from Bloomberg Television
Stocks Slip, Dollar Gains as Market Awaits Inflation Data
by Herbert Lash and Harry Robertson
Reuters.com
NEW YORK/LONDON, May 8 (Reuters) – Global equity markets mostly faltered on Wednesday as investors await fresh inflation data to better assess the likelihood of Federal Reserve interest rate cuts, while the dollar edged higher on expectations of U.S. economic out-performance.
European stocks rose to a record high, boosted by company earnings, but stocks on Wall Street slid as a downbeat forecast from Uber (UBER.N), opens new tab knocked its shares down 5.7% and made the ride-hailing firm one of the biggest decliners on the S&P 500.
The yen weakened for a third day and kept investors wary of intervention from Japanese authorities, while crude oil edged up from near two-month lows. In Europe, the Swedish crown was under pressure after the central bank cut rates as expected and said two more cuts were likely this year if inflation remained mild.
Here’s How Inflation Erodes Your Savings and What You Can Do to Stop It
Inflation wears away your purchasing power, meaning the dollars you save today will be worth less in the future.
by Emily Batdorf
Yahoo! Finance
Inflation has been all over the news over the last couple of years. Even if you’re not tired of hearing about it, you’re probably sick of higher prices at the grocery store and gas pump.
As of March 2024, the U.S. inflation rate was 3.5% for the previous 12 months. Although inflation has cooled following the 40-year high of 9.1% in 2022, it’s still above the Federal Reserve’s long-term target of 2%, which it considers ideal for employment and stable prices.
Not only can inflation negatively impact the economy as a whole, but it can also make it tough for the average consumer to save. Let’s take a closer look at how inflation affects savings and what you can do to combat it.
Sky-High Inflation Forces Argentina to Circulate First 10,000-Peso Notes
New bills worth $11 aim to help population avoid having to carry bricks of cash
by Ciara Nugent
FT
The new notes, worth $11 at the country’s official exchange rate, are five times more valuable than the previous largest note, of 2,000 pesos — which began circulating last year and remains relatively rare — and 10 times more valuable than the more common 1,000-peso note.
Cash payments remain popular in Argentina, where many retailers prefer to receive funds immediately amid chronic economic instability, and others operate off the books. Residents are forced to carry large wads of bills to make small payments, and backpacks of them to make larger ones.
What to Expect from the Next CPI Report
by Simon Moore
Forbes
The next Consumer Price Index release for April 2024 is expected to continue the pattern of relatively higher inflation as seen so far this year. If so, it’s likely to provide support for the Federal Reserve holding back on interest rate cuts until July or later.
Release Timing
On May 15 the U.S. Bureau of Labor Statistics will release CPI data for the month of April at 8:30 a.m. ET. This will be the first of two CPI releases before the next Federal Open Market Committee meeting on June 12. However, that subsequent CPI release will come on the morning of the FOMC’s decision day. Due to lack of progress on disinflation so far in 2024, the FOMC isn’t expected to cut interest rates until July at the earliest, and quite possibly later.
Fed’s Kashkari Cites High Risk Inflation is “Settling”
by Reuters
Kitco
WASHINGTON, May 7 (Reuters) – The strength of the U.S. housing market and potentially stalled progress on inflation means monetary policy may not be as tight as Federal Reserve officials think it is, Minneapolis Federal Reserve President Neel Kashkari said in a new essay, opens new tabon Tuesday that raises the possibility price pressures are “settling” to a level above the Fed’s 2% target.
Wrongly estimating how current policy is affecting the economy “could explain the constellation of data we are observing,” particularly in housing but more broadly in ongoing economic growth, Kashkari wrote. Housing in particular is “proving more resilient to…tight policy than it generally has in the past,” depriving the Fed of what is typically a key channel for the impact of high interest rates to be felt.
Trump Tariffs Drive Inflation? Big Short’s Steve Eisman Says That’s ‘Ridiculous’
by John Carney
Breitbart.com
Steve Eisman, best known for his “Big Short” bet against subprime mortgages, said that the idea tariffs imposed by Donald Trump will drive up inflation is “ridiculous.”
