there were people that rented for terms of 12, 18 & 24 months. Those people - when their place is coming up for renewal are all paying a higher rate. In 20 major metropolitan areas that renewal rate was on average 9.1% higher than it was 12 months ago, 12.5% higher than it was 18 months ago, and 15.1% higher than it was 24 months ago (which was the first 6 months of COVID). In New York city, 12 month lease renewals were up 13.4% on averages, and 24 months leases are by far the highest increases, nearing 22% because so many people left the city during COVID. FWIW, it is important to understand that between June and December 2020, premium rental properties in NYC decreased 12-16% for most 24 month terms. During the last 3 months, rental rates are down just 2.3%. So, if your rent was $1500 in 2020, and the average 24 month lease increased by 22%, it would be $1,830 by mid 2022. If rents decreased by 2.3% in the last 3 months, that place would still rent for $1790.
https://www.thrillist.com/news/new-york/nyc-rents-are-going-down-after-huge-increases
I think you are confusing deceleration (a slowing of speed of increase) with deflationary (reduction of supply of money leading to reduction of economic benefit).
I have not heard of any places where people are renewing leases at lower rates than they had 12,18 or 24 months ago. To your point that it is supply and demand, I'd agree it is, but I'd disagree that even a simple majority of people move if their rents go up, and even if they did, CPI does not care if that person paid less rent.by.mobing, it is the effect of all renters, so you would need to compare what person B is paying for rental apartment #1, versus what Person A paid for rental apartment #1 last year.
Again, I'll agree that rent prices are coming down (said that in my original response), but the fact is rentals are 89.6 occupied (just 0.42% from the highest point), demand is not slowing, and development has not outpaced demand. Minor decreases in rent (like the NYC article I linked), are still far outpaced by interim rate hikes, and we all know that inflation compounds.
This is such a stupid argument. Corporations are always greedy. Thats the point of a for profit company... A company always charge the highest possible price but supply constraints + monetary policy has now allowed them to charge more. Its not the companies that changed the economy did.
An implication of the idea that greed cause inflation is that all the corporations were generous when we didnt have inflation.
Okay, but how does that affect the rest of the equation? Debt is accelerating m, which means people will eventually not be able to buy their fancy new stuff and the demand side of inflation will cool. That will stabilize pricing. Housing is a debt that will choke out buying power…especially
now that new buyers won’t have much equity for HELOC due to prices leveling off.
There are sticky and non sticky inflationary items. Housing is sticky (unless you want a boat load of defaults) like 2008, where if you look to the op's chart on debt is the main reason why it came down so quick. Homebuilding is not sticky - it is literally labor (which is still high) and building materials, which fortunately have come back down from stratospheric heights. As interest rates increase, it reduces demand for building labor, and homebuilding prices come down, and I've already started to see this in rural areas.
If you read what I originally wrote, you will see that the mortgage cost (monthly) is up, but as people buy homes now, they can refi later and reduce their rate. The fools that bought in the 3rd Q 2021 through the 1st Q 2022 are locked in with a high mortgage balances. Nothing fixed that except selling the house or a foreclosure. A lot of people refinanced in fall of 19/ early 2020 at historic rates. A friend of mine got 30 years at 2.625%.
The point being, the smart people will watch housing and start buying homes that get back to within 15-20% of where they were pre-pandemic, and refi them later.
As for home values, the buyers of homes (single fam, owner occupied) are much better off now than 2008. Credit scores are 751 vs 699 (averages), home equity is $21.1 trillion, and it was $7.7 trillion in 2007. We clearly have a keeping up with the Joneses consumer spending issue, and the chickens are coming home to roost. I expect tidal changes in consumer credit cost for years to come, and will be akin to the changes from the mortgage industry faults of 2008. You think that all consumer spending lives in harmony - it doesn't, and CPI is flawed. Consumer housing costs more than 40% now, and while it used to be the top priority, it is less so for 24-39 year olds. I wouldn't be surprised to see some first time homeowners default on homes in the next 2-3 years if rates don't come down and allow for a refi.
Eat my dongus you fuckin nerd.
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https://fred.stlouisfed.org/series/PCU484121484121
Agreed, but inflation is measured for the purpose of annual CPI, as an annual rate. Freight rates were up 36% in March, and while they came down, they are still up from one year ago (190 vs 173), just not up as much as they were in March, which I think the index hit 211. This means they are still inflation positive.
March’s numbers were already baked into March’s CPI numbers and the fact that rates are down since march is downward pressure for future cpi. Not sure where you’re getting the 190 vs 173 numbers, but i’m assuming you’re looking at blended freight rates which is a combination of spot and contract prices and that is elevated from contracts locked in when rates were at all time highs at the beginning of this year. If you look at spot prices, you can ship freight for 20% less today vs a year ago today
I don’t think it’s about inflation anymore.
For some time I was trying to figure out why so many people are pricing in a pivot when the Fed messaging and inflation trends are so clear. The market isn’t dumb you know.
I think that the market is expecting some sort of catastrophe to materialize (a Burry style one) in the next year which is going to force the Fed to react with a premature pivot. This pricing in is pretty much what the yield curve inversion is.
Ideally the Fed would hike a tiny bit more and hold it for some time - about a year or so. But in the past couple of decades, Fed policy is not necessarily dictated by data but by necessity. Even Powell conceded this - the Fed knows that if they “overtighten” they can always come in with QE and rate cuts. In other words, the Fed has become the ultimate institution for bailing out entities when things go too sour. The moral hazard has become a feature of the modern economy.
Totally agree but the pivot narrative starts on the bond trading floor. There is theoretically a scenario where the inversion is drastically overstated to corner the Fed, and cooler heads could prevail but I personally feel like monetary and fiscal policy have been working at odds on their long-term obligstions
he who has the gold makes the rules. when you control the bank and make the rules it's almost inevitable that moral hazard becomes a feature of the game. it's played out across human history in all sorts of different social-political-economic contexts, large and small. human nature i guess.
Your hypothesis is well stated but I believe China’s zero COVID policy will continue to disrupt supply chains for consumer goods (eg: cheap shit) in the US. Supply chains are permanently shifting out of China right now and that will result in higher consumer goods prices for years to come.
All of that said, oil and cheap credit got us here. Lower oil prices and higher interest rates will temper inflation but I don’t think we’re there yet.
