INFLATION--FED's cutting rates again...

[Chop]

Yes, housing prices have been coming down. It's about time--housing $$$$ had gotten way out of control, pricing out the young potential homebuyers who would normally be entering the market.

As long as energy doesn't throw us a curveball (and it might...), the Fed may have inflation licked in another few quarters. I'd still look for another 0.5% rate hike or two, then some 0.25% rate hikes before no action for quite a while, then maybe rate cuts--but not until stabilization of prices is hard set. Of course, if we go into recession, the Fed will likely pick up the pace.

This Fed chairman looks like he will do what it takes to damper high inflation. The massive "free money" from the Coronavirus era surely helped plenty of people out, but it did make his job more difficult. It's a lot less likely now to have that sort of huge $$$$$ giveaways.

 

[mchammer]

Labor inflation came in lower than expected at 4.6%, which is lower than the fed rate.

Is there anything besides eggs that is increasing in price?

 

[mchammer]

We’re still at around 7.1%.
Not going up and up anymore,
Decreasing a bit month by month since June 2022.
But not going down by much.
Not too terrible. But still too high, and not at all good.
The battle continues. Look for more 0.5% hikes by the Fed. It may not be over for quite a while.

Sorry to beat a dead horse but you are wrong. Inflation is going down a lot. In fact, it has been 2.5% for the past 5 months as explained by Alan Binder in the WSJ (please see below). It only looks high because of the comps from 12 months ago (again please read Mr Binder for an explanation).

 

[mchammer]

Yes, housing prices have been coming down. It's about time--housing $$$$ had gotten way out of control, pricing out the young potential homebuyers who would normally be entering the market.

As long as energy doesn't throw us a curveball (and it might...), the Fed may have inflation licked in another few quarters. I'd still look for another 0.5% rate hike or two, then some 0.25% rate hikes before no action for quite a while, then maybe rate cuts--but not until stabilization of prices is hard set.

Inflation has been licked for the past 5 months. Wall St is just figuring this out, which is why the market is taking off. Labor inflation is the last inflationary component left. All others such as energy, housing, materials, etc are dropping in price.

 

[mchammer]

If you are not 100% invested in equities now, you are losing money.

 

[Monahorns]

Money supply contracted at the end of 2022. That means inflation will come down it is just a matter of time as long as the money supply isn't increased again. We had previously seen the price inflation rate decrease so we are approaching an inflection point.

 

[mchammer]

The Covid stimulus money (fiscal boost) has dried up since June (actually since late 2021 from the government coffers but apparently it took 6 months to drain it from folks accounts). Also supply chain crunch is fixing itself after a year of focus. The last leg of the stool is government money supply as Mona pointed out.

 

[nashhorn]

Hahahshaha, yep it’s decreasing but what do you see coming down on a daily need basis? Eggs? Bacon? Come on man, the daily expenses still suck.

 

[mchammer]

Hahahshaha, yep it’s decreasing but what do you see coming down on a daily need basis? Eggs? Bacon? Come on man, the daily expenses still suck.

Sorry, but no one cares about your grocery bill. What they care about is future inflation and if the fed will raise rates beyond 0.5% points. Why would they care about you and me spending $2000 more annually if the stock market goes up 15%?

Actually beef has come down a lot. Top sirloin is now $8 per lb at Costco.

 

[Monahorns]

Hahahshaha, yep it’s decreasing but what do you see coming down on a daily need basis? Eggs? Bacon? Come on man, the daily expenses still suck.

I haven't seen any real price reduction yet. Money supply inflation is the foundation of it all so with the supply reducing at some point prices will follow. But it takes an unknown amount of time for the "new" money to move through the economy and cause changes. Historical data shows it could take 5-10 years

But with the money supply change rate being negative we know NO more extra damage will be done. Anymore damage occurring now is from previous money increases.

Some things may never go down. The ratio of value between goods will never go back to what it was but overall prices will be less at some point if no new money is created.

 

[Monahorns]

Sorry, but no one cares about your grocery bill. What they care about is future inflation and if the fed will raise rates beyond 0.5% points. Why would they care about you and me spending $2000 more annually if the stock market goes up 15%?

Reducing money supply will reduce stocks too. The foundation is the # of $ in existence. If the # goes down then prices across the board will be affected. Stock prices were one of the most closely tied categories to money supply too. The stock market was up because new $ went directly to investment assets like stocks. With no new $ that stops and prices should go down too.

 

[mchammer]

Reducing money supply will reduce stocks too. The foundation is the # of $ in existence. If the # goes down then prices across the board will be affected. Stock prices were one of the most closely tied categories to money supply too. The stock market was up because new $ went directly to investment assets like stocks. With no new $ that stops and prices should go down too.

New money went into crap stocks and crypto, which most don’t care about. Even if some of the money lifted S&P stocks, those stocks lost 30% last year from peak. Market is going up.

 

[Monahorns]

New money went into crap stocks and crypto, which most don’t care about. Even if some of the money lifted S&P stocks, those stocks lost 30% last year from peak. Market is going up.

