INFLATION

Discussion in 'West Mall' started by Chop, Nov 30, 2021.

  1. Monahorns

    Monahorns 5,000+ Posts

    I wouldn't say hero at this point. But I saw a graph yesterday showing rate hike curves for last 50 years. This one which Powell is leading has a much higher slope than even Volker in the 80s. Hat tip to him.
     
    • Agree Agree x 1
  2. Chop

    Chop 10,000+ Posts

    Powell has done well once he got started, he just got started too late.

    Energy remains the wildcard.
     
  3. Chop

    Chop 10,000+ Posts

    Looks like somebody is not happy at all with the Fed's rate hikes:

    [​IMG]
    "The big picture: Sanders said he also believes the Federal Reserve's interest rates increases have hurt the economy and have not helped curb soaring inflation.

    • "I think they're hurting the situation," Sanders said of the Fed's actions. "I think it is wrong to be saying that the way we're going to deal with inflation is by lowering wages and increasing unemployment. That is not what we should be doing."
    • "Inflation right now is an international problem. In Germany, it is 10%. U.K. it is 10%. Canada it is 10%. Inflation, globally, is caused by the pandemic and the break in supply chains. It is caused by, in my view, the war in Ukraine, obviously," he said.
    • "And it is also caused by incredible corporate greed. And I hope everybody understands that when you go to the gas tank — you fill up your car today — the oil companies are making huge profits, the food companies are making huge profits," he added. "We have to deal with that issue.""
     
    • Funny Funny x 1
  4. Monahorns

    Monahorns 5,000+ Posts

    • Like Like x 1
  5. Sangre Naranjada

    Sangre Naranjada 10,000+ Posts

    The ******* government makes more profit off a gallon of gas than oil companies do.
     
  6. bystander

    bystander 10,000+ Posts


    He doesn't like it because he knows we can't justify higher minimum wage, reparations, benefits for illegal aliens and an expansion of the welfare state in general.
     
    • Agree Agree x 3
  7. mchammer

    mchammer 10,000+ Posts

    Last edited: Dec 23, 2022
  8. mchammer

    mchammer 10,000+ Posts

  9. Chop

    Chop 10,000+ Posts

    We’re still at around 7.1%.
    Not going up and up anymore,
    Decreasing a bit month by month since June 2022.
    But not going down by much.
    Not too terrible.
    But still too high, and not at all good.
    The battle continues.
    Look for more 0.5% hikes by the Fed.
    It may not be over for quite a while.
     
    Last edited: Dec 24, 2022
  10. Chop

    Chop 10,000+ Posts

    Cue politicians to prepare the public to get used to “the new normal.”
     
    • poop poop x 1
  11. Chop

    Chop 10,000+ Posts

    A real potential for a recession is looming.
    Most likely not a long or deep one.
     
  12. mchammer

    mchammer 10,000+ Posts

    This is year over year. In the last 3 months, inflation has been 4+% on an annualized basis. The YoY is going to drop sharply in the next 6 months due to favorable comps from Dec 2021 - May 2022.
     
  13. Chop

    Chop 10,000+ Posts

    It peaked in June.
     
  14. Chop

    Chop 10,000+ Posts

    Fed will most likely keep raising rates by 0.5%.

    Then maybe lower rate increases will follow.

    Any energy market disruptions could throw a wrench in the wheels.
     
  15. mchammer

    mchammer 10,000+ Posts

    I am not aware of any item going up in price. Actually I am seeing deflation: crude oil, Nat gas, gasoline, chemical prices, housing, meat prices, lumber, etc.
     
  16. mchammer

    mchammer 10,000+ Posts

    Meat prices have fallen substantially. Prime ribeye is $14 at Costco and beef tenderloin is $23/lb. Lamb chops were $8 per lb.
     
  17. mchammer

    mchammer 10,000+ Posts

    Most are predicting 0.25% rates. At most 0.5% at next meeting and then 0.25% or none thereafter.
     
  18. mchammer

    mchammer 10,000+ Posts

    According to this, either 3x0.25% or 0.5+0.25% for all of 2023:

    The Fed's key benchmark borrowing rate is projected to rise another three-quarters of a percentage point in 2023, hitting a 17-year high of 5-5.25 percent from its current 4.25-4.5 percent level, according to the Fed's median projection from December.
     
    Last edited: Dec 24, 2022
  19. Chop

    Chop 10,000+ Posts

    Yeah, but how much is the mint jelly to go with the lamb chops?
     
    • Funny Funny x 1
  20. Chop

    Chop 10,000+ Posts

    Of course it’s possible that will be enough to lick inflation, but it may very well take more.
     
  21. mchammer

    mchammer 10,000+ Posts

    Once the fed rate is above the inflation rate, there is nothing more to do. At that point, your money in the bank is making real money for you over inflation.
     
  22. Chop

    Chop 10,000+ Posts

    It sure is. But we don’t know if the 0.25% rate increases you mentioned will cause that cross-over. Or when such cross-over might happen.
     
  23. mchammer

    mchammer 10,000+ Posts

    The crossover is expected to occur in February. The issue is inflation in Fall, 2023. Will it be 2-3% or 3-4%?
     
  24. Chop

    Chop 10,000+ Posts

    That would be nice, and I hope it happens on that sort of timetable, but I’m not counting my chickens just yet…
     
  25. mchammer

    mchammer 10,000+ Posts

    If you look at inflation since Oct 2021, you will note inflation jumped sharply between Dec 2021 and May, 2022. The YoY crossover is baked in.
     
  26. mchammer

    mchammer 10,000+ Posts

    The issue is if the tail inflation is above 3%, which means a delay in the Fed cutting rates in 2024. It’s not about hiking any more (beyond the next 0.5-0.75% increase in 2023).
     
  27. Mr. Deez

    Mr. Deez Beer Prophet

    The inflation problem will go away when the Fed decides to make it go away. Remember, it is a choice.
     
    • Agree Agree x 1
  28. Monahorns

    Monahorns 5,000+ Posts

    It is also the Federal government's choice. The spending bills they sign are just as responsible.
     
    • Agree Agree x 2
  29. Mr. Deez

    Mr. Deez Beer Prophet

    Well, they go together. One of the reasons the Fed has been allowing for inflation is to account for the ridiculous spending bills. They have to monetize all the debt be government has been racking up for the last several years.
     
    • Agree Agree x 1
  30. mchammer

    mchammer 10,000+ Posts

    4th months now of housing DEFLATION. Yet, on a YoY basis, house prices are up 8%. It’s all about the comps. Food and housing inflation are now gone. Only thing left is labor inflation and that will moderate soon. Labor inflation is why there will likely be an inflation tail into late 2023 of 3-4% assuming no significant recession.

    US Home Prices Tumbled For 4th Straight Month In October | ZeroHedge
     

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