from CNBC Television
What Did the Last Four Years Teach Us about Managing Inflation?
Central banks around the world have faced years of extraordinary circumstances, including the COVID-related crash of the global economy, a spike in interest rates, and an ensuing runup in interest rates. William English, Eugene F. Williams, Jr. Professor of the Practice and a former economist at the Federal Reserve, discusses the lessons learned and what still stands in the way of a soft landing.
by William B. English
Yale Insights
Q: There’s tremendous attention on inflation these days. But the Federal Reserve and other central banks have been dealing with extraordinary circumstances for more than four years. Would you walk us through the challenges, the responses, and what we have learned, starting with the shutdown from the COVID pandemic?
While “unprecedented” is a term that can be overused, when the pandemic hit in 2020, it was an unprecedented shock. It had been 100 years since we’d had a global pandemic. And, of course, we now have a much bigger, much more complicated, much more integrated global economy, which was abruptly shut down.
It was very hard for policymakers to understand what was happening and to judge what was the right thing to do. Central banks did basically everything in their power to help get their economies going again. They have three monetary policy levers: interest rates, balance sheets, and guidance. They used them all to respond powerfully and quickly.
What to Expect From Friday’s Closely Watched Report On Inflation
The PCE Index is the Fed’s Preferred Gauge of Inflation as it Considers Rate Cuts
by Diccon Hyatt
Investopedia
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The Fed’s preferred gauge of inflation likely stayed stubbornly high in March, though the details of Friday’s official report could complicate the picture.
The cost of living measured by the Bureau of Economic Analysis’s Personal Consumption Expenditures (PCE) index is expected to have increased 2.6% over the 12 months ending in March, according to a survey of forecasters by Dow Jones Newswires and The Wall Street Journal.1 That would be an acceleration from the 2.5% annual rate reported in February, and still above the 2% rate officials at the Federal Reserve target when they set the nation’s monetary policy.
Economists also expect core inflation, which excludes volatile prices for food and energy, to have declined to 2.7% from 2.8% in February. That’s a key measure for anyone concerned with interest rates.
Inflation is Challenging Small and Mid-Cap Stocks
by Josh Lipton
Yahoo! Finance, Canada
Markets have been undergoing a correction as major market indexes struggle and have seen consecutive daily losses as of late. BofA Securities Senior US Equity Strategist and Head of US Small/Mid-Cap Strategy Jill Carey Hall joins Market Domination to discuss the market outlook.
Hall acknowledges that a correction was looming: “It had been a while since markets had seen any significant pullback.” She notes that the ongoing earnings season would have investors scrutinizing company outlooks amid higher inflation, geopolitical risks, and uncertainty attributed to expectations around the Federal Reserve’s monetary policy.
Throughout 2024 so far, Hall highlights that markets have seen “inflation data that surprised to the upside,” which has led to Fed rate cut expectations being pushed out further into the year. She cautions that this could affect the performance of small-cap stocks, boosting refinancing risks in the sector.
Breitbart Business Digest: Earth Day is Over. Let’s Talk About Inflation Day.
by John Carney
Breitbart.com
Earth Day’s Disreputable History
Forget about Earth Day. We need an Inflation Day.
Earth Day got its start back in 1970 as a campus protest movement. The date of April 22 was selected because it came after Spring Break but far enough ahead of final exams that students and college faculties could be encouraged to participate.
The first Earth Day was organized by a young man named Denis Hayes at the behest of Sen. Gaylord Nelson (D-WI), the former governor of Wisconsin who had defeated the Republican incumbent Alexander Wiley in the 1962 midterm election that saw Democrats pick up four Senate seats and keep control of the Senate. Nelson served three terms before being ousted in the 1980 election by a then-Congressman named Bob Kasten.
Gold is ‘Good Money’ as a Hedge Against Inflation and Default Risks, Says Billionaire Investor Ray Dalio
by Neils Christensen
Kitco
(Kitco News) – Billionaire investor Ray Dalio has had a mixed relationship with the U.S. dollar over the last few years, and it appears he is once again raising doubts about the health of the greenback.
In a commentary posted to LinkedIn on Thursday, the former Bridgewater Associates CEO said he is holding gold as a hedge against a potential debt crisis and higher inflation.
The comments come as the U.S. government’s burgeoning debt comes into greater focus. The U.S. national debt has surpassed $34.5 trillion. However, this is not just a United States-based threat.
During its annual spring meeting in Washington, D.C., the International Monetary Fund said in its Fiscal Monitor that China and the U.S. will drive global public debt over the next five years.
