from Reuters
Wall Street Climbs as Inflation Data Sparks Rate Cut Hopes
Stocks surged Friday with positive US inflation data boosting investor confidence in potential rate cuts
by Freschia Gonzales
Wealth Professional
Stocks soared on Friday, ending a volatile week on a high note as investors considered fresh US inflation data, according to CNBC.
The Dow Jones Industrial Average surged 654.27 points, or 1.64 percent, closing at 40,589.34. The S&P 500 increased by 1.11 percent to 5,459.10, while the Nasdaq Composite rose 1.03 percent, finishing at 17,357.88.
CFRA Research’s Sam Stovall noted that Friday’s gains resulted from oversold sentiment, a robust GDP report on Thursday, and expectations that the Federal Reserve will cut rates due to economic strength.
“Today’s benign PCE report helped talk the market off the ledge,” he said. “With this pullback, the great rotation lives on, and breadth continues to be on our side.”
Harris Freshens Up Her Message On the Economy as Trump and Republicans Go After Her On Inflation
Since President Joe Biden left the White House race, Vice President Kamala Harris has begun to craft her own narrative around the economy
by Josh Boak
ABC News
WASHINGTON — All of a sudden it’s Kamala Harris ‘ economy — a major opportunity as well as a possible risk for the likely Democratic presidential nominee.
Shortly after President Joe Biden left the race a week ago, Harris began to craft her own narrative around the economy by putting an emphasis on ending child poverty, promoting labor unions, reducing the costs of health and child care and protecting “dignity” in retirement.
Not once in speeches in Wisconsin, Indiana or Texas did she mention the word “inflation” — the overwhelming economic challenge that has dogged Biden’s administration and forced him in remarks to consistently acknowledge voters’ pain as they cope with higher grocery, gasoline, housing and auto expenses.
Harris is putting a bigger priority on what she says could be ahead.
Consumer Sentiment Hits Eight-Month Low Amid Inflation Woes
by John Carney
Breitbart.com
US consumer sentiment dropped in July to its lowest level in eight months as persistent high prices and stubbornly high inflation continued to erode confidence in personal finances.
According to the University of Michigan, the final July sentiment index fell to 66.4 from 68.2 in June. The preliminary reading for the month had been 66, indicating a downward trend in consumer confidence.
Consumer sentiment has been mired at a low level for the past three months, as households’ views of the economy remain extraordinarily negative.
Consumers now expect prices to rise at an annual rate of 2.9 percent over the next year, marking the lowest expectation in four months and slightly down from the 3 percent anticipated in June. Over the next five to ten years, Americans see costs climbing at an average of 3 percent, unchanged from the previous month.
Inequality is Caused by Inflation
by Lennart Wagemans
Mises.org
Many claim the problem with fractional reserve banking is that it loans money into existence. It does, but under normal circumstances the money created by commercial banks disappears when loans are repaid or defaulted on, which therefore doesn’t create a permanent inflation of the money supply. Government intervention, however, converts temporary money into permanent money through bailouts like the Troubled Asset Relief Program. They purchase loans that would have been defaulted on, preventing the evaporation of credit. When banks hold loans that are at risk of default, they face having to write them off, which would remove this part of the money supply. Bailouts turn such disappearing credit into permanent money, in effect giving banks free money.
Without government bailouts, banks would be unwilling to make loans that are unlikely to be repaid, thus limiting their willingness to loan large amounts of money into existence. This would keep the money supply more stable. At any time, some part of the money in existence would still be destined for removal through repayment. This proportion would somewhat fluctuate with economic conditions, and the temporary money would be indistinguishable from other money until a loan is repaid, but new money would not continually get loaned into existence.
Large Upward Revisions of “Core Services” PCE Inflation Pushed Six-Month “Core” PCE Inflation to 3.4%, Worst in a Year
by Wolf Richter
Wolf Street
Fed’s Wait-and-See on rate cuts makes sense amid heavily revised whiplashy data and still too high inflation.
The revisions, the upward revisions, oh-la-la! The Bureau of Economic Analysis released today the PCE price index for June; and as part of it, the “core” PCE price index – the Fed’s primary yardstick for inflation – was revised substantially higher for May, driven by a large upward revision of the “core services” PCE price index. So the much-hailed month-to-month core PCE reading a month ago of +1.0% annualized (+0.08% not annualized) was revised up to +1.5% annualized (+0.13% not annualized).
