Inflation

[mullokintyre]

1.1%, to really put the cat among the pigeons.
And then on the 15th (beware the ides of March) , PPI for goods rises 1.6%, and for services 1.1%.
Mick

 

[waterbottle]

1.1%, to really put the cat among the pigeons.
And then on the 15th (beware the ides of March) , PPI for goods rises 1.6%, and for services 1.1%.
Mick

That's a 0.5% rate rise.... Maybe 0.75%

 

[over9k]

The fed's all but said it's going to be a 0.25 rate rise just in case you're wondering. As soon as war broke out all the hike bets etc that had effectively priced in a 0.48 or thereabouts change plummeted back to 0.25.

It's somewhat difficult to coordinate monetary policy with war.

 

[qldfrog]

That's a 0.5% rate rise.... Maybe 0.75%

BTD on gold,silver and index shorts IMHO
PS i doubt we will see any significant rate rise in the US...just hyperinflation on its way, but we could see some here.

 

[macca]

That's a 0.5% rate rise.... Maybe 0.75%

Should be, won't be..................

At the most 0.25 but IMO very unlikely, 0.01 will be closer to the mark,

Hyper inflation is required to reduce the debts to something that can be repaid within our grandchildren's lifetime.

The whole thing is a stinking pile of s...

 

[Smurf1976]

As a real world example of hidden inflation, a simple consumer product - a solar powered garden light.

Needing to replace a failed one, and wanting to match the others for purely aesthetic reasons, I went in search of an identical new one. That turned out to be unavailable but I did find one that looks almost the same apart from colour and on inspection all the parts are interchangeable and fit - it comes from the same factory almost certainly.

However, with detailed examination at home I can confirm that:

The colour change from stainless steel to black for the top and body has been achieved simply by omitting the stainless steel parts which fitted over a black plastic base. Now it's just the bare plastic.

The plastic piece to which the LED and switch are mounted was white plastic with the old one and fitted well. The new uses softer black plastic and is a poor fit, requiring some effort to reassemble.

The stake which goes in the ground contains 30% less plastic by weight with the new one when compared to the old but is otherwise the same design and material, just thinner.

The tube which forms the stem of the light has been changed from stainless steel to powder coated steel and is substantially thinner. The old one is quite firm whereas the new is easily deformed simply by squeezing it between fingers and thumb.

The old one had two modes - white light or multi-colour changing. The new has one mode only, white.

The old one had a 600mAh battery. The new one comes with a 400mAh battery.

The three screws which secure the top section, housing the electronics, have been reduced in length by approximately 30%.

The new one cost 20% more than the old.

So what's the real rate of inflation there?

It's drastically more than the 20% price increase alone. The materials in the product have been reduced in mass by making it thinner, lower quality materials have been used and and it has only one function instead of two with the associated parts simply omitted.

My best estimate is that true inflation for this product would be around 80% over three years, primarily due to the reduced quality, noting that it's no longer possible to buy the original.

Now realise that this situation is in no way unique to a garden light and applies across the board to a vast range of consumer products. Thinner or lower capacity components made of cheaper materials and with functionality reduced but done in a manner so as to conceal the change so far as possible given that most consumers won't disassemble the product and weigh the components.

Now I dare say that when some central banker does a "hedonic adjustment" to account for changes in product quality, they won't be picking things like this up and saying that oh yeah, inflation's actually higher than the headline figure because product quality has reduced.

 

[qldfrog]

As a real world example of hidden inflation, a simple consumer product - a solar powered garden light.

Needing to replace a failed one, and wanting to match the others for purely aesthetic reasons, I went in search of an identical new one. That turned out to be unavailable but I did find one that looks almost the same apart from colour and on inspection all the parts are interchangeable and fit - it comes from the same factory almost certainly.

However, with detailed examination at home I can confirm that:

The colour change from stainless steel to black for the top and body has been achieved simply by omitting the stainless steel parts which fitted over a black plastic base. Now it's just the bare plastic.