The Neuberger Berman Group portfolio manager said in a Bloomberg TV interview on Tuesday that he expects that if Donald Trump is re-elected as president, he will impose tariffs on goods from China. But he does not believe that higher import duties will increase inflation.
“Do I think that Donald Trump will increase tariffs on China? Sure. Do I think that would have a massively inflationary impact on the U.S.? I think that’s ridiculous,” Eisman said.
President Donald Trump has said he is considering tariffs on almost all imported goods. He has also said he plans to raise the tariffs he imposed on Chinese goods. Critics charge that these would moves would raise consumer prices, although recent history shows that the earlier round of tariffs did not raise consumer prices.
Get Ready for Weaker Growth and Higher Inflation. The Consensus Was Wrong.
by Daniel Lacalle
Mises.org
The weak GDP figure for the first quarter came with a double negative: poor consumer spending and exports, plus a rise in core inflation. The US administration’s enormous fiscal stimulus underscores the importance of considering the weaker-than-expected data.
A deceleration in consumer spending, a decline in the personal savings ratio to 3.6%, and poor exports added to a set of figures for investment that were also negative when we looked at the details.
The gross domestic product is much weaker than the headlines suggest. If we look at consumption, both durable and non-durable goods were flat or down, while the only item that increased modestly was the services factor. Residential and intellectual property boosted investment, while equipment remained weak in the past two quarters. The slump in export growth coincided with a significant increase in imports, which weakened the trade deficit. Government spending continues to rise, albeit at a slower pace, and becomes the main factor to disguise what is evidently a concerning level of growth for a leading economy with enormous potential.
Can You Guess What it Costs to Live “the American Dream” After Three Years of Inflation Under Joe Biden?
by Michael Snyder
End of the American Dream
If you are like most Americans, the cost of living has been going up much faster than your income has been. Right now, millions of Americans that were once prospering are now deeply struggling. When I was growing up, most of the population could afford to live “the American Dream”, but now that is no longer true. At this point, the basics of a middle class lifestyle are out of reach for most Americans. Poverty and homelessness are steadily rising, and the economy has become the number one issue during this election cycle. Most of us just want things to go back to the way that they once were, but thanks to the very foolish decisions of our leaders that simply is not possible.
According to a brand new report that was just released, it now takes over $100,000 a year for the typical family to live “the American Dream” in all 50 states, and in 29 of those states it actually takes over $150,000 a year…
Why Fast-Food Price Increases Have Surpassed Overall Inflation
by Ryan Baker
CNBC.com
Fast food has become increasingly expensive — and some consumers are changing their spending habits because of it.
Fast-food chains such as Chick-Fil-A and Taco Bell are included in the limited-service meals and snacks category in the consumer price index report, which shows prices are up nearly 28% from 2019 to 2023. The full-service meals and snacks category, which covers sit-down restaurants with servers, meanwhile, has increased about 24% and overall CPI was up by about 19% in the same time period.
“There were increased commodity costs. We’ve seen those start to normalize,” said Stephens analyst Jim Salera. “But what continues to be ahead of historical averages is the increase in labor costs that restaurants are seeing.”
Fed Official Urges Patience On Inflation
Get caught up.
by David Rovella
Bloomberg.com
Wait for it. That’s the message from Federal Reserve Bank of Richmond President Thomas Barkin, who said he expects high interest rates to eventually cool US inflation to the central bank’s 2% target. Barkin said Monday the strength of the labor market offers the Fed time to gain confidence that inflation is moving sustainably lower before cutting borrowing costs. But he cautioned that there still is risk that continued housing and services inflation will keep price gains elevated. Sellers are still trying to raise prices, he warned, and they will do so until customers push back strongly. “The risk is that, as we get less help from the goods sector, continued shelter and services inflation will leave the overall index higher than our target,” Barkin said.
Here are today’s top stories
Fixed income is living up to its name. And it shouldn’t be a surprise given US benchmark rates jumped from 0% to more than 5% in the span of just two years.