Your Food is More Expensive – Are U.S. Corporate Profits to Blame?
Many companies such as Chipotle and McDonald’s are seeing profits jump as they continue raising prices, an analysis finds
by Tom Perkins
The Guardian
As inflation shot to its peak around mid-2022, Chipotle’s prices also rose, pushing up what customers paid for burritos and bowls by as much as several dollars. Since then, the fast casual restaurant’s costs have broadly fallen. Prices have not.
Chipotle’s decision to maintain high prices helped boost profits 110% in recent years, while its executives boasted to investors that they raised prices higher than inflationary costs.
Chipotle’s sparkling financials are representative of much of the food industry, according to a Guardian analysis of financial documents and earning calls transcripts from 36 top US food corporations.
Core Inflation Cools but by Less Than Expected
by John Carney
Breitbart.com
The Federal Reserve’s go-to inflation gauge showed a slight easing of inflation in June and consumer spending remained solid, bolstering the argument that the Fed’s policy could be “just right” and undermining calls for an urgent rate cut.
The core personal consumption expenditures (PCE) price index, which omits food and energy costs, ticked up just 0.2 percent from May, which annualizes to a 2.2 percent increase. Over the past year, it is up rose 2.6 percent, according to Friday’s data from the Bureau of Economic Analysis. The year-over-year figure was slightly higher than expected.
Inflation-adjusted consumer spending also climbed 0.2 percent, with May’s numbers seeing a positive revision.
On a three-month annualized basis, core inflation dipped to 2.3 percent, the lowest since December. The six-month annualized rate is a still high 3.4 percent.
Breitbart Business Digest: Growth and Inflation Are Too Hot for the Fed to Cut in September
by John Carney
Breitbart.com
Economic Growth Rips Higher Than Expected
Economic growth picked up more than expected in the spring, not only undermining the case for rate cuts but also raising the possibility that the Federal Reserve still has not done enough to cool the economy off to bring inflation down to its two percent target.
The Bureau of Economic Analysis said Thursday that real gross domestic product (GDP) expanded at a 2.8 percent annual rate in the second quarter. That is twice the pace of the 1.4 percent recorded in the first quarter of the year and significantly stronger than the two percent consensus forecast.
Consumer spending, the engine of the U.S. economy, rose at a 2.3 percent annual rate in the April through June period, matching the rate of growth in the first quarter and defying expectations for a slowdown. This contributed about 1.6 percentage points to growth.
Rep. Nanette Barragán Says Democrats Need ‘Four More Years’ to Push Through the Policies Needed to Lower Inflation and High Cost of Living
by Jack Hellner
American Thinker
The Democrat party is full of economic illiterates, and here’s the latest example, from a report out at Breitbart News:
Dem Rep. Barragán: Biden Needs ‘Four More Years’ to ‘Finish the Implementation’ of Policies to Lower Prices
On Friday’s broadcast of MSNBC’s ‘José Díaz-Balart Reports,’ Rep. Nanette Barragán (D-CA) stated that people still have concerns about prices, but President Joe Biden is asking Congress to do things like rent control and has a plan to lower prices and ‘he needs four more years to finish the job, to finish the implementation of these policies, to build on them to help the American people.’
(Now of course this was before Joe Biden dropped out of the race, but since Kamala Harris is being anointed as the nominee without any input from the Democrat voter base, and she’s cut from the same cloth and Biden’s own right-hand man, we can rightfully assume she would carry on with Biden’s economic approach.)
Have We Been Living in an MMT World Since 2008?
by Joseph T. Salerno
Mises.org
I recently viewed Finding the Money, a video aimed at persuading a popular audience of the putative merits of Modern Monetary Theory (MMT). The video debuted this past May on several streaming platforms and theaters throughout the U.S. Whether it succeeded or not in its purpose, I will leave it for others to judge.
What I found most noteworthy in the 95-minute video was a brief clip of an interview with George Selgin, an economist of some stature in free-market monetary policy circles. When questioned about what MMT proponents get wrong or factually incorrect, Selgin waffles a bit and replies, “it’s a matter of emphasis and rhetoric.” He then goes on to give a more definite answer: “The MM theorists do say there is ultimately a scarcity of resources. But too often, they treat the world as if the norm is one of generally unemployed resources and plenty of ‘em.” Here, Selgin seems to be challenging MMT’s central claim that politicians and bureaucrats can costlessly conjure up real resources to expend on their favorite programs simply by creating and spending fiat money.