The plastic piece to which the LED and switch are mounted was white plastic with the old one and fitted well. The new uses softer black plastic and is a poor fit, requiring some effort to reassemble.

The stake which goes in the ground contains 30% less plastic by weight with the new one when compared to the old but is otherwise the same design and material, just thinner.

The tube which forms the stem of the light has been changed from stainless steel to powder coated steel and is substantially thinner. The old one is quite firm whereas the new is easily deformed simply by squeezing it between fingers and thumb.

The old one had two modes - white light or multi-colour changing. The new has one mode only, white.

The old one had a 600mAh battery. The new one comes with a 400mAh battery.

The three screws which secure the top section, housing the electronics, have been reduced in length by approximately 30%.

The new one cost 20% more than the old.

So what's the real rate of inflation there?

It's drastically more than the 20% price increase alone. The materials in the product have been reduced in mass by making it thinner, lower quality materials have been used and and it has only one function instead of two with the associated parts simply omitted.

My best estimate is that true inflation for this product would be around 80% over three years, primarily due to the reduced quality, noting that it's no longer possible to buy the original.

Now realise that this situation is in no way unique to a garden light and applies across the board to a vast range of consumer products. Thinner or lower capacity components made of cheaper materials and with functionality reduced but done in a manner so as to conceal the change so far as possible given that most consumers won't disassemble the product and weigh the components.

Now I dare say that when some central banker does a "hedonic adjustment" to account for changes in product quality, they won't be picking things like this up and saying that oh yeah, inflation's actually higher than the headline figure because product quality has reduced.

As an aside, i so like to see people acting as i do?
We should form a tribe!!!!
Anyone knowing exactly when US cpi figures are released?
I expect bad numbers, and we should remember these do not reflect yet the Ukraine war effects.
US futures down again but these can be manipulated,oil and gold silver up again

 

[qldfrog]

As an aside, i so like to see people acting as i do?
We should form a tribe!!!!
Anyone knowing exactly when US cpi figures are released?
I expect bad numbers, and we should remember these do not reflect yet the Ukraine war effects.
US futures down again but these can be manipulated,oil and gold silver up again

Actually PM down now.. volatility...

 

[waterbottle]

As an aside, i so like to see people acting as i do?
We should form a tribe!!!!
Anyone knowing exactly when US cpi figures are released?
I expect bad numbers, and we should remember these do not reflect yet the Ukraine war effects.
US futures down again but these can be manipulated,oil and gold silver up again

12:30AM Friday AEST

 

[qldfrog]

12:30AM Friday AEST

Thanks @waterbottle
so after today's US session but in the middle of our last day of the week.will be interesting and a wild guess.

 

[qldfrog]

Thanks @waterbottle
so after today's US session but in the middle of our last day of the week.will be interesting and a wild guess.

Apologies got confused currently in US time zone so
I believe it will be above these expectations...

 

[qldfrog]

Apologies got confused currently in US time zone soView attachment 138900
I believe it will be above these expectations...

Official 7.9%
US market down, PM up, Frog has no complaint

 

[mullokintyre]

From Trading Economics

Annual inflation rate in the US accelerated to 7.9% in February of 2022, the highest since January of 1982, matching market expectations. Energy remained the biggest contributor (25.6% vs 27% in January), with gasoline prices surging 38% (40% in January). Inflation accelerated for shelter (4.7% vs 4.4%); food (7.9% vs 7%, the largest since July of 1981), namely food at home (8.6% vs 7.4%); new vehicles (12.4% vs 12.2%); and used cars and trucks (41.2% vs 40.5%). Excluding volatile energy and food categories, the CPI rose 6.4%, the most in 40 years. Still, the surge in energy costs due to war in Ukraine is still to come. The inflation was seen peaking in March but the recent developments in Europe coupled with the ongoing supply constraints, strong demand, and labour shortages will likely maintain inflation elevated for longer. source: U.S. Bureau of Labor Statistics​

Whichever way you look at it, things are getting tougher for the US consumer.This transitionary inflation is not only persistent, it keeps getting larger margins.
The Fed will not raise rates until too late, and the US consumers are in for a period of high inflation.
Mick

 

[waterbottle]

0.8% for the month. Critically, inflation is rising across all components, not just energy.