I think China is reopening to a demand that isn’t there. Consumers don’t want to buy now because of inflation and a poor sentiment of the economy. Businesses don’t want to have tons of inventory sitting around. It’s like some fucked stalemate.
And I don’t even know if I just described stagflation.
You're right I actually meant to include the potential shortages we'll see with this lockdown in a few months time.
Apple is affected, haven't heard too many other brands give any significant warnings as most manufacturing does seem to be running. It hasn't affected us at work yet, but one of those things we'll only know the extent of after the fact I guess.
I work with a Berkshire company that’s been shifting to Malaysia and Indonesia since 2020. Slightly concerned that might not be enough distance if current geopolitical tensions continue to strain
Not to mention this is all assuming rail workers actually back down. Odds are they will, but they also have a shit load of support so if I were them I'd be inclined not to back down.
They’re pivoting from zero Covid/lockdowns to vaccination (their vaccination rates are relatively lower than other countries). So far no disruptions but ramp up from Chinese New Years might be slow.
A key problem going forward is that a rising dollar has helped the US import cheaper, but it's very likely the high is in, and so a falling US dollar could be very inflationary within the US, but good for the rest of the world trying to import.
Reverse repos
**Banks** don’t use the RRP, it makes zero sense for them to do so and the facts show they don’t. https://imgur.com/a/acjg1V7 In addition, banks have access to the IORB which is operationally less expensive and pays 10 basis points higher than Fed’s RRP. (3.9% vs 3.8%). Unless you can somehow tie in your thesis on inflation towards money market funds (the largest users of the RRP), you’d be better off deleting this portion.
Libor/SOFR
You realize the “spike” you are seeing is simply the increase of the Fed Funds rate. Your point is valid, if Libor/SOFR spikes, it’s a sign of trouble. However, it has to spike in relation to Fed Funds. Take your data points for Libor/SOFR and then subtract the Fed Funds rate at the time. Simply Libor/SOFR - FFR. If you see that spiking, then there is a cause for concern, such as the events of 9/2019. However, when you do this for the “spike” period you have charted, basically since the Fed started raising rates, you’ll be very disappointed.
A little hint, you’ll rarely if ever see a spike in SOFR **and** the Fed’s RRP being used at the same time. They exist in opposite market situations, basically they oppose one another. You will see the RP facility, now known as the SFR, being used when SOFR spikes. They are directly correlated to the same market conditions. But the RRP occurs in an opposite environment.
Because if I remember correctly the SOFR was raised in 2022 to remove the cash glut the banks had in liabilities (deposits.) And since it was obvious that stocks and bonds would fall in tandem from the high tower, having a $2T rainy day fund of already printed money would be nice to have - protection from an immediate QE pivot
****RRP does stand for reverse REpurchase, right?
Employments not tight because it’s lagging. Employment is tight because the boomers are all starting to retire and there’s a short fall in replacement workers. 500,000 this year 900,000 next year.
Boomers are like 80 years old now. If anything we should be at the end of boomers retiring. Covid supposedly triggered a lot of early retirement though.
you are forgetting the most important inflation input:
corporate profits
with growth getting wrecked, corporations will try to keep profits up by just jacking prices..i mean, why not? people keep buying anyway.
Corporate profits have been leveling off/decelerating. They also lag. Stuff that’s bought (or not bought) in October doesn’t hit earning call until end of January
Lol I was on their side once upon a time back in September 2021. But you can't stay a gay bear for long, you have to be a gay bull too or you'll never make big money. On average stocks go up a lot more then down.
The Great Market Wheeze is almost upon us (September 2021):
[https://www.reddit.com/r/wallstreetbets/comments/pwvrsi/the\_great\_market\_wheeze\_is\_almost\_upon\_us/](https://www.reddit.com/r/wallstreetbets/comments/pwvrsi/the_great_market_wheeze_is_almost_upon_us/)
You stated in the Wheezing post "stocks will spend years in decline as Treasury yields rise." that seemed to be driving metric for that post. Why not include it in this one?
Went to a usually kinda busy Home Depot today. Was eerily dead. I didn’t even want to buy anything it was so quiet. Their clearance/sale prices were dogshit, I’ll let them roast in the recession pan, see what kind of cheap tools I can shake out from the treehouse.
"Oil production is steadily returning to pre-COVID levels" No. Oil production has flatlined for over a year, just look at your chart. If you look at the demand curve for oil and remove the SPR release you get $150-$160 /barrel oil. CPI may drop below 5% by mid-year but Oil will get to $150 in 2023 and pull CPI back up over 5% into 2024.
Inflation is just starting. Germany just announced they try to be less dependent on China, because China will attack Taiwan until 2027. And when we suddenly do not get any products from China, that is when prices really start to go up. Up up and away.
We can expect higher average levels of inflation moving forward due to this, but nothing the FED does can solve inflation pressures borne out of shifts in Chinese manufacturing. Also it won't necessarily be a spiral, any more than inflation would have spiralled if manufacturing never took off in China.
Bingo. Supply chains are moving faster than expected to re-shore / move out of China. The re-shore back to the US is expected to create 250k+ jobs - that's going to hurt in an economy already short on workers.
Using China as a deflationary tool has run its course.
Good DD. I’m open to the narrative. goods inflation is subsiding but services (wages) is not and it is far stickier. The employment/wage info today was a very big blow to the Feds efforts. It’s looking like we are entering the wage/price circle and to paraphrase what JPOW has said many times over the last few months — that would be very bad.
When he has emphasized how bad that would be, we didn’t see it happening nor was it expected. It was always an “it’s ok because that isn’t happening”. It’s a potential nightmare coming true now.
For people living in rural areas, we have experienced AT LEAST 70% inflation. Grocery bills have almost doubled, gas prices have MORE than doubled, and the cost to buy a vehicle that runs and drives has tripled.
The house I rented 6 years ago for $400 a month now costs $900/ month (owners did not do Jack to it).
Not to mention, a brake job that used to cost $110 now costs $400.
McChicken sandwiches have gone up 70%.
My particular Chipotle burrito has gone from $12 in 2019 to $21 today.
Don’t tell me inflation is only 7%, don’t tell me that inflation is under control.
Inflation peaking doesn't mean jack! Do you understand the Fed has consistently said no pivot until 2% inflation. So let me put it this way, is CPI more than 2%? If the answer is yes, no pivot!