How Inflation Impacts Cash, Stock Markets, Investments and a Possible Housing Market Crash with John Grace
from Kerry Lutz's Financial Survival Network
Kerry and John Grace discussed the changing role of utilities in the context of electric vehicles and artificial intelligence trends. The speakers emphasized the need for increased stations and the limitations of solar and wind power. They also explored the potential of battery power to stabilize the grid and address the challenges faced by millennial first-time homebuyers. The conversation provided insights into the changing landscape of utilities and real estate, shedding light on the implications for both industries in the current market. John and Kerry also discussed the significance of consumer age in shaping buying and selling behavior, drawing attention to the historical trends in home purchasing and the age at which individuals typically make significant property investments. The speakers highlighted the impact of life expectancy on housing market dynamics, emphasizing the need for forward-looking asset management strategies. The discussion also delved into the challenges of selling a property that has doubled in price, with considerations for relocation and the financial implications. Overall, the conversation emphasized the importance of being prepared for market fluctuations and making strategic decisions to safeguard assets.
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US Bond Bulls Lean Into Latest Selloff Despite Inflation Scare
by Reuters
Kitco
NEW YORK, April 22 (Reuters) – A sharp selloff in U.S. bonds so far in April is prompting some investors to consider allocating more funds to the asset class to lock in higher yields ahead of interest rate cuts by the Federal Reserve, a prospect that remains investors’ base case despite U.S. economic resilience.
Treasury yields, which move inversely to prices, have soared in recent weeks, opens new tab after a string of solid economic data and three consecutive monthly inflation prints showing a rebound in price pressures pushed out expectations of when the Fed would start cutting rates. The benchmark 10-year yield has approached 5% – a level last touched in October for the first time in 16 years.
Minneapolis Fed Pres: Biden Spending On Chips, Infrastructure ‘is Inflationary’ and There Are ‘Cross-Purposes’
by Ian Hanchett
Breitbart.com
On Thursday’s broadcast of the Fox News Channel’s “Your World,” Minneapolis Federal Reserve Bank President Neel Kashkari stated that stimulus spending was “a contributor to the high inflation that we’ve seen.” And “the spending on infrastructure, the spending on new chip plants, all of that, on a margin, is inflationary.” Kashkari further stated that while it’s not clear if that spending impacts inflation at the national level, “we are a little bit at cross-purposes” with government spending.
Kashkari said, [relevant remarks begin around 2:35] “Well, the data is going to guide us, we’ve been surprised — in a concerning way — about the first three months’ inflation data this year. The second half of last year, we saw a lot of progress as inflation fell back towards our target.
S&P 500 Heads for Worst Month Since 2022 as Bond Yields Jump On Inflation Fears
‘We got a rise in commodity prices, which is problematic for the Fed,’ says Bob Elliott, CIO of Unlimited Funds
by Christine Idzelis
Market Watch
The S&P 500 is on pace for its biggest monthly drop since December 2022, with April’s pullback erasing about half the gains the U.S. stock market had booked this year by the end of March. The index has slumped 5.5% this month through Friday, lowering its climb in 2024 to 4.1%.
Still, the S&P 500 is just 5.5% from its record closing peak on March 28. Equities investors got it right this year that economic growth remained strong in the U.S., but the problem now is that the view is already priced into stocks — and that yields in bond market were left to catch up, according to Bob Elliott, chief executive officer and chief investment officer of Unlimited Funds.
Fed’s Preferred Inflation Gauge is Set to Back Rate-Cut Patience
by Molly Smith and Craig Stirling
BNN Bloomberg
(Bloomberg) — Federal Reserve officials are about to get further confirmation that progress against inflation has stalled, supporting what appears to be a shift in tone to keep interest rates higher for longer than previously anticipated.
Policymakers’ preferred inflation gauge — the personal consumption expenditures price index — probably stayed elevated in March, according to data due in the coming week.
The measure is seen accelerating slightly to 2.6% on an annual basis as energy costs rise. The core metric, which strips out energy and food, is expected to rise 0.3% from the prior month after a similar gain in February.
Why Haven’t We Whipped Inflation Yet?
by Alexander William Salter
The American Institute for Economic Research
Despite extraordinary monetary tightening by the Federal Reserve, inflation remains elevated above its 2 percent target. Even more worrying, inflation accelerated during the first quarter. The Consumer Price Index (CPI) rose at an annualized rate of 4.5 percent over the last three months. The figures for Personal Consumption Expenditures Price Index (PCEPI) are similar through February, with March data set to release later this month. It looked like we had inflation whipped as recently as December. Now it looks like price stability is slipping away.
Many commentators (including myself) were worried monetary policy had become too restrictive as inflation eased. Others worry the Fed is missing the signs of an inflation resurgence, just as they misdiagnosed inflation beginning in 2021 as “transitory.” Clearly there is room for reasonable disagreement. But there’s still a puzzle here: by conventional measures, money looks tight. It’s not clear what needs to happen next to get disinflation back on track.