Inflation

[waterbottle]

FedEx ringing the bell

FedEx issues ominous warning about the global economy, shares tumble

FedEx withdrew its full year earnings guidance as macro trends 'significantly worsened,' sending share tumbling in extended trading.

finance.yahoo.com

 

[over9k]

USD the place to be

 

[waterbottle]

Possibly, it's a bet on what the Fed is going to do next week.
We've known for a while now that they've been targeting rates >4% but the market has been in denial and rising on hopium.

 

[qldfrog]

Possibly, it's a bet on what the Fed is going to do next week.
We've known for a while now that they've been targeting rates >4% but the market has been in denial and rising on hopium.

Rising on opioids and ....fees:
buy....sell..diversify.....?

 

[mullokintyre]

The bad news, though, is that inflation has “very quickly” gone from “too low to too high”. (Hence the rapid rise in interest rates at the fastest pace since 1994.)

Lowe has repeated the bank’s expectation that inflation (CPI) will peak at about 7.75% at the end of 2022, and ease to 3% by the end of 2024.

Unfortunately, Lowe provides no explanation as to why the Bank has an expectation that inflation will ease to 3% by the end of 2024.
If as some suggest, the inflation was largely due to supply chain issues, the bank must expect that these issues are going to be solved in the near term. I see nothing that suggests supply problems will be fixed.
Others suggest that energy supply/cost increases were the main driver.
The world has spent billions on renewables over the past ten years, and still we have major supply/cost issues associated with energy.
This will not be solved in another ten years, let alone 2 years.
An example of a combination of the two points above, OIL Price

• As the EU ban on Russian oil and fuels looms, demand for tankers - particularly ice tankers - has been climbing.
• In early August, the average profit for an oil product tanker jumped to the highest level since 1997, and it is likely that profits have increased since then.
• Fuel markets worldwide are also tight which, combined with soaring tanker prices, will only add to inflation fears.

And to add to that, large numbers of older tankers have been scrapped as oil is phased out. To add to the problem, the building of new large bulk oil cargo ships have been severely reduced as forward orders suggested the market for oil would disappear.
Then of course you have the built up wage demand that is yet to start flowing through into business costs. Wage rises are always lagging inflation, and with the low unemployment rate, workers are in the box seat to demand and get larger wage rises, which in turn increases costs, which increases inflation and so on.

As for the RBA’s actions over the past couple of years, Lowe says the bigger policy mistake would have been to have too little than to do too much, Lowe says, of the support given during the “very scary” period at the start of the Covid pandemic.

I have argued on here in the past that the bank was already doing too little too late. Rates should have been rising at the end of last year to signal to the market what was happening, but instead Lowe said he could see no rises till the end of 2023.
I can't believe that they somehow thought that all the issues causing inflation in other parts of the world would somehow magically bypass OZ.

Still, it’s a “difficult and concerning time for many people” with the rise in the RBA cash rate and consequent increased borrowing costs. Not to act to stem inflation, though, would have worse impacts, Lowe says.

I think its already too late.
Mick

 

[over9k]

Possibly, it's a bet on what the Fed is going to do next week.
We've known for a while now that they've been targeting rates >4% but the market has been in denial and rising on hopium.

My gut instinct is that we'll see another 100.

 

[bluekelah]

Actually the inverted 2/10 yield curve DOES NOT 'guarantee' a recession. Having listened to the author (A university researcher/Ph.D student ? of some US University in maybe 1980's or 1990's) of the paper her wrote that assessed this phenomenon in a podcast he stated that 'it all depends on how long the inversion lasts for'. I can't remember for the life of me what timeframe it needs to be to 'statistically confirm the future occurrance of a recession' however just that it is inverted does not confirm a recession.
This may be pedantic but when people quote this fact inversion=recession they misrepresent the researchers work, and he states in the podcast I heard that it annoys him and it all depends on the length of the inversion, 1month, 2 months, 3 months etc.
I think the podcast was either NPR's 'Planet Money' or NPR's 'Indicator podcast in about ....... June/July this year.

Personally thinking ........ I've no idea whether the US IS in recession or will be, however I think it is likely.

Just a comment to ground ourselves in the facts as in the current market we (or some of us) are looking at each comment, tick or trend in order to try to make moeny in the market.