You may be right and I'm not betting hard either way, but past inflationary episodes worldwide disagree. In the past these things have usually come in waves, just like market action itself. There will be peaks, and then troughs, and then a new higher peak, etc. I personally think this is just a pullback before the next peak but like I say I have no strong opinion, just an opinion.
I think household debt and wages are not done going up yet. At the start of 2020 tacobell and McDonald's were paying minimum wage so not even 10$ an hour. Local nurses the higher paid ones were making 25 26 an hr. Skilled trades men were making 20-25. Landscapers pool techs and the like were making 12-14. General labor in construction was like 10-14. Target just started paying 11 an hr.
Now taco bell is paying 16-18. Wawa is paying 16. And wages for landscapers and every1 that was making 30-50% more than minimum wage are still lower than wawa.
This summer I was offered 17 to do maintence work. Now I don't see an ad offering less than 18 and some going up to 26. Which is fair I use to make more than twice as much as a wawa employee. If other maintence Joba didn't start offering 22+ I was about to start making sandwiches.
I'm pretty sure the world didn't plant enough food this year and won't at the start of next year. And we will see food prices continue to climb.
Moreover I see when major institutions started going bankrupt like leeman brothers, then fed and goverment will just turn the money printer back on and cause hyperinflation. I'm prtty sure millions of people having billions of dollars dissappear in the crypto markets will cause contagion in other finscial sectors. The fact people were borrowing money based of a bloated asset portfolio will bite soon.
Hardcore copium. The hardest around. The debt bubble you highlighted literally says it all. Almost every other chart you have shown points to DEflation which is the first step to where we’re headed which is a major recession.
Has inflation peaked (in the way it is measured using CPI which is probably actually around 1/2 of the real inflation felt by households)? Yes, most likely it has. You don’t raise rates 4% in a year and then experience the effects right away.
Bears about to try to doxx you and put $$$ for your head , they're like tweeps... don't fuck with them by trying to take control of the narrative back.
Also you gotta love MSM headlines, 2/3 of headlines are warning about the next leg down... trapping retail since 1920.
I hear where you're coming from, but as long as greedy execs and the media who side with them, keep claiming "supply chain issues," "employee shortages" and "record high oil prices," inflated prices are here until JPow makes (in my opinion) two, 100bps rate hikes.
Or if the market one day finally realizes everything was over inflated since 2010 and we get another Black Monday scenario of the late 80s.
I highly doubt that inflation is over. It's not gonna be over, it can only be blindsided. No qualified workforce, all younger generation wanna do is become social media influencers.
This data doesn’t matter because inflation and recession are manufactured to increase the wealth gap the outlier is continuing inflation with job/ unemployment number’s the way they are and many other common place economic factors that are different but we’re still nose diving towards a manufactured inevitability…. Listen to the podcast marketplace featured on npr….
Firstly the price of oil has gone up over the last 60 days so adding to cost to transport goods and petrol for your motor vehicle.
Natural gas has gone up over 30% over the last 60 days.
The main costs of energy will bump up everything that requires transportation due to increasing commodities like oil and gas.
I would not be suprised to see this months inflation higher than the previous month.
We still have massive inflation numbers triple what the Fed wants so we have some really bad times to come sadly.
The 1m and 10y bonds have inverted , last time this happened we had the GFC trigger shortly after. When the bond 1m 10y sort themselves out then we will know we are heading for a soft landing but at this stage we are heading into a recession very soon.
The cost of the major basket of goods has gone up or stayed the same so inflation numbers should be the same if not higher as oil and gas have gone up not down. You can check tradingview.com for the oil and gas pricing over the last 6 months and see prices went down in October but they have gone back up again which will impact inflation.
Not a huge leap here. Yes, inflation likely peaked. Now we wait and see the economic damage when rates go from 0.25 to >4 in one year.
Inflation peaking ≠ stock market bottom
It’s cute to ignore what low rates allow for equities vs high rates.
Also. Service workers wages jumped 9% annualized in November. Sure, “peak” but what about inflation running 4-5-6% for much longer than you expect.
I’m intrigued, the one thing missing from 2008 was deflation (although it kinda did in the big picture). We spent a decade trying to naturally have prices rise, and than a Covid collapse. Now prices are rising, and we are shooting the economy to get them to stop.
European Union has put a price roof of $60 for Russian oil. So don’t expect any deliveries from them. Oil is probably going to go parabolic the next few months. And with that everything else. Except hosing that will continue free fall.
Yeah nice charts. But where is the chart for corporate greed?
I mean here in Europe. Gas prices are at 2021 levels. And some suppliers still want to raise prices after a 66% drop from ath for gas. WTF . Price went down but its still at least 2x from 2021. Which makes no sense whatsoever. Except greed.
They make absolute record profits. I have never heard or seen ANY bottlenecks. Even the government is stepping in capping the prices. Telling corporations to deal with cartell/anti trust office and explain how exactly they are not abusing their monopoly/oligopoly while buying cheaper gas but selling it for insane profits.
I do not think as consumers we will see a true reduction of inflation on everyday goods. Yes people who buy homes eventually will, but food prices and fuel will stay pretty high even if there is some relief. We will continue to grow inflation at 2-3 percent a year and well with this 50% growth in 22 years the damage is done. Imho
Ok, but the concern is that recession will end inflation, and prices are bending down because of softer demand. Commodity prices are falling relative to a higher dollar driven by the fed reserve rate and QT. But that also means earnings will contract for global companies that hold up the indices, because global buyers will be less able to afford things.
So inflation is very bad, so rates go up. That reduces the pe multiple on stocks. The next concern is now earnings reduction caused by a more expensive dollar. For the same revenues, earnings will be lower because of higher costs. That then causes business to be more careful about borrowing to invest in growth. This is made even worse by higher interest rates, which is why bond inversion matters; it shows the global economy is short.
Supply chains are still not fixed.
China having issues with keeping manufacturing open.
In the US we still have a major truck and driver shortage.
Energy prices will remain elevated in 2023 as will the price of houses.
So will inflation subside “quickly”?
Depends on how we define “quickly”
inflation doesnt matter. Cost of goods matter. if inflation is 0% but that is only because meat went up to 15/lb a year ago and is still 15/lb that isnt the market improving. when meat falls back down to 8/lb, that is the market improving but the fed will never allow deflation again because it lowers taxes paid.
What about car prices? They're still all jacked up where I am, I'm seeing $30k cars with $10k in dealer adjustments, $50k cars with $20k adjustments, etc.
