Tag Archives: Inflation

Inflation is as violent as a mugger, as frightening as an armed robber, and as deadly as a hit man

Inflation is serious stuff. It makes people`s money less valuable, and it means a lot of trouble for a lot of people. But I`m not shocked, because we knew it was coming someday. I wrote about nine years ago, and here we are.

Ronald Reagan was fighting against inflation in the ’80s, and he once said;

«Inflation is as violent as a mugger, as frightening as an armed robber, and as deadly as a hit man.»

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I bet Chair Powell thinks the same, as he raised the federal fund’s rate by 75 bps to the 3% – 3,25% range during its September meeting. This is the third three-quarter point increase, pushing borrowing costs to the highest since 2008.

Policymakers also anticipate that ongoing increases in the target range will be appropriate which was reinforced by Chair Powell during the press conference.

«We have got to get inflation behind us. I wish there were a painless way to do that. There isn`t. The so-called dot plot showed interest rates will likely reach 4,4% by December, above 3,4% projected in June, and rise to 4,6% next year.

Meanwhile, GDP growth forecasts were revised lower to show a 0,2% expansion this year, compared to 1,7% seen in June and 1,2% in 2023, below 1,7% seen in June. Inflation as measured by PCE is seen to reach 5,4% in 2022 (5,2% projected in June) and 2,8% in 2023 (vs 2,6%).

They also expect the unemployment rate to raise up to 4,4% next year. In August this year, the unemployment rate rose to 3,7%, which is the highest since February and above market expectations of 3,5%.

The number of unemployed people increased by 344 thousand to 6,014 million, while employment levels went up by 442 thousand to 158,732 million. Meanwhile, the labor force participation rate rose to 62,4% in August from 62,1% in July.

The unemployment rate was about 4% right after the dot com bubble, but it rose to about 6% a few years later. In 2010, the unemployment rate rose to about 10% but it peaked at an all-time high of nearly 16% after all the lockdowns.

Banks in nearly every country (not China and Japan) are facing similar trade-offs as they raise rates to combat their own inflation problems.

The inflation rate in the US is 8,3%. In the UK it`s 9,9%. Euro Area; 9,1%. In China and Japan, the inflation rate is 2,5% and 3,0%. But this is nothing compared to Turkey where the inflation rate rose for the 15th consecutive month to 80,2% in August of 2022.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shinybull.com. The author has made every effort to ensure the accuracy of the information provided; however, neither Shinybull.com nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities, or other financial instruments. Shinybull.com and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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Nasdaq plummeted more than 5%

What a day in the stock market. Nasdaq plummeted 5,16%. That`s 632,84 points. Dow Jones and S&P 500 were also sharply down, followed by cryptos like Bitcoin. They all went down because the annual inflation rate in the US eased for a second straight month to 8,3% in August of 2022.

This is the lowest number in four months, so why did investors have so much panic? The rate is down from 8,5% in July. But it`s down from 9,1% in June, so, it’s on the way down. For all I know, it will continue the same path, and probably end up in the opposite direction; deflation in the long run.

The energy index increased by 23,8% (32,9% in July). Gasoline increased 25,6% (44% in July). Fuel oil increased 68,8% (75,9% in July).

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Natural gas increased 33% vs 30,5%, and electricity was at the highest since August 1981, at 15,8%. Prices for food rose by 11,4%, and that is the most since 1979. The shelter is up 6,2%, which is the most since 1984.

CPI, which excludes volatile energy and food prices, increased 6,3% in a year. This is the most since March, and up markedly from 5,9% in June and July.

The Federal Reserve has done a lot to push down inflation because inflation over time could have dramatic consequences for consumers. The Fed has been hawkish when it comes to interest rate hikes this year.

They try to make it expensive for consumers to borrow, and the interest rate hikes will affect consumers’ interest rates like credit cards, loans, and mortgage rates.

CPI measures changes in the cost of consumer goods and is a key indicator of just how bad inflation is.

Economists anticipated a lower CPI in August, but the index rose 0,1% from the previous month and 8,3 on an annual basis. More rate hikes from the Fed will force consumers to change their lifestyles in the future.

The Fed looks at CPI when deciding whether to raise rates or not. Experts claim that we must expect the Fed to continue to be very aggressive when it comes to rate hikes. So, fasten your seat belts.

