Tag Archives: Inflation

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.

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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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Brazil`s Auto Sales jumped 39,4 percent to 189 vehicles last month

Brazil has been struggling for a while now. First of all with Dilma Rousseff and her corruption scandal involving the state-controlled oil company Petrobras. All this on top af a terrible recession. Since the Workers’ Party came to power in 2003, there has been a series of corruption scandals in Brazil.

Operation Car Wash has uncovered a widening corruption scandal with dozens of political accused of paying or receiving kickbacks. Former President Luiz Inacio Lula da Silva has been named in connection with the investigation. Let`s take a look at some positive things in Brazil right now.

Auto sales in Brazil jumped 39,4 percent to 189 vehicles last month. Sales rebounded for passenger cars (39 percent vs -8 percent in February). Compared to a year ago, auto sales fell 5,6 percent. Brazil had an all-time high of 420 thousand in 2012.

 

 

Brazil had an all-time high trade surplus in March this year. Brazil recorded a USD 7,145 million trade surplus, which is higher than a USD 4,435 million surpluses in 2016. Exports jumped 25,6 percent YoY and imports rose at a slower 11,9 percent.

Inflation in Brazil is also going the right direction. It rose by 4,76 percent in the year to February 2017, which is down from an increase of 5,35 percent in previous month. It`s also lower than a year ago at 9,39 percent.

Brazil is the largest country in both South America and Latin America. Its the worlds fifth largest country by both area and population of 200,4 million citizens. Unfortunately, the unemployment rate is going the wrong direction.

It reached an all-time high of 13,2 percent in the quarter ended February this year. Brazil has been the largest producer of coffee for the last 150 years. Can they fix the problems? Their economy has not been growing since 2014.

The Brazilians economy shrank 2,5 percent YoY in the fourth quarter of 2016. GDP has been negative for eleven straight quarters and they face a sharp drop in both household consumption and fixed investment.

You can clearly see how bad economy are going hand in hand with crime and frustration. Everybody blame each other for everything and politicians are always a target.

A jump in their auto sales is music in samba ears.

 

 

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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Filed under Emerging markets, Politics

Hyper inflation of 231,150,888,87 percent in July

Janet Yellen and the FED raised the rates and its expected to see them raise the rates at least a couple of times before the end of this year. In addition; they are planning to raise the rates three times next year. Wow. What about the inflation? Let`s take a look at Japan, Venezuela and Zimbabwe.

Nikkei reach its all-time high on December 29th 1989. The stock market plummeted and did never come back. Japan started to grow after world war II and was among the first in the world to use robots in the 70s and 80s.

Japan used robots especially in the auto and techno industry. The optimism went to be a huge euphoria og Nikkei reached 38.957.44 and ended the day at 38.915.87 on December 29th 1989. As you may know; Japan started to «print» money. But what happened to the inflation?

As you can see from the chart above, Japans inflation increased the early 90s and then it started to decline again. You can see from the chart that it went up again in the late 90`s, but not for a long time. It drops every time it goes up.

Consumer prices increased 0,4 percent YoY in January this year. Transportation cost posted the first annual gain since March of 2015 and prices went up faster for clothing and footwear and recreation and culture.

Inflation rate reached an all-time high of 24,9 percent in February of 1974 and a record low of -2,5 percent in October of 2009. It`s a different and more scary story in Venezuela.

It`s not getting better in Venezuela and it goes from bad to extremely bad right now. What in the world is going on? Venezuela has the highest inflation rate in the world right now. Economic turmoil in Venezuela has made the bolivar go straight up to heaven.

Some analysts say it could reach 2000 percent in 2017. No, I`m not kidding; 2000 percent. President Nicolàs Maduro who is elected after the death of socialist firebrand Hugo Chàvez explained the shock move by accusing US-backed «mafias» of conspiring to destabilize his country’s economy by hoarding bank notes.

Take a good look at the chart above. Consumer prices in Venezuela jumped 800 percent YoY in 2016, following a 180,9 percent rise in 2015. It is the highest inflation rate on record after the slump in oil prices led to a severe recession and food shortages.

Venezuela reached an all-time high of 800 percent in December of 2016 and a record low of 3,22 percent in February of 1973. You think 800 percent is much? Take a look at Zimbabwe.

The worst of the inflation occurred in 2008, leading to the abandonment of the currency. The peak month of hyperinflation occurred in mid-November 2008 with a rate estimated at 79,600,000% per month. That is what I call hyper-inflation.

This resulted in US$1 becoming equivalent to the staggering sum of Z$2,621,228. The rate went up 585,84 percent in 2005. 1,281,11 percent in 2006 and 66,212,3 percent in 2007. And then it exploded; Up 231,150,888,87 percent in July of 2008. Wow.

Hyper-inflation like that mean that the price can jump when you are sitting on the bus. That can be problematic for some customers but also for business owners.

Any Zimbabwean dollars acquired needed to be exchanged for foreign currency on the parallel market immediately, or the holder would suffer a significant loss of value.

For example, a mini-bus driver charged riders in Zimbabwean dollars, but different rates throughout the day. The evening commute was highest-priced. He sometimes exchanged money three times a day, not in banks but in back office rooms and parking lots.

Lack of confidence in government to practice fiscal restraint feeds on itself. In Zimbabwe, neither the issuance of banknotes of higher denominations nor proclamation of new currency regimes led holders of the currency to expect that the new money would be more stable than the old.

Remedies announced by the government never included a believable basis for monetary stability. Thus, one reason the currency continued to lose value, causing hyperinflation, is that so many people expected it to.

What about a hyper-inflation in the U.S? Is it possible? What can go wrong, and what will happen? I will write more about that later on this week.

 

 

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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Banks are in focus this week and ECB could change its forward guidance

The FED is expected to increase the short-term interest rate by 25 basis points this week. If the FED does not raise rates at he March FOMC meeting, it will be a big surprise for many investors. Two things to look for is unemployment and inflation.

The FED is not the only one to have a look at the rates this month. BOJ and ECB is also looking at the rate. All this is headed for an exiting week.

 

 

The U.S unemployment rate fell to 4,7 percent last month which is in line with market expectations. Labor force participation rate increased by 0,1 percentage point to 63 percent, and the number of unemployment persons was almost unchanged at 7,5 million.

Inflation rate is at near 5-year high of 2,5 percent, which is the highest since March of 2012. The inflation rate accelerated for the sixth consecutive month, mainly boosted by gasoline prices. Energy prices jumped 10,8 percent YoY and food prices declined 0,2 percent.

 

 

Watch out for inflation in February 2017 on Wednesday 15 at 12:30 PM. forecast is 2,5%.

Mario Draghi and ECB discussed whether rates can rise before QE ends. A big surprise for many analysts. Why are they doing that? The fact is that they are not satisfied with negative interest rates. This negative rates is squeezing banks’ profit margins because they are not matching the cost, and that will make if difficult for banks to lend to households and companies.

BNP Paribas has predicted the deposit rate will be increased this September, and QE is intended to run until at least the end of 2017. Some people said at least mid-2018. Anyway; analysts will scrutinize the ECB statement on Thursday to look for any changes.

BOJ will have an Interest rate decision on Thursday 16th at 03:00 AM. Forecast is -0,1 percent, which is the same as its January 2017 meeting. In January, policymakers also decided to maintain its 10-years government bond yield target around zero percent.

Economic growth forecast is 1,5 percent for 2017 fiscal year from an earlier projection of a 1,3 percent growth.

Banks are in focus this week and ECB could change its forward guidance.

 

trump100_b

 

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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Filed under Politics, Quantitative Easing