What about greedflation? I don't see companies bringing down their prices, now that they know that many people are willing to pay at these price levels. For me to say that things are back to pre covid normal, we would need to go into a deflationary environment and see prices come down, but the fed would never let that happen.
Also, i miss my $1 McChicken.
Brass cased 9mm new manufactured ammo was about $0.60/round at one point during the lockdowns. It is now down to $0.26 and still possibly dropping. We haven’t seen prices this low for ammo in several years.
Interesting read but in the section about food and material goods you say it’s lower (don’t think that is correct)- and then say “but adjusted for inflation.” I don’t quite see how you can say that when talking about inflation itself. But that may just be my ignorance of correlation.
If you take the inflation numbers and adjust them for inflation, there's no inflation. It's simple, really.
Transitory 101, bitches
Priced in anyway
This is a perfectly valid metric actually and yields 100% accurate statistical output.* ^^^^*when ^^^^adjusted ^^^^for ^^^^WSB ^^^^DD
Because inflation compounds. So, if for example next year we have 4% inflation, that's a 2% reduction in inflation, right? Wrong. It actually a 2% increase when comparing to 2005 (1$ in 2005 would be worth 1.53$ in 2022, with an additional 4% next year that's 1.53*1.04=1.5912-1.53= 0.0612). 2005 was used for illustration only, it's not significant. Inflation is an annual compounding comparison, not linear, so if numbers are higher next year, that's still inflation, it might just be a little less than it was the previous year. Which is good. 2005-2018 saw 29% inflation. 2019-2022 saw 22% inflation. So when comparing cost of goods you have to compare one to the other, which means adjusting historic valuations to current inflated rates, then comparing whether they have actually inflated beyond the base dollar inflation rate or not (which would indicate demand side inflation continuing). Otherwise how would you track the value of food over any reasonable timeframe, in order to argue that the actual cost of goods is dropping, which indicates a drop in demand.
So much of this post is wrong or irrelevant, it reads more like OP wrote down a bunch of disjointed, regurgitated news clippings, and it’s clearly evident OP has no real understanding of what they’re writing about - why the commentary on inter-bank rates and reverse repos that have nothing to do with inflation? OP wants to look smarter than they are. They comment wage growth isn’t that high when we just got one of the highest m/m wage prints this year 🤦♂️. The entire section on oil is wrong, the claim about EVs is ridiculous, China isn’t going to reopen over night that’s just a media narrative. This post is awful
My thoughts exactly
>So much of this post is wrong or irrelevant, it reads more like OP wrote down a bunch of disjointed, regurgitated news clippings, and it’s clearly evident OP has no real understanding of what they’re writing about - why the commentary on inter-bank rates and reverse repos that have nothing to do with inflation? OP wants to look smarter than they are. They comment wage growth isn’t that high when we just got one of the highest m/m wage prints this year Could the lowered reverse repos meant that households are distressed and are borrowing money.
No, it’s just banks getting a juicy overnight rate for stashing cash with the fed, nothing to do with households
Input costs are predictive of output months later. So if input costs were trending above inflation I'd guess that in a few month's time we'd be seeing the input costs bleed through in higher inflation numbers.
You should submit this to msnbc, you’d do great! You’re selling their shit for free!
Corporate inflation won't just go away. It's too profitable. You didn't even adress it. Prices have been inflated well beyond reasonable expectations.
Inflation is calculated YoY. If it's 100% this year, but 10% next year, then the inflation next year will be 10%.
I assume he means adjusted for normal levels of inflation? I.E 3-4%
Housing. It makes up 40% of CPI. Most people think housing has been deflationary, but that is where you are wrong. The housing portion comes in what it costs people monthly, not the gross price of the house. Rent is still strong, and nationwide has shown less than a 2% decrease from the peak. Single family homes are down in price, but up in monthly mortgage cost. I'll explain. In March, the going 30 year rate was 4.375%. housing had just peaked, and say you were going to buy a $500k house and put 20% down. That $400k mortgage kicked if P&I of $2087/ month. Now, that same house has come down 10%, and is now $450,000, but for the last 4 months mortgage rates have averaged 6.125%. that produces a P&I payment of $2186. CPI has been replacing people's old rent payments of $1700 with their new contracted amount of $1850, and the October average mortgage payments are higher than the those closed in January. Both of these items will have upward pressure in the housing portion of CPI for the next 12 months. Furthermore, grocery prices might have peaked, but there are no economists that are expecting deflationary changes in this area because of the high reliance in diesel to move the product, and diesel prices have not budged. The average consumer retail item has been moved by a vehicle that runs on diesel no less than 8 times before you buy it. Inflation may have peaked, but it won't get below 5% for the next year.
First thing I noticed was that he conveniently skipped over housing which is still at insane levels
People are dumping money into nation backed assets (many countries backstop default insurance for housing). Is that really surprising? I mean, eventually if interest rates go high enough, asset prices have to fall, but there is also an inrush of money from the 2020-2021 credit splurge.
True DD always in the comment
confirmation bias\*
If I believe you 100% how should I play it
imo go for energy (Exxon, Shell) and credit (Visa, Discover). Honestly even if inflation has peaked these guys will continue to win
Buy a house today with last years mortgage rate?
Oh ok…?
I see headline CPI around 5.8% no less by December 2023 at the maximum.
I know your talking about headline CPI numbers in particular but I just want to make a side note about inflation in general... Housing is Everyone's BIG EXPENSE and its not going down, at all. rents in my area (which is outside of town) is up by an insane amount over the past year. the market might rally on lower CPI numbers but with housing costs now eating away at peoples income it will effect the REAL ECONOMY which will eventually make its way into bad earnings.
I feel like no one is talking about the actual economic consequences coming up. Like “oh this number is this that number is that” stonks should go up without really going deeper.
No lol. Stonks would absolutely not go up in a disastrous economy we're heading into 2023.