Stay safe out there. Patience.

Gunnerguy.
(DYOR)

1Q 2022 and 2Q2022 showed negative GDP growth in USA.

2 negative GDP quarters == technical recession. So technically USA is already in a technical recession, US gov doesnt want to admit it as they were late to raise rates and need to justify their rate rising into a "non-recession".

3rd quarter july-sept GDP growth WILL be negative and announced late October to confirm the recession. So yes this yield curve inversion seen this year from March 31st 2022 has been followed by a technical recession which FED will soon have to admit has become a real recession.

Jobs have always been the lagging indicator. Usually by the time jobless rates go up the recession is already ongoing.

 

[over9k]

As I said previously, parity is on the way.

 

[over9k]

 

[Smurf1976]

Personally thinking ........ I've no idea whether the US IS in recession or will be, however I think it is likely.

I'm starting to see reports suggesting a meaningful slowdown at the "real" end of the economy.

Spotted a mainstream media one from the US yesterday about museums being down on visitors and revenue. Spotted one from the UK about restaurants and theatre shows saying the same.

Locally for the first time in quite a while I'm seeing car dealers now advertising again. Presumably that means they're getting stock in that isn't already sold = either demand's dropping off or supply's increasing.

Also another one is CBA offered a 20% bonus to exchange credit card rewards points for gift vouchers etc. I'd have thought they'd be more than happy to have the points just sitting there, at worst it's a non-interest bearing deposit that isn't guaranteed so no loss to them, but they seem to want them gone. Must be a reason.....

 

[over9k]

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My gut instinct is that we'll see another 100.

To further this post, last time it was a debate between 75 and 100 they delivered with 100 and markets absolutely screamed on the day/got exactly what they wanted. Food for thought.

 

[waterbottle]

To further this post, last time it was a debate between 75 and 100 they delivered with 100 and markets absolutely screamed on the day/got exactly what they wanted. Food for thought.

Agreed. Might head down until the date and then pop afterwards - particularly if the Fed signal that they will soon slow down the pace of rate increases, although this seems unlikely given 10yr bond rising and will probably surpass the June highs

 

[over9k]

Agreed. Might head down until the date and then pop afterwards - particularly if the Fed signal that they will soon slow down the pace of rate increases, although this seems unlikely given 10yr bond rising and will probably surpass the June highs

Yeah, I'm reading nothing into what will be another slaughter tonight as it's friday and profit taking is reigning supreme. Worth a buy tonight if you're brave.

Probably going to be very low volume/flatline next week until the fed announcement too, unless something happens over the weekend to set things off.

 

[over9k]

Alright lads, slaughter today as expected, got a cheeky buy of nrgu in at 401, monday will be telling.

 

[over9k]

Upped their dividend too...

 

[Smurf1976]

So while you all bicker like children, I'll ask, did anyone have the stones to buy yesterday?

I'm not seeing signs of a proper bottom yet so not for me.

 

[qldfrog]

‘Plummeting’ demand sees China-US shipping rates tumble despite typhoon delays

China’s Port of Shanghai and Ningbo-Zhoushan Port were forced to shut down this week due to Typhoon Muifa, but the cost of sending a 40-foot container to the west coast of the United States has still dropped by 10 per cent.

www.scmp.com

So this is not a supply issue?
I think we are just at the start of a non transitory ROL., stagnation period.. often called a depression..
We are just one tactical nuke away..... And gosh, seems the forces behind the Biden puppet are really keen on it.
Hold on for the ride...

 

[over9k]

I'm not seeing signs of a proper bottom yet so not for me.

What do you think those signs will look like?

 

[frugal.rock]

What do you think those signs will look like?

Broken windscreen and glass everwhere, car on it's roof, branches and leaves everywhere, airbags deployed and all partially submerged in a swamp.
Just to reuse the car analogy.

 

[waterbottle]

What do you think those signs will look like?

Me personally not too sure, but the fact that the market keeps dumping everytime someone mentions recession or fed funds rate >4% tells me that it hasn't been priced in yet, even though they were strong possibilities beginning at the start of the year.
My guestimate is for NDX to hit 10000, which I think is possible given the Fed has yet to mention a slow down in rate hikes (and core CPI continues to be elevated).