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2021 - Is inflation finally back in the conversation?

Reagan1k

By Reagan1k
in Business and Markets

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Bateshorn
Bateshorn

The only thing more predictable than the GOP running up huge deficits on tax cuts and military spending, is each one suddenly becoming horrified by deficit spending 5 mins after a Democrat is sworn in

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bernorange

bernorange 8385

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Quote

... the New York Federal Reserve reported better-than-expected activity within its region's manufacturing sector.

Wednesday, the regional central bank said its latest Empire State manufacturing survey's general business conditions index rose to -5.8, up from January's reading of -32.9. The data significantly beat expectations, as economists were looking for a reading of -18.2.
...

https://www.kitco.com/news/2023-02-15/Gold-prices-trading-near-session-lows-below-1-850-after-New-York-Fed-Survey-rises-to-5-8.html

Quote

The National Association of Home Builders’ (NAHB) monthly confidence index rose 7 points to 42 in February, the trade group said on Wednesday.

This is the second month in a row that sentiment has improved among builders.

The jump in confidence in February was more than what analysts had expected. Economists polled by The Wall Street Journal expected the index to rise to 37.

The February reading of 42 was the strongest since September 2022, the NAHB said.

The last time builder sentiment rose by this magnitude was in June 2013.
...
What are they saying? “The NAHB Home Sales Index showed further signs of stabilization in February as mortgage rates came down further during the month,” Eugenio J. Alemán, chief economist at Raymond James, wrote in a note.

“However, this situation may be reversed in the coming months as we expect mortgage rates to increase once again due to the Fed’s active interest rate campaign,” he added.
...

https://www.marketwatch.com/story/u-s-builder-confidence-rises-for-second-consecutive-month-to-highest-level-since-september-2022-60e70553

Fed going to keep foot on the brake longer than most folk expect.

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Mullet Free

Mullet Free 39

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On 2/14/2023 at 9:39 AM, bernorange said:

Markets hoping for a Fed pivot coming to the realization that a pivot aint happening any time soon.

 

42 minutes ago, bernorange said:

https://www.kitco.com/news/2023-02-15/Gold-prices-trading-near-session-lows-below-1-850-after-New-York-Fed-Survey-rises-to-5-8.html

https://www.marketwatch.com/story/u-s-builder-confidence-rises-for-second-consecutive-month-to-highest-level-since-september-2022-60e70553

Fed going to keep foot on the brake longer than most folk expect.

Brainard leaving Fed is likely another signal to that effect. Dove clashed with hawkish Powell?

 

https://www.cnbc.com/2023/02/14/brainard-bernstein-tapped-for-top-white-house-economic-posts-as-biden-shakes-up-team.html

 

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Storm the Field

Storm the Field 5367

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Atlanta Fed GDPNow up to 2.4% for Q1 in latest reading.

Goldman just cut their estimated probability of a recession in the next 12 months from 35% to 25%. 

IMO, starting to seem less far-fetched that we might see what some are calling the "no landing" scenario where inflation proves sticky and FED has to raise rates higher and keep them there for longer, but unemployment remains low and GDP growth remains positive, at least for the next 4 quarters. 

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Cheeseweasel

Cheeseweasel 26442

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49 minutes ago, Gravy Train said:

So... wages are surely the last domino to follow, now that we've cemented a new price for everything, right?! 🤡

I'm a firm believer that in order for wages to increase, we actually have to be producing something. Since our economy is now a storefront for China, wages won't directly increase as prices increase as they should. 

Fuck you Jeff Bezos.

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HamsterHookah

HamsterHookah 112

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I'm starting to think that we are a nation of consumers now who will literally not stop buying things until we are all broke and in the ditches of the muddy streets. And even then we will have a smart cell phone with cash app.

Sane, rational policies to try and get people to stop buying crap is not going to work in 2023, I guess is the fear.

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bernorange

bernorange 8385

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There is a governor for consumer spending (consumer debt) and it is shortening the chain:

https://www.cnbc.com/2023/02/16/consumer-debt-hits-record-16point9-trillion-as-delinquencies-rise-as-well.html

Probability that Fed increases next rate hike going up...

https://finance.yahoo.com/news/feds-mester-saw-compelling-case-for-050-rate-hike-this-month-135749680.html

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Mullet Free

Mullet Free 39

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Some other data points that point to rates staying higher for longer. 

 

November 22nd, 2021 Powell reappointed

https://www.npr.org/2021/11/22/1052741845/biden-reappoints-jerome-powell-as-federal-reserve

 

November 20th, 2021 Powell drops transitory

https://www.reuters.com/article/usa-fed-instant/feds-powell-floats-dropping-transitory-label-for-inflation-idUSKBN2IF1S0

 

This seems to have been his play for a while. Get the job security then he's emboldened to do whatever it takes to break the inflation.

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UTGrad98

UTGrad98 2343

Posted
Posted
2 hours ago, HamsterHookah said:

I'm starting to think that we are a nation of consumers now who will literally not stop buying things until we are all broke and in the ditches of the muddy streets. And even then we will have a smart cell phone with cash app.

Sane, rational policies to try and get people to stop buying crap is not going to work in 2023, I guess is the fear.

Holy shit does this not hit the nail on the head. 