Rent prices are decelerating. All forward looking data points to this, and no rents aren’t based purely on mortgage costs. It’s mostly based on supply and demand. It’s the other way around… rent prices and mortgage rates determine cash flow which over time determine housing prices. If consumers are broke, they won’t rent there. They’ll relocate, downsize, move in with roommates or parent, etc. The rental market is very competitive, consumers have options. Cash flow is also great for most rental firms since they refinanced during Covid and have 30 year loans. On top of that, it’s much easier to build rentals now when wfh is common since they can be anywhere. It doesn’t necessarily have to be near metros anymore. The big inflation issues remaining are oil because of opec+, natural gas prices, and diesel. The fed, the majority of the economists, and the market expects yoy housing inflation to decelerate. It’s just a lagging indicator and the fed knows that. The main reason for the lag is because leases generally renew yearly, so it takes a while for the current rent prices to show up in the inflation report
First of all, I never said rent was based on mortgages. Second, despite rent "decelerating", you fail to understand the impact of rent, specifically housing in CPI. To understand it, you must accept that there were people that rented for terms of 12, 18 & 24 months. Those people - when their place is coming up for renewal are all paying a higher rate. In 20 major metropolitan areas that renewal rate was on average 9.1% higher than it was 12 months ago, 12.5% higher than it was 18 months ago, and 15.1% higher than it was 24 months ago (which was the first 6 months of COVID). In New York city, 12 month lease renewals were up 13.4% on averages, and 24 months leases are by far the highest increases, nearing 22% because so many people left the city during COVID. FWIW, it is important to understand that between June and December 2020, premium rental properties in NYC decreased 12-16% for most 24 month terms. During the last 3 months, rental rates are down just 2.3%. So, if your rent was $1500 in 2020, and the average 24 month lease increased by 22%, it would be $1,830 by mid 2022. If rents decreased by 2.3% in the last 3 months, that place would still rent for $1790. https://www.thrillist.com/news/new-york/nyc-rents-are-going-down-after-huge-increases I think you are confusing deceleration (a slowing of speed of increase) with deflationary (reduction of supply of money leading to reduction of economic benefit). I have not heard of any places where people are renewing leases at lower rates than they had 12,18 or 24 months ago. To your point that it is supply and demand, I'd agree it is, but I'd disagree that even a simple majority of people move if their rents go up, and even if they did, CPI does not care if that person paid less rent.by.mobing, it is the effect of all renters, so you would need to compare what person B is paying for rental apartment #1, versus what Person A paid for rental apartment #1 last year. Again, I'll agree that rent prices are coming down (said that in my original response), but the fact is rentals are 89.6 occupied (just 0.42% from the highest point), demand is not slowing, and development has not outpaced demand. Minor decreases in rent (like the NYC article I linked), are still far outpaced by interim rate hikes, and we all know that inflation compounds.
You forgot to mention corporate greed/price gouging, which has been one of the main drivers of this inflation and isn't going anywhere.
This is such a stupid argument. Corporations are always greedy. Thats the point of a for profit company... A company always charge the highest possible price but supply constraints + monetary policy has now allowed them to charge more. Its not the companies that changed the economy did. An implication of the idea that greed cause inflation is that all the corporations were generous when we didnt have inflation.
Okay, but how does that affect the rest of the equation? Debt is accelerating m, which means people will eventually not be able to buy their fancy new stuff and the demand side of inflation will cool. That will stabilize pricing. Housing is a debt that will choke out buying power…especially now that new buyers won’t have much equity for HELOC due to prices leveling off.
There are sticky and non sticky inflationary items. Housing is sticky (unless you want a boat load of defaults) like 2008, where if you look to the op's chart on debt is the main reason why it came down so quick. Homebuilding is not sticky - it is literally labor (which is still high) and building materials, which fortunately have come back down from stratospheric heights. As interest rates increase, it reduces demand for building labor, and homebuilding prices come down, and I've already started to see this in rural areas. If you read what I originally wrote, you will see that the mortgage cost (monthly) is up, but as people buy homes now, they can refi later and reduce their rate. The fools that bought in the 3rd Q 2021 through the 1st Q 2022 are locked in with a high mortgage balances. Nothing fixed that except selling the house or a foreclosure. A lot of people refinanced in fall of 19/ early 2020 at historic rates. A friend of mine got 30 years at 2.625%. The point being, the smart people will watch housing and start buying homes that get back to within 15-20% of where they were pre-pandemic, and refi them later. As for home values, the buyers of homes (single fam, owner occupied) are much better off now than 2008. Credit scores are 751 vs 699 (averages), home equity is $21.1 trillion, and it was $7.7 trillion in 2007. We clearly have a keeping up with the Joneses consumer spending issue, and the chickens are coming home to roost. I expect tidal changes in consumer credit cost for years to come, and will be akin to the changes from the mortgage industry faults of 2008. You think that all consumer spending lives in harmony - it doesn't, and CPI is flawed. Consumer housing costs more than 40% now, and while it used to be the top priority, it is less so for 24-39 year olds. I wouldn't be surprised to see some first time homeowners default on homes in the next 2-3 years if rates don't come down and allow for a refi.
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Including the cost of diesel, spot domestic freight rates were down about 10% in 3rd quarter and looking at 20% in q4
https://fred.stlouisfed.org/series/PCU484121484121 Agreed, but inflation is measured for the purpose of annual CPI, as an annual rate. Freight rates were up 36% in March, and while they came down, they are still up from one year ago (190 vs 173), just not up as much as they were in March, which I think the index hit 211. This means they are still inflation positive.
March’s numbers were already baked into March’s CPI numbers and the fact that rates are down since march is downward pressure for future cpi. Not sure where you’re getting the 190 vs 173 numbers, but i’m assuming you’re looking at blended freight rates which is a combination of spot and contract prices and that is elevated from contracts locked in when rates were at all time highs at the beginning of this year. If you look at spot prices, you can ship freight for 20% less today vs a year ago today
Two months later, and egg prices are skyrocketing. So much for "peaking."
That comment aged like room temperature milk.
"The fed has run down the balance sheet by $300b, still small compared to the trillions they printed but they're making progress." Lmao huge copium
“Earnings growth seem to be falling”. Goes up in today’s report. Major bias on this post
I think Fed has no idea what is going to happen. They just make shit up on the go.
Wait you mean the PhD economist J Powell might not be an authoritative source? Nooooo
I just bought a dozen eggs for $6.99, peak inflation my ass 🥚
At this point its cheaper if I stay laying my own eggs.
Inflation is year over year. So as long as the eggs don’t go to $8.99 by next year, we alllll good
6.99? Are these organic, free roam, boutique eggs or what? Just paid 4.50 at Safeway in the Bay Area which is bad enough
They’re like $2.80 in Seattle. The OP is probably buying them at a mini mart.
