As Inflation Fades and Incoming Data Disappoint The Fed Appears Intransigent
The headline CPI reading of no price inflation (0.0%) in October surprised the financial markets (but not us). It caused a bond market rally as yields (especially on the long end) fell. Then the PPI (Producer Price Index) showed up with a negative number for October (-0.5%), and this is generally a harbinger of what […]
GDP Growth Will Slow – Likely to Turn Negative
The economic story of the week was the “hot” 4.9% GDP print. The chart shows this in relationship to the recent past, with the dotted line showing the long-run 1.8% growth rate of the economy. The 4.9% is an annualized number, so the actual growth from Q2 was just under 1.5%, and the year/tear growth […]
Rates Spike, Sentiment Softens – Real Inflation Already at Target
Is a Recession Imminent? The relentless upward spike in interest rates continued this past week despite Fedspeak implying that the Fed will continue to be in “pause” mode, at least at the November 1st meeting. Rates on 10-Year Treasury Notes closed on Friday (October 20) at 4.91%. During the trading day, the 10-Year almost pierced […]
Inflation War
The Inflation War Has Been Won Time to Start Fighting the Recession Several weeks ago, we described the effectiveness of monetary policy on the economy if it acted with a 12 month lag. The San Francisco Regional Federal Reserve Bank recently published research showing the lag to be 11 months. The Fed has also indicated […]
As Signs of Recession Mount, the Fed Reiterates its Hawkish Path (Even Volcker Relented as the Recession Approached!)
The chart shows the continued downtrend in same store sales and, while the Seasonally Adjusted (SA) rise in April’s Retail Sales of +0.4% over the March number was cheered by the financial media, the Not Seasonally Adjusted (NSA) data showed a -2.4% fall vs. March and was the worst showing for any April in the […]
March Inflation: In Like a Lion; Out Like a Lamb
The CPI came out on Wednesday – it only rose +0.1% in March – that’s down from +0.4% in February and +0.5% in January. On a Y/Y basis, it fell from +6.0% in February and +6.4% in January to +5.0% (see table). CPI actually rose only +0.053% to the 3rd decimal (about half as much […]