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Inflation Report Has Some Decimals
Not that anyone cared -- caught up as the American media was Friday in a domestic political circus complete with blond wigs and bright orange makeup -- but core price growth on the Fed's preferred inflation gauge ran 0.24917% last month.
The print technically counted as "in line." With consensus, I mean. It was consistent with the collective wisdom of dozens of forecasters who're rarely right individually and only occasionally so collectively. That's the miracle of macro forecasting: Economists
But …. how will these numbers influence the dot plots?
How do us degenerates trade it H!?
Look to twitter to find out……..
Disposal income growth lowest since Nov 23.
Service expenditures growth continues falling. Goods expenditures growth are back to flat/negative after March’s sharp +ve blip.
While core PCE price growth has been stuck at a still-to-high level and without a clear +ve or -ve trend for 4-6 months, the economy is slowing. Which is either bad-is-good or bad-is-bad, depending on where you sit.
Assuming it’s all measured properly, which it isn’t. And all of that’ll be revised. Nobody knows anything.
The richer you are the less important any of this is, including rates. Just one question: after nearly a year with no change in rates, will it really make any difference whether there will be a 25bp cut in September? I mean seriously who cares? I sure don’t. Market rates are changing by the minute already, but not enough to make anyone but a pro operated algo care. The stock market is just another version of FanDuel. Look around, everywhere one turns there is someone begging us to bet on something, anything. Gamma is a calculus equation. Most people out there don’t even know how calculus works. It took me three tries to tame it (my heart wasn’t in the first two times). Everywhere there is something to bet on. The total financial derivatives market is more than 8 times the global annual GDP, nearing a Quadrillion dollars. Now that is some kind of gambling … on math for God’s sake. I am glad I am old.
Great post, Dr. Lucky!
“another version of FanDuel” is right.
The economy is slowing and inflation is cooling. Slowly. The trend is clear. Higher for longer will deliver what the Fed is aiming for.
More interest income for rich people?
I think that argument, like the pandemic funds spending spree thesis, is way overdone. Five percent for even people with a net worth under $1m — i.e., most people — doesn’t change their behavior much at all.
It’s north of $22 billion per month: https://heisenbergreport.com/wp-content/uploads/2023/10/MMFInterestIncomeOct2023.png