No. Money went into all the areas of the economy where apparent growth occurred. That means real estate, education, woke green industry, and ALL of the stocks. Stocks are due to drop more. I heard one analyst say stocks won't grow much for the next 10 years. Money injection and the end of it are his justification.

 

[mchammer]

No. Money went into all the areas of the economy where apparent growth occurred. That means real estate, education, woke green industry, and ALL of the stocks. Stocks are due to drop more. I heard one analyst say stocks won't grow much for the next 10 years. Money injection and the end of it are his justification.

Fine - I am happy to take your money.

 

[Monahorns]

Fine - I am happy to take your money.

You still don't understand. Sad.

 

[Monahorns]

I have put money in all the areas. I believe in innovation. Small and large companies continue to pursue it, so stocks will still have value in pockets. I am looking for them. I believe in sound money, which is very important if you understand history. Putting your money into sound currency will produce real results too.

The one area I haven't invested in is real estate because it takes a considerable chunk to enter. At some point I will buy or inherit rental space. I'm covering all my bases.

 

[AC]

Labor inflation came in lower than expected at 4.6%, which is lower than the fed rate.

Is there anything besides eggs that is increasing in price?

Your analysis on inflation is missing the point. Inflation on a real basis is still 15-20%. CPI is not at all accurate. The ratio pulls in 1982-1984 inflation, then the calculation does not consider household expenses. Food is still up big, rent up big, mortgages up big, due to interest rates. The Fed is starting to push CBDC. I write blogs about this. It’s very complicated and you cannot go by Larry Kudlow. He’s a shill!:
Bitcoin is the decentralized alternative, all US Banks are now piloting CBDC’s, even Visa and Mastercard

 

[AC]

Lyn Alden is a very smart down to earth economist who is far better than Larry Summers or Larry Kudlow! Pay attention to her!

 

[mchammer]

I always love it when the Fed haters criticize them for doing the right thing: creating sound money by raising interest rates. Yes, if money was free, I could hire anyone off the street and the unemployment rate will be zero. Is this really what you want?

 

[AC]

No, sound money is scarce. USD and other fiat currencies are not scarce. Regardless of what the interest rate is. They hide inflation so the public cannot see the theft. Let’s see what happens in 2023.

 

[Horn2RunAgain]

Sorry, but no one cares about your grocery bill. What they care about is future inflation and if the fed will raise rates beyond 0.5% points. Why would they care about you and me spending $2000 more annually if the stock market goes up 15%?

Actually beef has come down a lot. Top sirloin is now $8 per lb at Costco.

At least half of Americans care about their grocery bill. The damage has been done and it was massive. Hurt a lot of our wallets and budgets

 

[mchammer]

At least half of Americans care about their grocery bill. The damage has been done and it was massive. Hurt a lot of our wallets and budgets

For folks on Wall Street, that was 2022. Besides, retirees are getting an 8.7% increase in payments from SS:

Social Security benefits and Supplemental Security Income (SSI) payments will increase by 8.7% in 2023. This is the annual cost-of-living adjustment (COLA) required by law.

 

[AC]

FEDERAL RESERVE BUILDING!!! JAN 2 2023

MH - I can’t help you. Maybe after the monetary system changes over to CBDC you will wake up. Or when the USD hyper-inflates after the BRICS reserve currency takes over as reserve currency. One of the two is happening pretty soon. You’ll see! Not saying when. We’ll all know when it gets here.

 

[mchammer]

FEDERAL RESERVE BUILDING!!! JAN 2 2023

MH - I can’t help you. Maybe after the monetary system changes over to CBDC you will wake up. Or when the USD hyper-inflates after the BRICS reserve currency takes over as reserve currency. One of the two is happening pretty soon. You’ll see! Not saying when. We’ll all know when it gets here.

You realize exchange rates only matter for imports and exports? Under a hyperinflation environment, US exports will be cheaper and our imports will be expensive, which will incentivize foreign companies to build here. It’s not all bad.

 

[Horn2RunAgain]

For folks on Wall Street, that was 2022. Besides, retirees are getting an 8.7% increase in payments from SS:

Social Security benefits and Supplemental Security Income (SSI) payments will increase by 8.7% in 2023. This is the annual cost-of-living adjustment (COLA) required by law.

I think a lot of retirees would say that's like draining half their blood in 2022 and putting back 35% in 2023

The damage has been done. No 2 ways about it

 

[mchammer]

I think a lot of retirees would say that's like draining half their blood in 2022 and putting back 35% in 2023

The damage has been done. No 2 ways about it

You can get some of it back by buying 5% CD. It was <1% for 2 years.

 

[mchammer]

NY Fed survey: Short-term inflation expectations drop to lowest level since 2021 — Yahoo Finance

 

[nashhorn]

Wow mc I should be so happy the rate is going down and my new SS is going to make up for all the price increase. Hell I’m gonna be rich. Ugh.

 

[Horn2RunAgain]

You can get some of it back by buying 5% CD. It was <1% for 2 years.

People aren't interested in getting "some of their money back "

 

[AC]

You can get some of it back by buying 5% CD. It was <1% for 2 years.

Dude, real inflation is 15% to 20% depending on where you live. Going from .8% to 5% doesn’t help.