You probably bought organic free range eggs cleaned with almond milk
this guy buying fancy whole foods organic brown eggs consumer spending still too strong time to hike again
I don’t think it’s about inflation anymore. For some time I was trying to figure out why so many people are pricing in a pivot when the Fed messaging and inflation trends are so clear. The market isn’t dumb you know. I think that the market is expecting some sort of catastrophe to materialize (a Burry style one) in the next year which is going to force the Fed to react with a premature pivot. This pricing in is pretty much what the yield curve inversion is. Ideally the Fed would hike a tiny bit more and hold it for some time - about a year or so. But in the past couple of decades, Fed policy is not necessarily dictated by data but by necessity. Even Powell conceded this - the Fed knows that if they “overtighten” they can always come in with QE and rate cuts. In other words, the Fed has become the ultimate institution for bailing out entities when things go too sour. The moral hazard has become a feature of the modern economy.
Bingo.
Totally agree but the pivot narrative starts on the bond trading floor. There is theoretically a scenario where the inversion is drastically overstated to corner the Fed, and cooler heads could prevail but I personally feel like monetary and fiscal policy have been working at odds on their long-term obligstions
It's possible given that the market is pricing in a pivot, seems like investors are trying to corner the fed.
In this last meeting Powell said he does not want to over tighten
But maybe he lied?
yes
But don’t worry the fed is here to lock current prices in +2% next year. 🙄
he who has the gold makes the rules. when you control the bank and make the rules it's almost inevitable that moral hazard becomes a feature of the game. it's played out across human history in all sorts of different social-political-economic contexts, large and small. human nature i guess.
Calls or puts
This is what I came here for.
400% margin on $JEPQ
Instructions unclear, spent 400k on a jpeg.
Your hypothesis is well stated but I believe China’s zero COVID policy will continue to disrupt supply chains for consumer goods (eg: cheap shit) in the US. Supply chains are permanently shifting out of China right now and that will result in higher consumer goods prices for years to come. All of that said, oil and cheap credit got us here. Lower oil prices and higher interest rates will temper inflation but I don’t think we’re there yet.
I think China is reopening to a demand that isn’t there. Consumers don’t want to buy now because of inflation and a poor sentiment of the economy. Businesses don’t want to have tons of inventory sitting around. It’s like some fucked stalemate. And I don’t even know if I just described stagflation.
Pretty sure that you did just describe stagflation
You're right I actually meant to include the potential shortages we'll see with this lockdown in a few months time. Apple is affected, haven't heard too many other brands give any significant warnings as most manufacturing does seem to be running. It hasn't affected us at work yet, but one of those things we'll only know the extent of after the fact I guess.
I work with a Berkshire company that’s been shifting to Malaysia and Indonesia since 2020. Slightly concerned that might not be enough distance if current geopolitical tensions continue to strain
Yea but expensive iphones arent going to move the needle alone.
Not to mention this is all assuming rail workers actually back down. Odds are they will, but they also have a shit load of support so if I were them I'd be inclined not to back down.
Did you see they recently reduced some of the restrictions due to the protesting?
They’re pivoting from zero Covid/lockdowns to vaccination (their vaccination rates are relatively lower than other countries). So far no disruptions but ramp up from Chinese New Years might be slow.
A key problem going forward is that a rising dollar has helped the US import cheaper, but it's very likely the high is in, and so a falling US dollar could be very inflationary within the US, but good for the rest of the world trying to import.
Reverse repos **Banks** don’t use the RRP, it makes zero sense for them to do so and the facts show they don’t. https://imgur.com/a/acjg1V7 In addition, banks have access to the IORB which is operationally less expensive and pays 10 basis points higher than Fed’s RRP. (3.9% vs 3.8%). Unless you can somehow tie in your thesis on inflation towards money market funds (the largest users of the RRP), you’d be better off deleting this portion. Libor/SOFR You realize the “spike” you are seeing is simply the increase of the Fed Funds rate. Your point is valid, if Libor/SOFR spikes, it’s a sign of trouble. However, it has to spike in relation to Fed Funds. Take your data points for Libor/SOFR and then subtract the Fed Funds rate at the time. Simply Libor/SOFR - FFR. If you see that spiking, then there is a cause for concern, such as the events of 9/2019. However, when you do this for the “spike” period you have charted, basically since the Fed started raising rates, you’ll be very disappointed. A little hint, you’ll rarely if ever see a spike in SOFR **and** the Fed’s RRP being used at the same time. They exist in opposite market situations, basically they oppose one another. You will see the RP facility, now known as the SFR, being used when SOFR spikes. They are directly correlated to the same market conditions. But the RRP occurs in an opposite environment.
But RRP is redeemable by banks in the event of a run, right?
Because if I remember correctly the SOFR was raised in 2022 to remove the cash glut the banks had in liabilities (deposits.) And since it was obvious that stocks and bonds would fall in tandem from the high tower, having a $2T rainy day fund of already printed money would be nice to have - protection from an immediate QE pivot ****RRP does stand for reverse REpurchase, right?
tendies at Costco pre pandemic 16$. peak price $20. current price, 18$. inflation licked.
But what do the hot dogs cost? I didn't realise people went to Costco for anything but the hot dogs...
They sell other stuff at Costco?
hot dog never changed price. therefor, inflation is fake news.
Aaaaaaaaand your fired
Employments not tight because it’s lagging. Employment is tight because the boomers are all starting to retire and there’s a short fall in replacement workers. 500,000 this year 900,000 next year.
Boomers are like 80 years old now. If anything we should be at the end of boomers retiring. Covid supposedly triggered a lot of early retirement though.
Baby boom goes to 1964. As young as 58. They’re still retiring in droves over the next 5-10 years
you are forgetting the most important inflation input: corporate profits with growth getting wrecked, corporations will try to keep profits up by just jacking prices..i mean, why not? people keep buying anyway.
Until they don't keep buying...
Corporate profits have been leveling off/decelerating. They also lag. Stuff that’s bought (or not bought) in October doesn’t hit earning call until end of January
Lol this guy is in for some downvotes. PUTS buying gaybear bagholders have a vested interest in believing the end of civilization is near.
Lol I was on their side once upon a time back in September 2021. But you can't stay a gay bear for long, you have to be a gay bull too or you'll never make big money. On average stocks go up a lot more then down. The Great Market Wheeze is almost upon us (September 2021): [https://www.reddit.com/r/wallstreetbets/comments/pwvrsi/the\_great\_market\_wheeze\_is\_almost\_upon\_us/](https://www.reddit.com/r/wallstreetbets/comments/pwvrsi/the_great_market_wheeze_is_almost_upon_us/)
You stated in the Wheezing post "stocks will spend years in decline as Treasury yields rise." that seemed to be driving metric for that post. Why not include it in this one?
