5 ms·

Fed holds off on rate hike, but says two more are coming later this year

27 points by scrlk 3y ago

JumpinJack_Cash 3y ago
Inflation is already gone, back to secular deflation we go
- Thetawaves 3y ago
  Core inflation at 4% yoy is not gone.
  - toss1 3y ago
    Core was 5.2% (from report I heard). But it is a dead man walking; the ground has fallen out from underneath it. The two main drivers were post-pandemic-supply-chain-shock oscillations, and corporate monopolistic price-profit increases. The supply chain has largely normalized, shipping rates are collapsing, we're decoupling from China, etc.. And corp pricing power has reached it's limit as consumers start saying "nope, not buying it" and/or downshifting purchases.
    - almog 3y ago
      Core came at 5.3% YoY for May 2023 and 0.4% MoM. It has been quite sticky, an seen little change compared on a 3 months annualized to May 2022 (5.3% vs 5.8%). It might as well be a dead man walking, in the zombie apocalypse sense of the word. Source: https://www.bls.gov/news.release/cpi.nr0.htm https://www.bls.gov/news.release/cpi.nr0.htm
- tomcar288 3y ago
  let's not forget, the CPI is off by about 2%. Just look at http://www.shadowstats.com/ http://www.shadowstats.com/ or the big mac index or case shiller index or any realistic measure of CPI.
  - deleted 3y ago
    [deleted]
mempko 3y ago
JP during his talk "inflation has not reacted much to our existing rate hikes". This analysis from Lyn Alden is really good at explaining why https://www.lynalden.com/inflation-vs-interest-rates/ https://www.lynalden.com/inflation-vs-interest-rates/ TLDR; The monetary expansion we saw was because of huge government spending during the Pandemic, which boosted growth and jobs. Higher interest rates on government debt just means more money going to the private sector. So Fed's rate rise provided a windfall for those holding government bonds, furthering inflation.
- deleted 3y ago
  [deleted]
- quickthrowman 3y ago
  > So Fed's rate rise provided a windfall for those holding government bonds, furthering inflation. Silicon Valley Bank was insolvent because the value of their government bonds declined so much after the Fed started raising rates. They were taken over by the FDIC after this came to light and the bank no longer exists. I find it hard to characterize that as a windfall.

27 points by scrlk 3y ago

JumpinJack_Cash 3y ago

Inflation is already gone, back to secular deflation we go

Thetawaves 3y ago
Core inflation at 4% yoy is not gone.
- toss1 3y ago
  Core was 5.2% (from report I heard). But it is a dead man walking; the ground has fallen out from underneath it. The two main drivers were post-pandemic-supply-chain-shock oscillations, and corporate monopolistic price-profit increases. The supply chain has largely normalized, shipping rates are collapsing, we're decoupling from China, etc.. And corp pricing power has reached it's limit as consumers start saying "nope, not buying it" and/or downshifting purchases.
  - almog 3y ago
    Core came at 5.3% YoY for May 2023 and 0.4% MoM. It has been quite sticky, an seen little change compared on a 3 months annualized to May 2022 (5.3% vs 5.8%). It might as well be a dead man walking, in the zombie apocalypse sense of the word. Source: https://www.bls.gov/news.release/cpi.nr0.htm https://www.bls.gov/news.release/cpi.nr0.htm
tomcar288 3y ago
let's not forget, the CPI is off by about 2%. Just look at http://www.shadowstats.com/ http://www.shadowstats.com/ or the big mac index or case shiller index or any realistic measure of CPI.
- deleted 3y ago
  [deleted]

mempko 3y ago

JP during his talk "inflation has not reacted much to our existing rate hikes". This analysis from Lyn Alden is really good at explaining why https://www.lynalden.com/inflation-vs-interest-rates/ https://www.lynalden.com/inflation-vs-interest-rates/ TLDR; The monetary expansion we saw was because of huge government spending during the Pandemic, which boosted growth and jobs. Higher interest rates on government debt just means more money going to the private sector. So Fed's rate rise provided a windfall for those holding government bonds, furthering inflation.

deleted 3y ago
[deleted]
quickthrowman 3y ago
> So Fed's rate rise provided a windfall for those holding government bonds, furthering inflation. Silicon Valley Bank was insolvent because the value of their government bonds declined so much after the Fed started raising rates. They were taken over by the FDIC after this came to light and the bank no longer exists. I find it hard to characterize that as a windfall.