So far this year, the central bank has already raised rates by 225 basis points, and many investors are waiting for another 75 basis point rate hike at their meeting next week.

The cost of living is increasing. Higher electricity bills, food, gasoline, and gas prices are making it difficult for many, and it isn`t easy to borrow either. The cost of borrowing is also increasing. On the other side; the rate on your saving account is also increasing.

Experts predict that we could see many more months of rampant inflation.

The Fed funds futures are pricing in a 36% chance that the bank will raise its benchmark rate by a full percentage point. Nomura forecasted a 100 basis point hike in September.

Investors don`t like Fed`s hawkishness, and they are worried that the Fed`s inflation fight will bring in a recession. On the other hand; the Fed is also ramping up the unwinding of its balance sheet to $95 billion per month.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shinybull.com. The author has made every effort to ensure the accuracy of the information provided; however, neither Shinybull.com nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities, or other financial instruments. Shinybull.com and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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Financial dissatisfaction hits a 50-year high in the United States of America

President Joe Biden tweeted this on Monday: «At the time I took office about 16 months ago, the economy had stalled and COVID was out of control. Today, thanks to the economic plan and the vaccination plan that my Administration put into action, America has achieved the most robust recovery in modern history.»

At the same time, we see that 83% of Americans describe the state of the economy as poor or not so good, according to a poll by Wall Street Journal. Biden`s poll numbers are also below those of Donald Trump. Not only that.

Another poll shows that 35% of Americans are not satisfied with their financial situation, which is the worst result in 50 years.

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Biden often said that Trump was the worst president in history and an existential threat to the nation`s democracy. I wonder what he is saying about himself right now? It must be a bitter pill for an anti-Trump politician like Biden to be outclassed by the 45th president.

On April 2, Biden`s approval rating was 40% while Trump`s was at 50% the same day in 2018. Instead of gaslighting voters, Biden should clean up the messes and fix the inflation asap.

Trump`s vision was lower taxes, but president Joe Biden turned that upside down. People are paying more tax under Biden, than under Trump. On top of that, people must pay more money for their products, which is a hidden tax and makes people`s money less valuable.

Higher gas prices are good for oil companies but very bad for people and the economy. In the long run, it could kill the economy, and today, gas prices in the U.S hit a new record high of $4,91 a gallon (average price). In California, the price is $6,37 a gallon. People don`t like it, but Biden says everything is fine.

Something must be wrong here because there is a huge disconnect between president Biden and the people. And that isn`t good for the democrats at all. If this continues, GOP can win big in the mid-term election in November.

Another poll shows that the GOP is in the best midterm position in 80 years (2 pts lead), according to CNN.

Not even Liberal Media is ignoring Biden`s crisis anymore. They are also lukewarm on his potential second term.

Earlier today, Biden tweeted this: «The fact is America is in a stronger economic position today than just about any other country in the world. Independent experts have even projected that the U.S economy could grow faster than China`s economy this year. That hasn`t happened since 1976».

People`s lives are worse under Biden than under Trump. But people voted for Biden. They asked for it. They got what they asked for. Higher taxes, and inflation. President Joe Biden is the most popular president in U.S history. He got more votes than Obama and Clinton.

On the day he was inaugurated, Biden said; «Today, we celebrate the triumph not of a candidate, but of cause, the cause of democracy. The will of the people has been heard and the will of the people has been heeded.»

The love for Joe Biden was huge in the Hate Trump Media, on the day Biden was inaugurated. «The reason Biden has to do this is that he`s just so incredibly popular,» Don Lemon said on CNN at that time. «The lights from Lincoln Memorial were like Joe Biden`s arms stretching out to all American,» CNN said.

Axios said at that time in January 2021, Biden is charting an economic policy that was visible to the left of Bill Clinton and Barrack Obama. Biden proposed a $1,9 trillion economic stimulus plan and a $15 minimum wage at that time, and employers, employees, and economists warned it will kill millions of jobs.

We are living in times with a lot of challenges, and more trouble is on the way. Famine is probably the most serious one. Chairman and Chief Executive of JPMorgan Chase & Co, Jamie Dimon, said a few days ago that we all must brace for U.S economic «hurricane» due to inflation. Earlier he said storm clouds looming over the U.S economy, but he has changed the rhetoric.