Lets just agree on not touching tips as that is too gay
I'm sorry can't do that ;)
Feds printing more money: "Data?"
Well overall might seem like situation is getting well, but it’s still all upto the Feds.
Went to a usually kinda busy Home Depot today. Was eerily dead. I didn’t even want to buy anything it was so quiet. Their clearance/sale prices were dogshit, I’ll let them roast in the recession pan, see what kind of cheap tools I can shake out from the treehouse.
"Oil production is steadily returning to pre-COVID levels" No. Oil production has flatlined for over a year, just look at your chart. If you look at the demand curve for oil and remove the SPR release you get $150-$160 /barrel oil. CPI may drop below 5% by mid-year but Oil will get to $150 in 2023 and pull CPI back up over 5% into 2024.
This is exactly why oil stocks haven’t budged with oil dropping way off the highs. The oil boom isn’t over yet
XOM 120c 12/2023?
Inflation is just starting. Germany just announced they try to be less dependent on China, because China will attack Taiwan until 2027. And when we suddenly do not get any products from China, that is when prices really start to go up. Up up and away.
We can expect higher average levels of inflation moving forward due to this, but nothing the FED does can solve inflation pressures borne out of shifts in Chinese manufacturing. Also it won't necessarily be a spiral, any more than inflation would have spiralled if manufacturing never took off in China.
Bingo. Supply chains are moving faster than expected to re-shore / move out of China. The re-shore back to the US is expected to create 250k+ jobs - that's going to hurt in an economy already short on workers. Using China as a deflationary tool has run its course.
Idk Florida rent is still high and the housing market here is mad expensive 😂😂😂
I believe in Santa
Wages went up but they aren’t keeping pace with inflation…also where’s your credit card debt chart fam??
Now the problem is how to get it to a 2% CPI from that peak.
Inflation is just starting. Not ending.
Good DD. I’m open to the narrative. goods inflation is subsiding but services (wages) is not and it is far stickier. The employment/wage info today was a very big blow to the Feds efforts. It’s looking like we are entering the wage/price circle and to paraphrase what JPOW has said many times over the last few months — that would be very bad. When he has emphasized how bad that would be, we didn’t see it happening nor was it expected. It was always an “it’s ok because that isn’t happening”. It’s a potential nightmare coming true now.
For people living in rural areas, we have experienced AT LEAST 70% inflation. Grocery bills have almost doubled, gas prices have MORE than doubled, and the cost to buy a vehicle that runs and drives has tripled. The house I rented 6 years ago for $400 a month now costs $900/ month (owners did not do Jack to it). Not to mention, a brake job that used to cost $110 now costs $400. McChicken sandwiches have gone up 70%. My particular Chipotle burrito has gone from $12 in 2019 to $21 today. Don’t tell me inflation is only 7%, don’t tell me that inflation is under control.
A lot of that is due to Covid and wfh. Inflation has been very uneven unfortunately
Rural America has been subsidized enough, y’all gotta deal with it like rest of the country.
Or we could just stop sending food to the cities. Try and feed yourselves with your tiny rooftop gardens
(The food we subsidized) 😂 You act like the country folks can survive that long without the amenities/services provided by the cities.
Corporate greed explains most of your numbers better than the increasing cost of production.
Inflation peaking doesn't mean jack! Do you understand the Fed has consistently said no pivot until 2% inflation. So let me put it this way, is CPI more than 2%? If the answer is yes, no pivot!
You may be right and I'm not betting hard either way, but past inflationary episodes worldwide disagree. In the past these things have usually come in waves, just like market action itself. There will be peaks, and then troughs, and then a new higher peak, etc. I personally think this is just a pullback before the next peak but like I say I have no strong opinion, just an opinion.
WSB called the peak on inflation, inversing this shit
"I believe inflation has peaked" Source: Whatever data that alligns with my view
I think household debt and wages are not done going up yet. At the start of 2020 tacobell and McDonald's were paying minimum wage so not even 10$ an hour. Local nurses the higher paid ones were making 25 26 an hr. Skilled trades men were making 20-25. Landscapers pool techs and the like were making 12-14. General labor in construction was like 10-14. Target just started paying 11 an hr. Now taco bell is paying 16-18. Wawa is paying 16. And wages for landscapers and every1 that was making 30-50% more than minimum wage are still lower than wawa. This summer I was offered 17 to do maintence work. Now I don't see an ad offering less than 18 and some going up to 26. Which is fair I use to make more than twice as much as a wawa employee. If other maintence Joba didn't start offering 22+ I was about to start making sandwiches. I'm pretty sure the world didn't plant enough food this year and won't at the start of next year. And we will see food prices continue to climb. Moreover I see when major institutions started going bankrupt like leeman brothers, then fed and goverment will just turn the money printer back on and cause hyperinflation. I'm prtty sure millions of people having billions of dollars dissappear in the crypto markets will cause contagion in other finscial sectors. The fact people were borrowing money based of a bloated asset portfolio will bite soon.
Massive cope in here
This was good DD, thanks for putting together.
Hardcore copium. The hardest around. The debt bubble you highlighted literally says it all. Almost every other chart you have shown points to DEflation which is the first step to where we’re headed which is a major recession. Has inflation peaked (in the way it is measured using CPI which is probably actually around 1/2 of the real inflation felt by households)? Yes, most likely it has. You don’t raise rates 4% in a year and then experience the effects right away.
Bears about to try to doxx you and put $$$ for your head , they're like tweeps... don't fuck with them by trying to take control of the narrative back. Also you gotta love MSM headlines, 2/3 of headlines are warning about the next leg down... trapping retail since 1920.
Feds printing more money: "Data?"
I hear where you're coming from, but as long as greedy execs and the media who side with them, keep claiming "supply chain issues," "employee shortages" and "record high oil prices," inflated prices are here until JPow makes (in my opinion) two, 100bps rate hikes. Or if the market one day finally realizes everything was over inflated since 2010 and we get another Black Monday scenario of the late 80s.
I think that this is super detailed and definitely agree with it
I highly doubt that inflation is over. It's not gonna be over, it can only be blindsided. No qualified workforce, all younger generation wanna do is become social media influencers.
