Australian (ASX) Stock Market Forum

Inflation

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over9k said:
We might have an inflation problem but it's only going to be transitory.

Honest >_>
Click to expand...
Is that because inverted yield as such guarantees recession and no one will be able to afford anything, thus reducing inflation inflammation? ?

Assume I'm as thick as 2 bricks and spell it out. Don't hold back.
 
frugal.rock said:
Is that because inverted yield as such guarantees recession and no one will be able to afford anything, thus reducing inflation inflammation? ?

Assume I'm as thick as 2 bricks and spell it out. Don't hold back.
Click to expand...
Yield inversion is often correlated with a subsequent recession historically but not a Guarantee of recession.

www.investopedia.com

Inverted Yield Curve: Definition, What It Can Tell Investors, and Examples

An inverted yield curve is an unusual state in which longer-term bonds have a lower yield than short-term debt instruments.
www.investopedia.com www.investopedia.com
[A yield curve inverts when long-term interest rates drop below short-term rates, indicating that investors are moving money away from short-term bonds and into long-term ones. This suggests that the market as a whole is becoming more pessimistic about the economic prospects for the near future.]

recession causes demand destruction which in theory should reduce inflation. However there have been periods of recession and still persistent high inflation as in 1970s called stagflation.
 
waterbottle said:
When

When does the US shut off SPR releases?
Click to expand...
Was expected to end in October if inflation started coming down. However looks like they will have to go on for longer as inflation is still skyhigh and elections are still not done yet. I believe they are down to 434 now. Look at the chart link, its falling off a cliff, starting going down even before the war. the rate they are going, its probably only gonna last another 1.5years.

U.S. emergency oil reserves tumble to lowest since 1984​

www.reuters.com

U.S. emergency oil reserves tumble to lowest since 1984

U.S. emergency crude oil stocks fell 8.4 million barrels last week to 434.1 million barrels, their lowest since October 1984, according to U.S. Department of Energy (DOE) data released on Monday.
www.reuters.com www.reuters.com

for the SPR chart
chart.png
 
frugal.rock said:
Is that because inverted yield as such guarantees recession and no one will be able to afford anything, thus reducing inflation inflammation? ?

Assume I'm as thick as 2 bricks and spell it out. Don't hold back.
Click to expand...
Well because it's just inverted, this means that we only reckon the inflation is going to be short(er) term. A bit like just pumping the brakes on a speeding car for a second to wipe some speed off and get back to a safe pace after we pressed the throttle a bit too hard.

It's only when we realise that we were accelerating the car right before we went over the crest of a hill when we actually should have seen the crest coming and just coasted over it and there's now gravity (long term supply side problems) that's speeding it up instead of our foot on the throttle and that said gravity is also outside of our control (i.e we went over the crest of the hill way too fast) that we'll realise that we have to keep the brakes on much harder for much longer than we initially thought (long dated rates are going to soar as well).

There's also the non-linear nature of speed reduction we now have to contend with too. It takes the square of the increase in the amount to actually stop the car, so it takes 4x the distance to stop from 2x the speed, 9x the distance to stop from 3x the speed, and so on and so forth, so the problem becomes exponentially worse the more you go over your intended speed too, which we obviously have.
 
over9k said:
Well because it's just inverted, this means that we only reckon the inflation is going to be short(er) term. A bit like just pumping the brakes on a speeding car for a second to wipe some speed off and get back to a safe pace after we pressed the throttle a bit too hard.

It's only when we realise that we were accelerating the car right before we went over the crest of a hill when we actually should have seen the crest coming and just coasted over it and there's now gravity (long term supply side problems) that's speeding it up instead of our foot on the throttle and that said gravity is also outside of our control (i.e we went over the crest of the hill way too fast) that we'll realise that we have to keep the brakes on much harder for much longer than we initially thought (long dated rates are going to soar as well).

There's also the non-linear nature of speed reduction we now have to contend with too. It takes the square of the increase in the amount to actually stop the car, so it takes 4x the distance to stop from 2x the speed, 9x the distance to stop from 3x the speed, and so on and so forth, so the problem becomes exponentially worse the more you go over your intended speed too, which we obviously have.
Click to expand...
Is this an electric car or ICE though?
 
frugal.rock said:
Is that because inverted yield as such guarantees recession and no one will be able to afford anything, thus reducing inflation inflammation? ?

Assume I'm as thick as 2 bricks and spell it out. Don't hold back.
Click to expand...
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)
 
Jobs numbers report now below estimates while the inflation report was above estimates.

Stagflation ahead lads.
 
From the Gyardian


Inflation too high at the moment, RBA governor says

Peter Hannam

As the economics committee gets going this morning, RBA governor Philip Lowe kicks off by stating the good news since the last meeting back in February.

That’s mainly the drop in the jobless rate from 4.2% then to 3.5% as of last month. (See earlier post.)

RBA governor Philip Lowe at the economics committee at Parliament House in Canberra, Friday, 16 September 2022. Photograph: Lukas Coch/AAP

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.

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.

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.
 

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