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HamsterHookah

HamsterHookah 112

Posted
Posted
On 2/16/2023 at 12:43 PM, bernorange said:

There is a governor for consumer spending (consumer debt) and it is shortening the chain:

https://www.cnbc.com/2023/02/16/consumer-debt-hits-record-16point9-trillion-as-delinquencies-rise-as-well.html

Probability that Fed increases next rate hike going up...

https://finance.yahoo.com/news/feds-mester-saw-compelling-case-for-050-rate-hike-this-month-135749680.html

Americans racked a record amount of debt last year — and a growing number are missing repayments. Total household debt hit $16.9 trillion in the fourth quarter, up $1.3 trillion year-on-year, according to data from the New York Federal Reserve. Mortgage balances climbed to $11.9 trillion, up about $1 trillion from 2021, while credit card balances grew 15% to $986 billion. Delinquencies rose across all debt categories, with younger borrowers struggling especially wit

https://finance.yahoo.com/news/troubling-signs-emerge-as-credit-card-debt-hits-record-high-160607906.html

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Captainant

Captainant 28574

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15 hours ago, HamsterHookah said:

Americans racked a record amount of debt last year — and a growing number are missing repayments. Total household debt hit $16.9 trillion in the fourth quarter, up $1.3 trillion year-on-year, according to data from the New York Federal Reserve. Mortgage balances climbed to $11.9 trillion, up about $1 trillion from 2021, while credit card balances grew 15% to $986 billion. Delinquencies rose across all debt categories, with younger borrowers struggling especially wit

https://finance.yahoo.com/news/troubling-signs-emerge-as-credit-card-debt-hits-record-high-160607906.html

That's generally what happens when costs spike and wages don't increase at the same rate, yes. 

13 hours ago, StassneyHorn said:

I am going to love being Gen Z’s landlord. Keep that credit card debt up ya jabronis

Just be sure to buy up as many single family properties as you can to ensure that gen Z will have no option but to rent

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52-80

52-80 19377

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On 2/14/2023 at 2:33 PM, Neonmoon said:

CPI 6.4% v forecast 6.2% 

Core was 5.6% v forecast 5.5% 

still hot hot 

 

On 2/15/2023 at 7:27 PM, Fudge Nuggets said:

All-time record according the surly braintrust.

So its only higher than expectation, and is 3x above target rate. 
 

You sure showed them, big buddy!!

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StassneyHorn

StassneyHorn 6780

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Been doing my part to help inflation this weekend..

Had the people at Kroger redo my checkout after not honoring the buy 1 get 1 free hot Italian links earlier in the week. Kroger routinely does shit like this, as well as charge 10, 20, 39 extra cents on tortillas and other products. Walgreens is second worst and they get sued all the time for bait and switch. I am their nightmare.

Refused my tab at a bar after charging 50 cents more than list price on Montucky. Manager came and apologized profusely like a bitch. Did this all because I’m a hero of the working class and care about poor guys in this thread.

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NotActuallyALonghorn

NotActuallyALonghorn 5005

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On 2/16/2023 at 12:22 PM, HamsterHookah said:

I'm starting to think that we are a nation of consumers now who will literally not stop buying things until we are all broke and in the ditches of the muddy streets. And even then we will have a smart cell phone with cash app.

Sane, rational policies to try and get people to stop buying crap is not going to work in 2023, I guess is the fear.

It's almost like a decade of artificially boosted markets got us even more addicted to consume consume consume with no rational basis.

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Hornbeliever

Hornbeliever 742

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12 hours ago, StassneyHorn said:

Been doing my part to help inflation this weekend..

Had the people at Kroger redo my checkout after not honoring the buy 1 get 1 free hot Italian links earlier in the week. Kroger routinely does shit like this, as well as charge 10, 20, 39 extra cents on tortillas and other products. Walgreens is second worst and they get sued all the time for bait and switch. I am their nightmare.

Refused my tab at a bar after charging 50 cents more than list price on Montucky. Manager came and apologized profusely like a bitch. Did this all because I’m a hero of the working class and care about poor guys in this thread.

 

 

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washparkhorn

washparkhorn 9974

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Gibson’s Paradox says hold my beer.

The Quantity Theory of Money predicts that there should be a positive correlation between the general price level and the supply of money, but a negative correlation between the general price level and the real interest rate.
 

However, Gibson's Paradox refers to the historical observation of a positive correlation between interest rates and prices (i.e. a rise in interest rates creates inflation), which is contrary to the negative correlation predicted by the Quantity Theory of Money. 

The Fed is hoping the paradox is transitory. 

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Parliament

Parliament 14600

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12 hours ago, washparkhorn said:

Gibson’s Paradox says hold my beer.

The Quantity Theory of Money predicts that there should be a positive correlation between the general price level and the supply of money, but a negative correlation between the general price level and the real interest rate.
 

However, Gibson's Paradox refers to the historical observation of a positive correlation between interest rates and prices (i.e. a rise in interest rates creates inflation), which is contrary to the negative correlation predicted by the Quantity Theory of Money. 

The Fed is hoping the paradox is transitory. 

Basically we're dividing by zero and gonna tear the space-time continuum into pieces.  Good times!

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Mullet Free

Mullet Free 39

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I didn't see any details of her proposal, but it's being put out there.

 

 

3-4 is the new 2

 

On 2/18/2023 at 10:38 PM, NotActuallyALonghorn said:

It's almost like a decade of artificially boosted markets got us even more addicted to consume consume consume with no rational basis.

For sure. People are going to have trouble dialing back.

Also, inflation generally causes people to raise their time preference. Shorter term thinking, which is less beneficial than long term thinking.

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Cheeseweasel

Cheeseweasel 26442

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Posted (edited)
1 hour ago, Mullet Free said:

I didn't see any details of her proposal, but it's being put out there.

I don't disagree with the thought, but it seems like a bit of a self-fulfilling cyclical prophecy. 

Inflation goes up, wages go up, which cases inflation, which raises wages, which causes inflation...

 

Edited by Cheeseweasel
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