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Every Dove Has Its Day
Markets were absolutely enamored with Wednesday's inflation report out of the US.
Bonds were the bane of equities' existence for most of the last four or five weeks, a period during which the term premium widened to the highest in a decade and longer-end yields breached 5%, raising the specter that 10s might revisit cycle highs.
The heavier bonds traded, the more anxious richly-valued equities became. The drama crescendoed late last week in a distasteful bear flattener following a(nother) stro
Will not be surprised to see a cut in March. Seasonals are completely distorted now. I expect the big payrolls number to wash out to a more normal level. The inflation genie is not quite back in the bottle but it is close. If inflation is between 2-2.50% by the end of the first quarter, a 4% funds rate is 1% too high to keep the economy growing.
An old old friend who is a quiet reader here expects that health and property insurance prices kicking in this month will postpone or ruin the party.
But, as our Dear Leader reminds us, healthcare and housing costs are irrelevant to Wall Street analysts.
Not so fast. Commodity prices are up 10+% so far in January. Shipping costs will follow. There will be some distortion from shelter costs following the tragic fires in CA. Food costs will only rise following deportation efforts. Today’s CPI might prove to be the low for months to come.
Ok. However, looking through some of the data- it looks like egg prices are “only” up 38% in the last year.
I was paying $10 per dozen last year for the best eggs I could find. Being a former egg farmer.
Luckily my neighbor has a work friend with $3 eggs per dozen and they are the best I’ve ever had
Egg price increases are mainly due to our old nemesis Exotic Newcastle Disease now being strongly augmented by bird flu. Depite the brilliant GOP campain messaging, there is little or nothing Biden, Trump or Powell could or can do about those twin scourges.
It’s truly a “Black Swan” event …….
H-Man, wait till the rise in oil drip into the CPI.
Does it seem a little pointless to study the monthly subtleties of current CPI components, with a blizzard of E.O.’s coming in five days?
Sure, an academic can argue that a price increase due to a tariff is merely a one-time event, not “inflation”. Similar logic didn’t convince during Biden either. What about price increases rippling downstream through the economy over months and years? What about price increases from tariffs phased in 2% per month over years?
Naah, wake me up in a week, I’m going skiing.