Right now, it`s kind of sunny, and things are doing fine, but the hurricane is right out there down the road coming our way, Dimon said. We just don`t know if it`s a minor one or Superstorm Sandy, he added.

The Fed is under pressure with inflation that is more than three times its 2% target, and that has caused a jump in the cost of living for Americans. It faces the difficult task of dampening demand enough to curb inflation while not causing a recession.

Dimon urged the Fed to take forceful measures to avoid tipping the world`s biggest economy into a recession.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shinybull.com. The author has made every effort to ensure the accuracy of the information provided; however, neither Shinybull.com nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities, or other financial instruments. Shinybull.com and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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Inflation soared to 4,2% in April of 2021

Inflation soared to 4,2% in April of 2021, and that`s a big jump from 2,6% in March. The stock market declined while the inflation rate came in well above market forecast of 3,6%, and this is the highest reading since September 2008.

The biggest increases were recorded for gasoline (49,6% vs 22,5% in March), fuel oil (37,3% vs 20,2%) and used car and trucks (21% vs 9,4%). It`s interesting to see the inflation slowed for food (2,4% vs 3,5%).

The jump in inflation is the highest in 13 years, and Wall Street sent the stock down on Wednesday in a broad market sell-off. Tech stock were hit hard as higher interest rates are threatening to undermine the valuations of those companies.

Nasdaq is down about -5% so far this week, but the European markets ended higher on Wednesday as stocks in Europe recovered from a global sell-off sparked by concerns that rising inflation will prompt central banks to tighten monetary policy sooner and more abruptly than expected.

Federal Reserve`s vice chair, Richard Clarida, had some dovish comments, and that helped calm nervous markets. He said that the twin shocks of a disappointing payroll report and higher inflation in April hadn`t changed the central bank`s view on maintaining its current ultra-accomodative policy.

To contact the author: post@shinybull.com

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shinybull.com. The author has made every effort to ensure the accuracy of the information provided; however, neither Shinybull.com nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities, or other financial instruments. Shinybull.com and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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Officials said the appropriate path for the FED`s funds rate over the next few years would likely be slightly steeper than they had previously expected

The Interest Rate are increasing while the outlook for the economy are getting stronger and the inflation is expected to follow the rate in the coming months. The FED, meeting for the first time under Chairman Jerome Powell, raised the funds rate to 1,5 – 1,75 percent during its March meeting.

FOMC holds eight regularly scheduled meetings during the year and other meetings as needed. Their next meeting is May 1 – 2, 2018, and GDP, Interest Rate and Inflation is on the table. The economic outlook is improving and the FED officials has recently projected a steeper path of hikes next year and 2020.

The FEDs funds rate was extremely volatile when Ronald Reagan entered the White House in 1981. In the early 80s the rate peaked at 20 percent and plummeted to about 10 percent and then back to nearly 20 percent again. That`s what I call action.

During the period of Ronald Reagan, the rate went from 20 percent and down to 10 percent in 1989, when Ronald Reagan said welcome to the next president; George Bush. He succeeded to push down the rate even more, but it hit a record low of 0,25 percent in 2008. That time is for now over.

The increase in March was the sixth rise since the central bank began a tightening cycle back in December 2015. As the economy has strengthened, the FED has upped the pace of hikes.

After the FOMC meeting in March, officials said the economy looks good and that the inflation is expected to move up. Almost all of the officials agreed that a gradual tightening remains appropriate.

The FED also said that the prospect of retaliatory trade actions by other countries as well as other issues and uncertainties associated with trade policies as downside risks for the economy.

Some people are concerned among their business contracts about the possible ramifications of the recent imposition of tariffs on imported steel and aluminium. They didn`t see the steel and aluminium tariffs, by themselves, to have significant effect on the national economic outlook.

Contracts in the agricultural sector reported feeling particularly vulnerable to retaliation.

The stance of monetary policy will remain accommodative, supporting strong labor market conditions and a sustained return to 2 percent inflation.

Some of the participants in the March meeting said that the stronger outlook for economic activity, along with their increased confidence that inflation would return to 2 percent, implied that the appropriate path for the FED`s funds rate over the next few years would likely be slightly steeper than they had previously expected.

It is expected to see the rate unchanged after the meeting on Wednesday, but another hike is imminent at the following one in mid June.

The next FOMC meeting took place on Tuesday this week and will end on Wednesday with any changes to monetary policy announced immediately after the meeting.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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