from Forbes Breaking News
Inflation and the Fed’s Monetary Policy
by Alasdair MacLeod
Gold Money
Jay Powell has signalled that inflation is moving sustainably towards the Fed’s 2% target and that the jobs market has cooled down. Hopes for an interest rate cut are rising, but the Fed is being misled badly…
The dynamics behind rate policy
Undoubtedly, market values everywhere are predicated on the Fed cutting rates. To a limited extent, this could become a self-fulfilling prophecy. So far, the effect on the 10-year US Treasury Note, which sets the valuation tone for all financial assets, has been to reduce its yield in recent months from 4.7% to under 4.2% currently. I have pencilled in a potential support line at 4.08% (the pecked line).
Prepare For Liftoff, Bulls vs Bears, Plus Get Ready For More Inflation
from King World News
Prepare for liftoff, plus a look at bulls vs bears and more inflation.
The Great Rotation
July 18 (King World News) – Graddhy out of Sweden: This very big picture ratio chart now shows silver breaking out plus backtesting vs SPX.
Silver Coiling To Blastoff vs S&P 500
Closing the Chapter On Inflation? ETFs to Watch
by Yashwardhan Jain
Yahoo! Finance
However, with inflation still remaining above the Fed’s benchmark target of 2%, this marks the first negative monthly headline CPI since May 2020, along with the slowest annual price increase since March 2021. The favorable inflation data makes rate cuts in 2024 more likely.
According to the CME FedWatch Tool, the Fed may begin reducing interest rates from September, this year, with a 91.6% probability that they will decrease to 5-5.25%.
Inflation’s Way Down, but Consumers Still Flinch at High Prices, Fed Observes
by Elizabeth Trovall
Market Place
In the latest Beige Book out this week, most Federal Reserve bank districts noted that retailers are offering discounts and price-sensitive consumers are buying fewer or lower-quality items.
This is the case even as inflation continues to cool. Prices actually came down in June from May, according to the latest consumer price index. So, why is price sensitivity lingering?
Pretty much anyone who eats can be price-sensitive. Even economists who track inflation, like Kayla Bruun with Morning Consult, who used to grab a bite at a nearby cafe.
Republicans at RNC Blame Biden for Inflation. Economists Say It’s Misleading.
A pandemic-era supply bottleneck is the main culprit, some economists said.
by Max Zahn
ABC News
Speakers at the Republican National Convention this week have faulted the Biden administration for putting the nation at risk from threats that include criminals, illicit drugs — and high prices.
“American families have been crushed by inflation,” Michigan Senate candidate Mike Rogers told the audience in Milwaukee, Wisconsin, on Tuesday. Virginia Gov. Glenn Youngkin, a Republican, described the “silent creep of inflation unleashed by Joe Biden and Kamala Harris.”
Some economists who spoke to ABC News took issue with the blame placed on President Joe Biden as an overstatement of his role in the price spike. Instead, they said, the bout of rapidly rising prices emerged from a supply shortage imposed by the COVID-19 pandemic and exacerbated by the Russia-Ukraine war.
Chicago Fed President: Fact That Groceries Are ‘Expensive’ ‘Not Really Going to Change’
by Ian Hanchett
Breitbart.com
On Friday’s broadcast of NPR’s “Morning Edition,” Chicago Federal Reserve Bank President Austan Goolsbee stated that while the May and June inflation reports were “excellent” ones, the frustration that he often hears that “I go to the grocery store. It is expensive. That’s not really going to change.”
Co-host A Martinez asked, “Austan, we’ve heard from a lot of listeners that the positive signs on inflation are not necessarily showing up in their day-to-day lives and that essentials, such as food and rent, still seem pretty painfully expensive. Do you have a sense that that is changing at all?”
Goolsbee answered, “Yes and no. And you could have made it even worse for us or made us more unpopular, in that the Fed looks, not at overall inflation, but primarily at core inflation, which does not include energy and food prices.
Global Shipping-Market Strain Revives Fear of Inflation Comeback Again
The historic disruption of $25 trillion in global goods trade that culminated two years ago left the deep economic scars of inflation and paranoia about shortages
by Brendan Murray and Enda Curran
Business Standard
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Jason Starr felt the first flashbacks of pandemic PTSD back in mid-April.
That’s when the vice president of operations at Montreal-based Globe Electric heard something he hadn’t in 18 months: Bookings on cargo ships from Asia were getting tight.
Within weeks, spot container rates surged the most since 2022 and customers were demanding lighting products sooner than ever before the peak sales season in the fourth quarter.
“We better start planning,” he recalled. “The shipping crisis during Covid really helped us understand how to handle future shipping crises like the one we’re in right now.”
Federal Spending Was Responsible for the 2022 Spike in Inflation, Research Shows
Increased federal spending helped the economy bounce back during the pandemic, but it also caused a surge in inflation, research reveals.
by Betsy Vereckey
MIT Management, Sloan School
Inflation is difficult to control. Its cause is often even harder to pinpoint.
In attempting to understand the 2022 spike in inflation that followed the pandemic, some policymakers — up to and including President Joe Biden — blamed shortages in the supply chain. But a new study shows that federal spending was the cause — significantly so.
“Our research shows mathematically that the overwhelming driver of that burst of inflation in 2022 was federal spending, not the supply chain,” said Mark Kritzman, a senior lecturer at MIT Sloan.
In writing “The Determinants of Inflation,” Kritzman and colleagues from State Street developed a new methodology that revealed how certain drivers of inflation changed in importance over time from 1960 to 2022.
When it Comes to Inflation, Interest Rates Might Work Like a “Jedi Mind Trick”
by Kristin Schwab and Sean McHenry
Market Place
Some Federal Reserve officials have signaled recently that they might be closer to making a cut (or two) in the key interest rate they use as a lever to slow down or speed up economic activity. But it’s clear that when the year is out, rates will be in the same elevated range they are now.
At least those high interest rates are doing their inflation-fighting job. Right? It turns out the answer might not be so cut and dried.
“I think almost every single economist I talked to kind of shrugged their shoulders and said, ‘We actually don’t understand the role that interest rates played in this disinflation of the past few years,’” said Rogé Karma, staff writer at The Atlantic.
Immigrants Power Job Growth, Help Tame Inflation, but is There a Downside for the Economy?
by Paul Davidson
USA Today
The surge into the U.S. of immigrants lacking permanent legal status has emerged as one of the most politically charged issues of the 2024 presidential election.
Yet the wave of new arrivals has boosted the U.S. economy while helping temper inflation, a top issue for voters.
“It (immigration) is helping to reduce the labor shortage and push down wage pressures” that have fueled price increases, says economist Michael Reid of RBC Capital Markets.
Strong job growth and lower inflation make for an unusual, best-of-both-worlds tandem that has helped the nation avoid a recession.