Inflation

[mullokintyre]

The issue for the unfortunate citizens of the world is that the transitoriness or otherwise of inflation is immaterial.
They have to pay the higher prices for the everyday survival needs.
Thrse are mere semantics spoken by the elites who can overcome these hurdles.
Mick

 

[over9k]

 

[CityIndex]

Time to go harder.

Canada delivered a shock 100bps increase.
South Korea surprised with 50bps.
NZ delivered 50bps consistently and early, with the view to continue indefinitely until inflation controlled.
The Fed is now likely to deliver 75bps, possibly 100bps.

RBA will have to move faster before AUD keeps falling and we end up with imported inflation.

The Eurozone’s current situation is a great example of this. While EUR/USD hitting and breaking parity is mostly just symbolic, the Euro’s immense deprecation over the last few months carries serious economic implications.

Most notably, as you already mentioned, rising import costs which will add to inflation. This will likely force the ECB into a relatively aggressive tightening cycle, albeit at the cost of a potential recession.

As for Australia, yesterday’s blowout labour market data does signal a relatively strong position for the economy, which therefore should be able to withstand further rate hikes. Of course, all trading carries risk, but it should be interesting to see if this can help AUD rebound over the coming weeks.

 

[over9k]

The Eurozone’s current situation is a great example of this. While EUR/USD hitting and breaking parity is mostly just symbolic, the Euro’s immense deprecation over the last few months carries serious economic implications.

Most notably, as you already mentioned, rising import costs which will add to inflation. This will likely force the ECB into a relatively aggressive tightening cycle, albeit at the cost of a potential recession.

As for Australia, yesterday’s blowout labour market data does signal a relatively strong position for the economy, which therefore should be able to withstand further rate hikes. Of course, all trading carries risk, but it should be interesting to see if this can help AUD rebound over the coming weeks.

Aka stagflation.

 

[over9k]

Lots of talk about trump finding his comeback moment now too. Something to keep an eye on.

 

[JohnDe]

Aka stagflation.

Not sure that you can call it the beginning of stagflation when unemployment is currently very low - In economics, stagflation or recession-inflation is a situation in which the inflation rate is high, the economic growth rate slows, and unemployment remains steadily high. It presents a dilemma for economic policy, since actions intended to lower inflation may exacerbate unemployment.

 

[henrietta]

Central banks have made clear that after a sluggish start, they're serious about putting a lid on inflation. Now, as prices soar even faster than expected, they're weighing increasingly drastic options.
What's happening: Investors see a growing probability that the Federal Reserve could hike interest rates by a full percentage point at its next meeting for the first time in the modern era. In June, the Fed raised interest rates by three-quarters of a percentage point, which it hadn't done since 1994.
US stocks mostly shrugged at the news on Wednesday that consumer prices jumped 9.1% year-over-year in June, a fresh 40-year high and a larger increase than forecast. But policymakers indicated deep concern.

"Everything is in play," Atlanta Federal Reserve Bank President Raphael Bostic told reporters on Wednesday.By Julia Horowitz, CNN Business

A 1% hike could be interesting.

Cheers
J

 

[waterbottle]

China GDP down 2.2% for the quarter... The only time it was worse was during the beginning of COVID lockdown in Jan 2020 when they hit -5%.

If China's GDP is this low, then what has the US been consuming... RIP retail

 

[mullokintyre]

China GDP down 2.2% for the quarter... The only time it was worse was during the beginning of COVID lockdown in Jan 2020 when they hit -5%.

If China's GDP is this low, then what has the US been consuming... RIP retail

Food, and lots of it.
Big Macs, Really Big Macs, and F%$#$ing enormous Macs.
Mick

 

[over9k]

China GDP down 2.2% for the quarter... The only time it was worse was during the beginning of COVID lockdown in Jan 2020 when they hit -5%.

If China's GDP is this low, then what has the US been consuming... RIP retail

Pent up demand for travel etc. Simple seasonality with it being summer up there too so retail gets a double fisting after the whole world bought *everything* last year/the year before.

 

[over9k]

PRECISELY:



https://www.bea.gov/news/2022/personal-income-and-outlays-may-2022

https://fred.stlouisfed.org/series/PSAVERT


Fact is that plenty of the printed cash was banked over the past couple of years and it's nowhere near running out yet. Don't get me wrong, more and more of it is having to be spent to do stuff (see: oil prices) so its purchasing power is diminishing, but there's still a fckton of it to go.

 

[over9k]

"If nordstream doesn't come back online, rationing is a certainty".

 

[over9k]

Looks like 75's most likely at the next meeting. Last time markets got what they wanted there was a huge bounce in response.

 

[qldfrog]

China GDP down 2.2% for the quarter... The only time it was worse was during the beginning of COVID lockdown in Jan 2020 when they hit -5%.

If China's GDP is this low, then what has the US been consuming... RIP retail

I would be more worried on the effect of this on our own mineral exports...
We can go past a US recession/depression a la GFC..but only if China pulls us.
If China does not,we are toast..well we have the Olympics and watermelon/teal in power so we are saved.

 

[divs4ever]

I would be more worried on the effect of this on our own mineral exports...
We can go past a US recession/depression a la GFC..but only if China pulls us.
If China does not,we are toast..well we have the Olympics and watermelon/teal in power so we are saved.

actually it doesn't sound like the watermelon/teal is so China-tolerant either , is that buttered toast or burned to charcoal

BTW the Olympics will be a rainbow albatross by then anyway ( last i heard Brisbane was the only nominee )

 

[waterbottle]

The Fed mouthpiece is indicating a 75bp rise at the next meeting

Fed Officials Preparing to Lift Interest Rates by Another 0.75 Percentage Point

Policy makers are leaning against a full-point interest-rate increase at their next meeting despite the inflation surge in June.

www.wsj.com

 

[JohnDe]

The Fed mouthpiece is indicating a 75bp rise at the next meeting

Fed Officials Preparing to Lift Interest Rates by Another 0.75 Percentage Point

Policy makers are leaning against a full-point interest-rate increase at their next meeting despite the inflation surge in June.

www.wsj.com

We may not be far behind.

 

[over9k]

Update on the shipping situation: Russia is now insuring the ships themselves so that other countries not participating in the sanctions can still get their oil.

So yeah, sovereign indemnification.

 

[divs4ever]

you would almost wonder when they start sinking Russian tankers and freighters .. just to help the sanctions along

 

[bluekelah]

you would almost wonder when they start sinking Russian tankers and freighters .. just to help the sanctions along

That would probably contribute even more to global inflation, not to mention risk of starting a proper war.

Time is running out for Europe as "winter is coming" ;D Them folks will be back to burning firewood for heat in winter.