Inflation

[over9k]

LOL I think it's more than just retail moving the market.

Who do you think was buying all of these:



"There is a lot more demand to trade and carry option positions in SPY than normal".

Open interest way above normal (**** me, it's 20% above normal...) means only one thing

 

[waterbottle]

Who do you think was buying all of these:

View attachment 150481

"There is a lot more demand to trade and carry option positions in SPY than normal".

Open interest way above normal (**** me, it's 20% above normal...) means only one thing

Sure that's the degen play, but I don't think they've been shifting bonds lol

 

[over9k]

Sure that's the degen play, but I don't think they've been shifting bonds lol

One begets the other

 

[waterbottle]

Here's why I would still be nervous if I was him:

View attachment 150479

Remember that this is just the rig count too, not the flow rate. Rigs flow their fastest at the beginning and then the rate tapers off over time:

View attachment 150480

So take a ~1m barrels/day shortfall and then factor in how much they've diverted/are still trying to divert to europe to replace the russian supply too and there's a biiiig problem.

Good point, but JPowell is focused on employment, not energy as the source of inflation. That might be a deficiency on their part.

The main employment issues seem to be:

1. Average hourly earnings are too high
2. Vacancies are too high

He describes the labour market as behaving as though there's a structure shortage yet the FOMC is projecting an increase in unemployment for 2023. How? Are they going to create/import more workers?

 

[over9k]

Are they going to create/import more workers?

Yes, that's what immigration policy is for - importing cheap labour.

 

[waterbottle]

Yes, that's what immigration policy is for - importing cheap labour.

From where? The US has been open for the past year. And wouldn't immigration contribute to inflation?

 

[over9k]

From where? The US has been open for the past year

Anywhere they can

 

[waterbottle]

Nasdaq poking it's head into the green, never a boring day

 

[over9k]

"Will have to hold restrictive rates for some time, median rate forecast of 5.1 for 2023"

 

[divs4ever]

I'll give you inept, but irrelevant?

are you sure they are inept ( rather than disingenuous ) after all their major , most frequently used tool is 'the jawbone '

now irrelevant is coming , how many inaccurate forecasts before most traders/investors say 'whatever ' and just trade the market move , whatever it is

 

[divs4ever]

From where? The US has been open for the past year. And wouldn't immigration contribute to inflation?

depends if the drugs they are trafficking goes up as well , if the price of illegal drugs was to fall ( or god forbid , they start importing cheap generic prescription pharmaceuticals flooding the markets in that sector ) that might be deflationary

 

[moXJO]

“We wouldn’t…try to crash the economy and then clean up afterwards,” Chairman Powell recently remarked. “I wouldn’t take that approach at all.” Yet that is, in fact, what every other Fed Chair has done during predictable yield‐curve‐inversion recessions.



In October I wrote, “CPI Less Rent Was Zero for 3 Months; CPI Rent Is Wrong.”
Nobody appeared to find that interesting.
Now, CPI less rent has shown zero inflation for 5 months.
How long can zero remain uninteresting?
Some prices went up over the past five months and others went down, but the weighted average increase for everything in the average consumer’s shopping basket was nil once we properly exclude disingenuous and outdated estimates of shelter inflation.

Not sure if this guy is right on the second comment but the first is on the money and I expect it will occur again.
Forced hard landing either by design or ineptitude.

https://www.cato.org/blog/history-cautions-against-loosening-fed-policy-too-late-3

 

[waterbottle]

“We wouldn’t…try to crash the economy and then clean up afterwards,” Chairman Powell recently remarked. “I wouldn’t take that approach at all.” Yet that is, in fact, what every other Fed Chair has done during predictable yield‐curve‐inversion recessions.



In October I wrote, “CPI Less Rent Was Zero for 3 Months; CPI Rent Is Wrong.”
Nobody appeared to find that interesting.
Now, CPI less rent has shown zero inflation for 5 months.
How long can zero remain uninteresting?
Some prices went up over the past five months and others went down, but the weighted average increase for everything in the average consumer’s shopping basket was nil once we properly exclude disingenuous and outdated estimates of shelter inflation.

