from Gregory Mannarino
Record High Prices in Coffee, Cocoa & Cattle as Oil Spikes and Travel Boom Continues
from King World News
We have recently seen record high prices in coffee, cocoa and cattle as the price of oil also spikes and the travel boom continues. Take a look…
Massive Spike In Oil Prices
January 14 (King World News) – Peter Boockvar: Many of the world’s refiners, particularly those in China and India, that were previous to last week able to buy Russian oil are now scrambling to buy it from elsewhere after the newly implemented sanctions on the Russian energy space, particularly the ships that transport its oil. In response, the price of oil continues higher by almost $2 for both brent and WTI to a level last seen in July last year.
Dollar Treads Water Ahead of CPI, Tariffs Remain in Focus
by Laura Matthews
Reuters.com
Jan 14 (Reuters) – The dollar weakened against the euro on Tuesday but stayed near its highest level in more than two years as cooler-than-expected inflation data following last week’s strong jobs report made it hard to project the Federal Reserve’s next moves on interest rates.
Data showed U.S. producer prices increased moderately in December. Investors had already started to scale back bets on rate cuts as potential U.S. tariffs remained in the spotlight.
The greenback pared gains later in the session as traders cautiously awaited Wednesday’s consumer price index report. Investors have been closely watching economic data to see if it supports the Fed’s cautious stance on rates.
“It’s possible that traders are hedging the other side of the market now before CPI tomorrow, so we’re seeing some pre-release volatility that’s keeping the dollar a touch depressed,” said Helen Given, associate director of trading at Monex USA in Washington. “Tariff stories are the primary driver, it appears, for price action today.”
PPI Inflation Accelerates to +3.3%, Driven by “Core Services,” +4.0%, Both the Worst Readings in Nearly Two Years
by Wolf Richter
Wolf Street
2024, the year of sharp acceleration. Services, accounting for two-thirds of PPI, are where inflation is festering and accelerating.
This time, the prior months’ data of the Producer Price Index were revised up by relatively small amounts, unlike the whopper up-revisions over the past four months. So November’s overall PPI reading was revised up to a year-over-year increase of 3.00%, from 2.98% reported a month ago. So that lack of big up-revisions was refreshing.
But then the December PPI, as reported today by the Bureau of Labor Statistics, accelerated to an increase of 3.31%, driven largely by services, which account for two-thirds of the overall PPI, and which accelerated to 4.03%. Both increases were the worst since February 2023.
PPI Shows Wholesale Inflation Increased Less Than Expected in December
by Josh Schafer
Yahoo! Finance
Wholesale prices rose less than expected in December, a positive sign for the economy amid recent market fears that inflation isn’t falling as quickly as hoped to the Federal Reserve’s 2% target.
Tuesday’s report from the Bureau of Labor Statistics showed that its producer price index (PPI) — which tracks the price changes companies see — rose 3.3% from the year prior, up from the 3% seen in November but below the 3.5% increase economists had projected. On a monthly basis, prices increased 0.2%, below the 0.4% increase economists had expected.
2025: More Inflation, More Asset Bubbles, and More QE?
by Artis Shepherd
Mises.org
Capital markets, monetary policy, fiscal policy. The extent to which these three factors intertwine is of no small consequence to the American economy.
On one hand, loose monetary policy generally enables the politically-desired fiscal policy—big deficit spending—by lowering the cost at which governments borrow. Loose money also enables rising asset prices through compression of cap rates—a shorthand valuation method wherein discount rates to future cash flows (which are themselves subject to increasingly fantastical projections as interest rates decline) are lowered, thus increasing present value.
In turn, rising asset prices provide political cover by creating a wealth illusion—a politically useful context in which high asset values belie weak fundamental performance in the main street economy. Thus, governments receive less pushback on price inflation and profligate government spending while Americans are distracted by increasing brokerage account balances.
Breitbart Business Digest: The Era of Fed Cuts is Over
by John Carney
Breitbart.com
The Fed’s Been Wrong About the Economy for Years
The Federal Reserve’s rate-cutting cycle has very likely come to an end—although it may take Fed officials several months to figure this out.
The Fed last hiked its overnight benchmark way back in July of 2023, when it raised the federal funds target to a range of 5.25 percent to 5.50 percent. At the time, the Fed was convinced that this level of interest rates would weigh heavily on economic growth, bringing the economy close to a recession or at least a long period of sluggish growth.
The summary of economic projections (SEP) released at the prior Fed meeting in June of 2023 showed that officials expected the economy to grow just one percent in 2023 and 1.1 percent in 2024. By 2025, growth was expected to creep up to 1.8 percent, which also happens to be the Fed’s long-run estimate of growth for the U.S. economy.
Inflation Worries to Dog the Fed and Crimp Trump’s Economic Agenda
The rise in bond yields at a time when the central bank is lowering interest rates could test the economy, the markets and Donald Trump’s agenda.
by Tim Smart
USNews.com
Last week provided almost a near trifecta of economic news that showed the economy strong but also with a strength that is unnerving markets.
That may well be the case again this week as a different version of the dynamic comes into play.
First, a review of last week’s good-news-is-bad-news story:
— A December jobs report from the Labor Department that beat expectations handily as 256,000 jobs were created, way above the 160,000 expected.
The Inflation Gamble
New research reveals that as inflation diminished spending power, many individual investors turned to risky investment behaviors to ease the pinch.
by Michael R. Malone
University of Miami
Traditional economic theory would indicate that individual investors should trend conservative and reduce their risks during times of high inflation, such as the extreme period that lingered globally in the wake of the pandemic.
Yet new research by Alok Kumar, Gabelli Asset Management Chair and finance professor in the University of Miami Patti and Allan Herbert Business School, reveal a contradictory trend—one with surprising and potentially disruptive implications for the economy.
“What we’re seeing in financial markets is not inflation hedging but pure speculation and gambling as people are trying to compensate for the potential loss in purchasing power,” Kumar said. “People don’t generally think—and traditional finance and economic theory doesn’t perceive—that gambling is going to affect prices. But the observed impact of this gambling channel is so strong that prices can move up and down.”
What to Expect From Wednesday’s Inflation Report
Inflation likely rose in December, indicating that progress against price increases has stalled, forecasters said.
by Diccon Hyatt
Investopedia
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Everyone’s least favorite economic phenomenon likely continued its comeback in December if forecasters are correct.
A report Wednesday from the Bureau of Labor Statistics is likely to show the Consumer Price Index, a measure of the cost of living, rose 2.9% over the 12 months ending in December, according to a survey of economists by Dow Jones Newswires and The Wall Street Journal. This would be the third month in a row the key inflation gauge has risen, bringing it to its highest since July.
Economists tracking consumer prices said rising costs for food and energy likely pushed the CPI higher. That could be a sign that progress against inflation earlier last year—thanks to the Covid-related supply chain snarls unraveling—remains stalled.
Inflation Expectations Surge, Pulling Down Consumer Sentiment, Casting Doubt On Fed Policy
by John Carney
Breitbart.com
Inflation expectations among American consumers surged in January, according to the latest University of Michigan survey, casting doubt on the Federal Reserve’s decision to cut interest rates three times late last year. The findings suggest that while consumers feel marginally better about their personal finances, concerns about rising prices in the months ahead have intensified.
“Assessments of personal finances improved about 5 percent, while the economic outlook fell back 7 percent for the short run and 5 percent for the long run,” said Joanne Hsu, director of the Surveys of Consumers. “January’s divergence in views of the present and the future reflects easing concerns over the current cost of living this month, but surging worries over the future path of inflation.”