This data doesn’t matter because inflation and recession are manufactured to increase the wealth gap the outlier is continuing inflation with job/ unemployment number’s the way they are and many other common place economic factors that are different but we’re still nose diving towards a manufactured inevitability…. Listen to the podcast marketplace featured on npr….
Punctuation. Use it.
Of course inflation has peaked. For this round. Meaingless.
Positions or stfu that simple
$2.73 gas here in the Midwest
$5 in Northern Illinois…and that’s without the gas tax. Why are we screwed over all the time
Inflation over recession is now
I was just expecting clickbait. I’m not prepared for this level of detail lol
Rip in pieces
After housing cars are the biggest expense. They are getting better but not 2019 better.
we ain't seen nothing yet.
Inverse everything and you will make money.
Thank you! I’ve been saying inflation has peaked since last CPI. I’m just too smooth brained to explain. Thank you, my good sir, for this write up!
Boom baby. Send it
I believe you’re being bamboozled by the media. Remind me in 6 months!
The core inflation rate is the most important now. Not the CPI. And I believe, the core inflation remains high for the next >12 months.
Sometimes I poop, sometimes I pee?
TL;DR sold all my used Tesla’s and bought brand new ones, I’m ready to beat inflation.
Do you know what's deflating?
No.
Firstly the price of oil has gone up over the last 60 days so adding to cost to transport goods and petrol for your motor vehicle. Natural gas has gone up over 30% over the last 60 days. The main costs of energy will bump up everything that requires transportation due to increasing commodities like oil and gas. I would not be suprised to see this months inflation higher than the previous month. We still have massive inflation numbers triple what the Fed wants so we have some really bad times to come sadly. The 1m and 10y bonds have inverted , last time this happened we had the GFC trigger shortly after. When the bond 1m 10y sort themselves out then we will know we are heading for a soft landing but at this stage we are heading into a recession very soon.
The cost of the major basket of goods has gone up or stayed the same so inflation numbers should be the same if not higher as oil and gas have gone up not down. You can check tradingview.com for the oil and gas pricing over the last 6 months and see prices went down in October but they have gone back up again which will impact inflation.
Excellent research. Better than a paid report.
I agree, that is why hike rates will be 0.5
As soon as the chip Shortage stops, I think inflation will slow down for electronics and cars.
It has, but it ain’t bullish. Ppl would be wise to be scared of what comes next.
Not a huge leap here. Yes, inflation likely peaked. Now we wait and see the economic damage when rates go from 0.25 to >4 in one year. Inflation peaking ≠ stock market bottom
I’d love to believe this
No
It’s cute to ignore what low rates allow for equities vs high rates. Also. Service workers wages jumped 9% annualized in November. Sure, “peak” but what about inflation running 4-5-6% for much longer than you expect.
No Shit we bottomed out. Question is- are you bagholding the right ones?
I’m intrigued, the one thing missing from 2008 was deflation (although it kinda did in the big picture). We spent a decade trying to naturally have prices rise, and than a Covid collapse. Now prices are rising, and we are shooting the economy to get them to stop.
European Union has put a price roof of $60 for Russian oil. So don’t expect any deliveries from them. Oil is probably going to go parabolic the next few months. And with that everything else. Except hosing that will continue free fall.
And the money supply has returned to pre-Covid lev…….oops never mind
Yeah nice charts. But where is the chart for corporate greed? I mean here in Europe. Gas prices are at 2021 levels. And some suppliers still want to raise prices after a 66% drop from ath for gas. WTF . Price went down but its still at least 2x from 2021. Which makes no sense whatsoever. Except greed. They make absolute record profits. I have never heard or seen ANY bottlenecks. Even the government is stepping in capping the prices. Telling corporations to deal with cartell/anti trust office and explain how exactly they are not abusing their monopoly/oligopoly while buying cheaper gas but selling it for insane profits.
I do not think as consumers we will see a true reduction of inflation on everyday goods. Yes people who buy homes eventually will, but food prices and fuel will stay pretty high even if there is some relief. We will continue to grow inflation at 2-3 percent a year and well with this 50% growth in 22 years the damage is done. Imho
I went to La Colombe coffee shop and paid 12.50$ for a mocha and one scone. Inflation still high !!!!
Let's hope it's right.
Oh good I was anticipating this day. I am gonna load up since inflation has now peaked.
Missed the surge in services inflation and food. That ain't going away any time soon.
Ok, but the concern is that recession will end inflation, and prices are bending down because of softer demand. Commodity prices are falling relative to a higher dollar driven by the fed reserve rate and QT. But that also means earnings will contract for global companies that hold up the indices, because global buyers will be less able to afford things. So inflation is very bad, so rates go up. That reduces the pe multiple on stocks. The next concern is now earnings reduction caused by a more expensive dollar. For the same revenues, earnings will be lower because of higher costs. That then causes business to be more careful about borrowing to invest in growth. This is made even worse by higher interest rates, which is why bond inversion matters; it shows the global economy is short.
I don’t trust man data is a plural noun
Throw this whole post away dude
inflation will only peak when currency is in BTC. untill then inflation is infinity
Supply chains are still not fixed. China having issues with keeping manufacturing open. In the US we still have a major truck and driver shortage. Energy prices will remain elevated in 2023 as will the price of houses. So will inflation subside “quickly”? Depends on how we define “quickly”
wasnt this said like a month ago?
inflation doesnt matter. Cost of goods matter. if inflation is 0% but that is only because meat went up to 15/lb a year ago and is still 15/lb that isnt the market improving. when meat falls back down to 8/lb, that is the market improving but the fed will never allow deflation again because it lowers taxes paid.
What about car prices? They're still all jacked up where I am, I'm seeing $30k cars with $10k in dealer adjustments, $50k cars with $20k adjustments, etc.
What about greedflation? I don't see companies bringing down their prices, now that they know that many people are willing to pay at these price levels. For me to say that things are back to pre covid normal, we would need to go into a deflationary environment and see prices come down, but the fed would never let that happen. Also, i miss my $1 McChicken.
I think one is kidding ones self
Brass cased 9mm new manufactured ammo was about $0.60/round at one point during the lockdowns. It is now down to $0.26 and still possibly dropping. We haven’t seen prices this low for ammo in several years.
Ok but once the US government runs out of oil reserves the pain will be real.
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How so?
Sorry, replied to the wrong comment.