The Fed in la-la land
The November CPI was up 2.7% over its year ago level, and unemployment is still low at 4.2%. The Fed is widely expected to announce a further quarter point cut after its upcoming meeting.
The parts of this picture patently don’t fit together. Not to mention that CPI was above the Fed’s own baseless target that is itself was above the price stability the Fed is charged with while the labor market remained tight when it announced cuts after the last two meetings.
Meanwhile the stock market is once again in bubble territory and the bond market has been hiking rates while the Fed has been cutting. Either the Fed is wrong or the bond market is wrong, and it isn’t the bond market. The only thing it’s doing right is continuing to trim its balance sheet if at an inadequate pace.
Maybe it will surprise us and at least stand pat on Fed funds. But betting on the Fed to do the right thing has been the wrong thing at least since this time last year. After vowing not to, it caved prematurely and goods and services price inflation has bottomed above its own inflated target and headed higher. The only thing poised to stop it is if this third financial bubble it has inflated in as many decades implodes. If this is the best it can do, the Fed should be stripped of its powers to manipulate interest rates if not disbanded.
Mega’s Dispatch from England.
Thanks for the FED update, here how things are here.
On going financial repression in that the banks charge 6% rates for Home loans while giving LESS than inflation rates to savers………..& that’s based on “their” inflation rates……Bastards!
As for the British economy bad is turning to worst.
Like a plane the economy has reached stall speed, zero or near zero growth. no matter what money they throw at it …..it fails. Blessed with the most “Green” (Most expensive) energy on the planet & no longer being a member of the ECCP, sorry EU, Blighty is now in freefall.
Our beloved, “Dear leader” is in the middle east right now trying to get “Investment”. Given that 88% of the Worlds people live in developing nations & thus are a golden investment opportu realty. Why the F**k would you invest in some Green leftish shit hole where the bulk of the population are or are about to retire?
We have few natural resources, oil/gas almost gone. Yes its windy but we no way to store the power for when it is not. I can almost see the meeting, “Invest in Blighty so they don’t need to buy our hydro carbons………….or invest in any number of nations who dont give a f**k about “Greta”.
Not a hard choice
As if we needed any more evidence the Fed is on the wrong track, this morning PPI came in at 3.0% YOY.
This might not be a bad time to recall that high official “inflation” data, counterintuitively, tend to be bearish for gold prices. This is on the potential they spur the Fed to tighter policy. This Fed would have to be dragged kicking and screaming into getting serious about inflation, but even a marginal move in that direction would have an impact on asset prices.
Possibly due to anticipation of tighter – no make that less looser – policy, we’re seeing a bit of deflation in asset markets this week in response to hotter goods and services price data. Today for example US stocks, XS stocks, US bonds, copper, gold, silver, and platinum are all down in dollar terms. This is another way of saying dollars are up in terms of just about everything else. The only major exception is oil, which is up, meaning the increase in oil is real.
Of course this is a short term observation and doesn’t imply anything substantial about the broader trend. Still, it bears watching because its continuation is about the only thing that would justify Fed easing.
THIS HAS NEVER HAPPENED IN LIVING MEMORY !
https://www.youtube.com/watch?v=hPGdrWeBb1g
Good news?
https://x.com/Megatron_ron/status/1868739697981477137?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Etweet
Gold sat on its ass
Canada might soon be free!
I just hope that “Woke” nonsense gets washed from history
Mike
I don’t know what’s going on with Canada, but lack of knowledge has never stopped me from commenting before. Does Freeland really think Trump wants to destroy their economy? I doubt he really wants to impose tariffs, let alone 25%. My impression is what he wants most from Canada and Mexico is a little help with the borders. Even 10% tariffs would surprise me. Remember this is the Art of the Deal guy, not to mention the one that spearheaded the USMCA.