from Bloomberg Television
Buy the Same Stuff, but Spend More Dollars
by Jay Davidson
American Thinker
My bank’s bond portfolio is generating a greater yield than loans are. That is rare. A 525-basis-point increase in the federal funds rate in less than one year is very rare, too.
The Fed Reserve drove short rates up dramatically and inverted the yield curve. Fed fund (short) rates are higher than the index for loan pricing — namely, five- and ten-year treasury rates. Monetary Policy is crushing net interest income for banks. That strangles lending activity, which depresses new capital for business expansion.
Further, the Fed’s actions crushed business activity in a number of ways. It created uncertainty in the market. Investors and businesses are not buying or selling, so there is no lending. Velocity is zero.
Fed dabbling in MMT (Modern Monetary Theory: Q.E., or printing money) is devastating our private economy and condemning our children to massive debt.
Services PPI & Core PPI YoY Were Pushed Down by Extreme Base Effect That’ll Flip Next Month for Rest of 2024
by Wolf Richter
Wolf Street
Whiplash-causing month-to-month services PPI fell in July after hot readings in prior months. Core goods PPI is well-behaved.
The sharp deceleration on a year-over-year basis of the core Producer Price Index and the services PPI in July was a one-time shot, caused by the services PPI of July 2023 (+9.9%), the highest month-to-month reading in over two years, to fall out of the 12-month figure and be replaced by July 2024 (-1.9%), lowest month-to-month reading since March 2023.
It won’t repeat the rest of the year because all the remaining month-to-month figures that will fall out of the average over the next five months were low to negative. And the base effect that was such a tailwind in July will flip to a headwind in August and going forward.
U.S. Consumer Medium-Term Inflation Expectations Drop
by Reuters
Reuters.com
Aug 12 (Reuters) – U.S. consumers’ medium-term inflation expectations eased substantially in July even as their near- and longer-term outlooks for price pressures held steady, although households are increasingly worried about staying current on their debt, a Federal Reserve Bank of New York report showed on Monday.
The median three-year inflation expectation dropped to 2.3% from 2.9% in June to register its lowest reading since the New York Fed launched the monthly Survey of Consumer Expectations in 2013. The one-year and five-year outlooks held steady at 3.0% and 2.8%, respectively.
Fed officials – who’ve been battling high inflation for more than two years – track a range of measures of inflation expectations because they worry that if they begin to drift substantially upward, consumers and businesses will alter their spending behaviors in ways that can make inflation harder to tame.
Small U.S. Inflation Pickup Won’t Derail a Fed Rate Cut in September
by Molly Smith and Craig Stirling
Yahoo! Finance
The consumer price index on Wednesday is expected to have risen 0.2% from June for both the headline figure and the so-called core gauge that excludes food and energy. While each would be an acceleration from June, the annual metrics should continue to rise at some of the slowest paces seen since early 2021.
The recent easing of price pressures has bolstered Fed officials’ confidence that they can start to lower borrowing costs while refocusing their attention on the labor market, which is showing greater signs of slowing.
Nolte: Poll – 59% Believe America is in a Recession
by John Nolte
Breitbart.com
Thanks to brutal inflation and equally brutal interest rates brought on by brutally stupid Biden-Harris economic policies, 59 percent of Americans believe this country is in a recession.
And thanks to the fact that there is a Democrat in the White House, CNBC is working very hard to tell that 59 percent they are wrong.
“The U.S. economy has remained remarkably strong even amid persistent inflation and high interest rates,” writes CNBC. “And yet, 59% of Americans falsely believe that the U.S. is currently in a recession, according to a recent survey of 2,000 adults[.]”
“Citing higher costs and difficulty making ends meet, most respondents said they think a recession started roughly 15 months ago,” the report continues, “ and could last until July 2025[.]”
60 Percent of Voters Want Kamala Harris to Abandon Bidenonomics
A new survey suggests that neither Harris nor Donald Trump have won over a majority of voters with their respective economic visions.
by Joe Lancaster
Reason.com
A new survey suggests that neither former President Donald Trump nor Vice President Kamala Harris has won over a majority of voters with their economic proposals. The results also suggest that most voters wish Harris would throw out her boss’s policies altogether.
An August poll by the Financial Times and the University of Michigan’s Ross School of Business gauged 1,001 registered voters’ feelings about the top two presidential candidates and their respective handling of the economy in the next term. Of the respondents, 45 percent identified as or “leaned” Democrat, while 41 percent identified as or “leaned” Republican.
The Financial Times led its coverage by noting that Harris had notched a noticeable improvement over President Joe Biden.
Gold Gains as Traders Mull Geopolitics, Await U.S. Inflation Data
by Yvonne Yue Li and Jack Wittels
BNN Bloomberg
(Bloomberg) — Gold rose, closing in on a record again as traders assessed geopolitical developments while awaiting key U.S. economic data due later this week that may help determine the Federal Reserve’s interest-rate path.
Bullion was up by as much as 1.6% to $2,471 an ounce, in touching distance of last month’s all-time high of $2,483.73. Traders continued to monitor Iran’s response to last month’s assassination of a Hamas leader in Tehran.
Investors are also preparing for U.S. producer price index figures on Tuesday and consumer price index numbers on Wednesday. Both will shed light on inflation in the world’s largest economy.
Gold Rises Over 1% On Safe-Haven Demand
by Rahul Paswan
Reuters.com
Aug 12 (Reuters) – Gold prices rose by more than 1% on Monday to hit the highest since Aug. 2, driven by safe-haven inflows as traders awaited U.S. inflation data this week that could shed more light on the Federal Reserve’s interest rate cut path.
Spot gold rose 1.5% to $2,468.25 per ounce as of 1818 GMT. U.S. gold futures settled 1.2% higher at $2,504.
“What we’re seeing today in the gold and silver markets is some price support coming from bullish charts in gold prompting some technical buying,” said Jim Wycoff, senior analyst at Kitco Metals.
“You’re also seeing a little bit of safe-haven demand coming from heightened tensions in the Middle East,” Wycoff said.
Jason Trennert Warns of ‘Second Wave of Inflation’ Unless Donald Trump is Reelected
by Sean Moran
Breitbart.com
Jason Trennert, the CEO of Strategas Research Partners, warned Breitbart News Saturday of a possible “second wave of inflation” in 2025 unless former President Donald Trump is reelected.
Trennert spoke to Breitbart News Saturday host Matthew Boyle about his “regular man CPI,” an economic tool to better measure the rise in the consumer price index (CPI). Strategas is a leading macroeconomic and advisory brokerage firm.
The Strategas CEO noted that Core CPI excludes vital expenses, such as food and energy, explaining that “there’s nothing more ‘core’ than feeding yourself or staying warm, so it’s kind of silly to exclude two of the most important things for most people.”
Fed’s Bowman: Cautious On Rate Cuts, Eyes On Upside Inflation Risks
by Lallalit Srijandorn
FX Street
Federal Reserve Governor Michelle Bowman said on Sunday that she still sees upside risks for inflation and continued strength in the labor market, highlighting the Fed may not be ready to cut rates when US central bankers next meet in September, per Bloomberg.
Key quotes
“The progress in lowering inflation during May and June is a welcome development, but inflation is still uncomfortably above the committee’s 2% goal.”
“I will remain cautious in my approach to considering adjustments to the current stance of policy.”
“Should the incoming data continue to show that inflation is moving sustainably toward our 2% goal, it will become appropriate to gradually lower the federal funds rate to prevent monetary policy from becoming overly restrictive on economic activity and employment.”