Not sure if this guy is right on the second comment but the first is on the money and I expect it will occur again.
Forced hard landing either by design or ineptitude.

https://www.cato.org/blog/history-cautions-against-loosening-fed-policy-too-late-3

To paraphrase Jpowell: it's services, not goods, that are still driving inflation. And that's being driven by a tight labour market.

The Fed is now expecting US unemployment to head up in 2023 from a median 3.7% in 2022 to 4.6% in 2023, 2024 and 4.5% in 2025. Meanwhile GDP is heading down in 2023 to a median 0.5% - look at the distribution, obviously some on the board who expect it to be negative following revisions from only 3 months earlier.


To top it all off they're going to hike a further ~100bps.

So you've got negative GDP, job losses and tighter monetary conditions. How does this happen without a recession?

 

[over9k]

To paraphrase Jpowell: it's services, not goods, that are still driving inflation. And that's being driven by a tight labour market.

The Fed is now expecting US unemployment to head up in 2023 from a median 3.7% in 2022 to 4.6% in 2023, 2024 and 4.5% in 2025. Meanwhile GDP is heading down in 2023 to a median 0.5% - look at the distribution, obviously some on the board who expect it to be negative following revisions from only 3 months earlier.
View attachment 150494

To top it all off they're going to hike a further ~100bps.

So you've got negative GDP, job losses and tighter monetary conditions. How does this happen without a recession?

Bingo, read twice lads, bottle is on the money. PPI below estimates but CPI above them means it's labour driven.

Good post

 

[Smurf1976]

So you've got negative GDP, job losses and tighter monetary conditions. How does this happen without a recession?

Fully agree there. Looking ahead (2023) I do think a "hard landing" is extremely likely and I expect the Fed's fully aware of this, just not saying it publicly.

I was however expecting the announcement, or at least the wording around it, to be seen as positive enough by the stock market to send the indices up rather than down in the short term (now through end of year). Just a thinking on my part there, that's what I was expecting.

I don't consider the Fed to be incompetent, just misunderstood. If you take what they say literally then yeah, they're incompetent but personally I see that as part of the game. What they say and what they do aren't intended to align. They're not like the weather bureau doing their best to accurately forecast the weather. They're more like the car salesman trying to convince you to do what they want you to do, which may or may not be what's best for you.

 

[over9k]

And then you get supply issues to factor in as well...

Messy hey?

 

[InsvestoBoy]

I'll give you inept, but irrelevant?

Utterly.

Why The Fed’s Balance Sheet Reduction Is As Irrelevant As Its Expansion

The FOMC is widely expected to vote in favor of reducing the system’s balance sheet this week. The possibility has been called historic and momentous, though it may be for reasons that aren’t very kind to these central bankers. Having started to swell almost ten years ago, it’s a big deal only in

alhambrapartners.com

 

[over9k]

Utterly.

Why The Fed’s Balance Sheet Reduction Is As Irrelevant As Its Expansion

The FOMC is widely expected to vote in favor of reducing the system’s balance sheet this week. The possibility has been called historic and momentous, though it may be for reasons that aren’t very kind to these central bankers. Having started to swell almost ten years ago, it’s a big deal only in

alhambrapartners.com

Markets have swung wildly just on st jerome's comments and perception = reality in this business.

 

[InsvestoBoy]

Markets have swung wildly just on st jerome's comments and perception = reality in this business.

I mean...exactly.

If you need any more proof of the absolute irrelevance of the Fed, look no further than the fact that their entire repertoire has been reduced to their effectiveness in managing perceptions.

They don't manage anything else, that's for sure.

 

[InsvestoBoy]

Markets have swung wildly just on st jerome's comments and perception = reality in this business.

I'm just thinking of all the stupid **** that Central Bankers have said since 2007 and the hilarity that people believe any of those absurdities have influenced reality in any way.





etc