Make that three in a row. Jan, Feb and Mar CPI all exceeded expectations – showing how stubborn inflation can be. And whilst the Fed focuses more on Core PCE (due at the end of the month) – this remains a concern. Here’s the thing: non-core inflation continues to hurt real America. Take small business – their confidence is now at 2012 lows. Their primary concern: inflation and higher input costs.
"Interest Rates / Bonds"
How About Zero Rate Cuts this Year?
At the time of writing (April 7) – the market is pricing in three rate cuts this year. I don’t see it. In fact, I think there is a very good chance of NO rate cuts this year. Now that is not a scenario the market is pricing in. However, with inflation likely to remain stubbornly high – where property prices are not falling – and the labor market remains tight – why would the Fed cut? Let’s explore….
Immigration’s Impact on Jobs
The headline will read 303K new jobs were added to the economy for the month of May. And on the surface, it gives the appearance of a very strong number. However, how many of these were full-time jobs? And where were the jobs being added? When we look into the details of the jobs report – it paints a very different picture. My take: the headline number is not as strong as some assume.
Powell’s Itchy Trigger Finger
Why does Powell think the Fed needs to cut rates? For me it’s curious. Itchy (trigger) finger maybe? What’s he so worried about? I was surprised by his (continued) dovish rhetoric and contradiction(s) last meeting. For example, on the one hand, growth is accelerating, inflation is falling and we have a strong labor market. Great! But we still need to cut rates and taper QT (soon!). I must be missing something – it’s hard to understand why the Fed is so keen to pull the trigger… what do they see we don’t?
For a full list of posts from 2017…