Also worth noting that the recent increase in the price of oil only occured in the last week of February. Continuation of the war (likely to take a few weeks) and disruption to Ukrainian and Russian commodity supply/access will last months.

 

[waterbottle]

US inflation at a 40-year high and the only way is up

Consumer price inflation hit a new 40 year high and will soon get close to 9% as businesses' surging commodity and labour costs get passed onto…

think.ing.com

 

[macca]

Should be, won't be..................

At the most 0.25 but IMO very unlikely, 0.01 will be closer to the mark,

Hyper inflation is required to reduce the debts to something that can be repaid within our grandchildren's lifetime.

The whole thing is a stinking pile of s...

Wrong again

Glad to be wrong actually, hyperinflation is really bad for retired folk

 

[mullokintyre]

US producer prices rose again Feb, but not as much as forecast.
From Investing dot com

Prices paid to U.S. producers rose strongly in February on higher costs of goods, underscoring inflationary pressures that set the stage for a Federal Reserve rate hike this week.

The producer price index for final demand increased 10% from February of last year and 0.8% from the prior month, Labor Department data showed Tuesday. That followed an upwardly revised 1.2% monthly gain in January.

The median forecasts in a Bloomberg survey of economists called for a 10% year-over-year increase and a 0.9% monthly advance.

Two year Treasury yields extended declines and U.S. stock futures rose after the data showed producer prices rose less than expected on a monthly basis.

The data reflect the biggest monthly gain in the price of goods in data back to 2009, with two-thirds of the increase due to energy. It’s the latest indication of rapid inflation in the U.S., and prices are poised to accelerate further after Russia’s invasion of Ukraine sent prices of some raw materials to new highs.

While that bolsters the case for the Fed to be aggressive in tamping down inflation in the coming months, the central bank will have to balance curbing inflation without stifling economic growth.

The Fed will have the latest inflation data in hand for its meeting that concludes Wednesday, when policy makers are widely expected to increase interest rates for the first time since 2018. Along with the decision, the Fed will release updated forecasts for inflation and growth.

The data suggest persistent inflationary pressures in production will filter through to consumer prices, which rose in February at the fastest pace in 40 years, in part due to higher gasoline, food and housing costs. That’ll only worsen given the war, and China’s lockdown of Shenzhen -- one of the nation’s most populous cities and a technology hub -- is expected to disrupt fragile supply chains even more.

So, one can assume there will be further inflation in the pipeline.
Mick

 

[mullokintyre]

Interesting take on yesterdays announcement in U about the 25 basis points rise in US rates.
from Their ABC

ASX to climb as Wall Street stocks, oil prices rise on outlook after aggressive Fed rate hike​

If they regard a 25 basis point rise in interest rates as "aggressive", I wonder what they would have thought of one the Fed members getting his wish for a 50 point rise??
Mick

 

[over9k]

 

[sptrawler]

Bloomberg - Are you a robot?

www.bloomberg.com

Losses in global bond markets have marked a milestone as central banks including the Federal Reserve look to tighten policy to combat surging inflation.

The Bloomberg Global Aggregate Index, a benchmark for government and corporate debt, has fallen 11% from a high in early 2021. That’s the biggest decline from a peak in data stretching back to 1990, surpassing a 10.8% drawdown during the financial crisis in 2008.
The Fed raised interest rates by 25 basis points last week, and Chair Jerome Powell said this week it is prepared to increase them by a half percentage-point at its next meeting if needed. Higher borrowing costs risk further dampening the return on debt, eroded by the fastest pace of consumer-price increases in decades.
It’s a blow to money managers accustomed to years of consistent gains, backstopped by loose monetary policy. Stocks are staring down a bear market, upending the dynamics of a classic 60/40 portfolio that is meant to balance out any losses from riskier equities with the more stable cash flow of bonds.