The Inflation Thread.

[Folster]

Not good news for hopes of getting a handle on inflation. I didn't realize all of this other stuff was also going on.

Fuel, housing, and food. Not good.

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[dscher]

Not good news for hopes of getting a handle on inflation. I didn't realize all of this other stuff was also going on.

Fuel, housing, and food. Not good.

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I hate to say it but when I looked at the chart of MBS it all but confirmed a housing crisis. Of course, IMO. I also don't like the continuing strength in the dollar vs the TIPs. Based on my charts, when they diverge significantly it's a deflationary signal that occured during the GFC. Just a plethora of leading indicators around the markets right now to be super cautious. I keep harping, but man, it's super sketchy out there. Factor in macro craziness and social unrest it just feels like that perfect rug pull.

 

[Folster]

March CPI 8.5%.

 

[Folster]

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[dscher]

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[elindholm]

Yeah, inflation is starting to look really bad. As I've said before, I think the covid stimulus was a good idea, but it was disingenuous of the Democrats to be so dismissive of the recognition that it would be inflationary.

 

[dscher]

Dan Niles just destroyed closing bell host on CNBC... Thing of beauty. Every now and then they throw ya a bone and get a guest on there that leaves most hosts with egg on their face...

 

[dscher]

Yeah, inflation is starting to look really bad. As I've said before, I think the covid stimulus was a good idea, but it was disingenuous of the Democrats to be so dismissive of the recognition that it would be inflationary.

Covid stimulus was just a blip IMO. This has been decades in the making with Fed intervention and just goes back to end of cycle behavior from consumer based economies. Basically, we as a country and consumer cling on to the premise of letting the good times roll and go on and on and on with our consumerism... You can only blow a bubble so big.

 

[Finito]

March CPI 8.5%.

What’s the over under by December?

 

[Finito]

Covid stimulus was just a blip IMO. This has been decades in the making with Fed intervention and just goes back to end of cycle behavior from consumer based economies. Basically, we as a country and consumer cling on to the premise of letting the good times roll and go on and on and on with our consumerism... You can only blow a bubble so big.

Oh yeah this has been a house of cards for years now. Honestly I’m kind of surprised we haven’t crashed yet. It’s coming and when it comes I think it comes fast

 

[Devilmaycare]

Covid stimulus was just a blip IMO. This has been decades in the making with Fed intervention and just goes back to end of cycle behavior from consumer based economies. Basically, we as a country and consumer cling on to the premise of letting the good times roll and go on and on and on with our consumerism... You can only blow a bubble so big.

I think the covid stimulus accelerated it though and caused a bubble on the bubble. Basically a weak point that's going help it burst. I mostly follow @elindholm's sentiment early with the caveat that I think the feds over did it with the covid stimulus. The first rounds were needed but I don't think we should have done the last one. And it should have been smaller if the last one was done. I would have only focused on directly helping people that were still displaced due to covid (a means test) and would have started the QT earlier.

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[dscher]

I think the covid stimulus accelerated it though and caused a bubble on the bubble. Basically a weak point that's going help it burst. I mostly follow @elindholm's sentiment early with the caveat that I think the feds over did it with the covid stimulus. The first rounds were needed but I don't think we should have done the last one. And it should have been smaller if the last one was done. I would have only focused on directly helping people that were still displaced due to covid (a means test) and would have started the QT earlier.

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No question. It certainly did not help. My point was more so to the fact that all of this was going to happen inevitably at some point in the near future. They more than likely just put it into hyperdrive at that point with stimmies.

 

[Russ Smith]

Interesting to see that several sites are saying core inflation is actually lower than they expected and a quick look at the first 10 days of April suggests it may have peaked and could be on the way down. The WH said a big chunk of the CPI jump was Russian sanctions kicking in and based on what they're seeing in April so far it appears they were right. Oil and gas is coming down, gas every slowly, and some other stuff seems to be showing signs of peaking. not saying inflation will come racing down but it appears there ARE signs we might be peaking.

The problem is nobody knows what's going to happen in Russia and as folster's video shows there are other events in play that could send inflation higher even if the core stuff they think they have a feel for settles down.

Definitely scary

 

[Folster]

Yeah, inflation is starting to look really bad. As I've said before, I think the covid stimulus was a good idea, but it was disingenuous of the Democrats to be so dismissive of the recognition that it would be inflationary.

I can understand much of the stimulus approved by Congress, but the nearly 2 years of massive asset purchases by the Fed adding to the decade of QE coming out of the Financial Crisis is largely responsible in my opinion.

 

[Russ Smith]

I can understand much of the stimulus approved by Congress, but the nearly 2 years of massive asset purchases by the Fed adding to the decade of QE coming out of the Financial Crisis is largely responsible in my opinion.

I think much of it was a timing issue. I think the first stimulus plan for Covid was too small and made the 2nd one necessary. Then new president and the 3rd stimulus plan was too big, but was still in part necessary because the first plan wasn't big enough. If the first was done right I think the 2nd might not have been needed when it happened and the 3rd could have been smaller(and would have been the 2nd).

 

[Folster]

I think much of it was a timing issue. I think the first stimulus plan for Covid was too small and made the 2nd one necessary. Then new president and the 3rd stimulus plan was too big, but was still in part necessary because the first plan wasn't big enough. If the first was done right I think the 2nd might not have been needed when it happened and the 3rd could have been smaller(and would have been the 2nd).

Perhaps, but it's hard to tell. I know I put all of the blame on the Fed, but the ballooning annual deficits which must be financed by the Treasury with the sale of bonds which are bought by the Fed and other foreign governments.

 

[dscher]

Perhaps, but it's hard to tell. I know I put all of the blame on the Fed, but the ballooning annual deficits which must be financed by the Treasury with the sale of bonds which are bought by the Fed and other foreign governments.

You could argue it began in the early 80s based on this chart. It's an overlay of the 30 yr yield (candlesticks) vs the SP500 (black line) since the 1940s. This is more than likely the time we went into that consumer based economic model. BTW, this massive divergence of stock/yield is not good for anyone wondering. lol. So, it's not a matter of if, just when this all comes crashing down. It's just the way of late stage capitalism.. IMO

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[Russ Smith]

"the central bank’s emergency remedies increased the nation’s money supply by an astonishing 40 percent." while it sounds high it's actually not even close to what was done in the Great Depression.

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"Instead, the financial institutions that the Fed paid for those bonds parked more than $2 trillion in their accounts at the central bank while American households banked much of their stimulus checks and now sit on an estimated $2.7 trillion in savings."

The people saving the money is great, we need more savings and less personal debt. The banks pocketing 2 trillion dollars in stimulus and not spending it, is terrible. We saw this in the first 2 stimulus rounds all the reports of fraudulent PPP loans, but in all 3 stimulus payouts it appears banks were asking for and getting money they didn't need and had no intention to spend. Add in the other non covid and non stimulus things the money was spent on, in all 3 of them, and not much surprise we have inflation now I guess?