from Morris Invest
The Changing Dynamics of Global Inflation
During the post-COVID-19 period, a surge in global inflation led to unprecedented fluctuations, with savings-oriented behaviors less prevalent than in previous decades
by Kerem Alkin
Daily Sabah
After the initial shock of the COVID-19 pandemic subsided and global demand began to rebound, global supply chain issues, influenced by the ongoing aftershocks of the pandemic, sparked a rapid acceleration in global inflation, which had remained largely subdued for decades. Supply disruptions, exacerbated by prolonged quarantine and restriction measures in China and Asia to combat the coronavirus pandemic, further fueled global inflation, compounded by the surge in demand resulting from accumulated savings during the initial 18 months of the pandemic. This dynamic, coupled with shifts in intergenerational savings and spending behaviors, has elevated the range of fluctuations in global inflation to unprecedented levels.
Over the past decade, maintaining price stability has become increasingly challenging, particularly in developing economies, as shifts in living standards and restructuring of saving-consumption habits have occurred.
Politics in the Fight Against Inflation
by Ira Kawaller
FX Street
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One of the disturbing features about economics as a field of study is that it really doesn’t have a particularly good handle on inflation and how to cure it. Our best remedy is a blunt effort to try to slow economic growth to broadly limit inflationary pressures, thereby threatening to substitute higher unemployment and slower job creation for lower inflation.
Many economists see inflation as a monetary phenomenon caused by too much money chasing too few goods. Those with this perspective see tight money as the cure-all – i.e., retarding the growth of the money supply and forcing interest rates higher.
Inflation Pressures Shift Back to Manufacturing as Factory Costs Surge
by John Carney
Breitbart.com
Inflationary pressures are mounting in the manufacturing sector even as the growth of the U.S. economy slowed in April after a brisk first quarter, a pair of key business surveys indicated Tuesday.
The “flash” purchasing managers surveys from S&P Global showed that input prices continued to rise sharply in April, although the pace of inflation eased from the ten-month high hit in March. Manufacturers saw the fastest rise in input costs in a year thanks to rising prices of raw materials.
Services providers reported the slowest rise in overall costs in three years, according to S&P Global, although shipping and staffing costs continued to increase.
U.S. Business Activity Cools in April; Inflation Measures Mixed
by Reuters
Yahoo! Finance
S&P Global said on Tuesday that its flash U.S. Composite PMI Output Index, which tracks the manufacturing and services sectors, fell to 50.9 this month from 52.1 in March. A reading above 50 indicates expansion in the private sector.
The slowdown reflected weaker rates of growth in both the manufacturing and services sectors, with activity easing to three- and five-month lows, respectively.
Billionaire Investor Ray Dalio Says He’s Owning Gold to Hedge the Risk of Debt and Inflation Crises
Ray Dalio says he owns gold partly to hedge against debt and inflation risks.
by Jennifer Sor
Business Insider
Ray Dalio is holding onto gold as a buffer against risks stemming from higher inflation and a potential debt crisis hitting the economy.
The billionaire investor and former Bridgewater Associates CEO has pointed to mounting debt balances around the world, with the US debt notching $34 trillion for the first time ever this year. Debt problems have also plagued China, Japan, and European nations — which poses a big risk for the currencies in those nations, he wrote in a post on LinkedIn this week.
“History and logic show that when there are big risks that the debts will either 1) not be paid back or 2) be paid back with money of depreciated value, the debt and the money become unattractive,” Dalio wrote on Thursday.
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.