Inflation

Fed Wants To See Fewer Job Openings

Oct 4, 2022 1 min read paid

It's been a great October so far for bond and stock investors. Last week's pivot by the Bank of England seems to have convinced investors that the Fed now must give more weight to financial stability, which means that the current monetary tightening cycle might end sooner rather than later.

Ed Yardeni

The Bond Vigilantes: They're Baaaack!

Sep 26, 2022 1 min read

The Bond Vigilantes are back. They were last active during the 1980s and early 1990s. They've been mostly lying low since then. That's partly because inflation remained remarkably subdued from the mid-1990s through 2020. Furthermore, in response to the Great Financial Crisis and then the Great Virus Crisis, central banks kept the Bond Vigilantes in check with ZIRP, NIRP, and QE. [1] No more: They'

Ed Yardeni

The Economic Week Ahead, September 26-30

Sep 25, 2022 1 min read

The blackout period is over for the members of the Federal Open Mouth Committee. This week, we can expect that many of the Fed's talking heads will repeat the hawkish remarks made by Fed Chair Jerome Powell during his presser last Wednesday, i.e., monetary policy needs to be more restrictive to bring down inflation. The week ahead is also jam packed with economic indicators: (1) Consumers &

Ed Yardeni

Another Awful Risk-Off Week

Sep 24, 2022 1 min read paid

The bad news for the stock market this past week actually started on September 16 in the morning after FedEx delivered a terrible preannouncement about the current quarter. The package delivery giant said in a statement the night before that it expects Q1 earnings, excluding some items, to be $3.44 per share, or roughly 33% below the average analyst estimate of $5.10. In addition, FedEx withdrew its earnings

Ed Yardeni

TINA-TAR: There Is No Alternative To A Recession?

Sep 23, 2022 2 min read

The financial markets seem to have concluded that Fed Chair Jerome Powell has decided to go Volcker on us. During 1979-1981, then-Fed Chair Paul Volcker let interest rates soar to levels that caused a recession. He did so to bring inflation down (charts below). During his press conference on Wednesday, Powell unambiguously reiterated the hawkish message of his Jackson Hole speech on August 26. In other words, he strongly suggested

Ed Yardeni

Fed Stays On Tightening Course

Sep 21, 2022 2 min read

The Fed lifted the federal funds rate range by 75bps to 3.00%-3.25%. Stocks sold off as Fed Chair Jerome Powell reiterated during his presser today the main points he made in his hawkish speech at Jackson Hole in late August. He stressed that monetary policy may have to be restrictive for a while to bring inflation down, and that the process may be painful. There wasn'

Ed Yardeni

CPI Tends To Overstate Inflation Relative To PCED

Sep 14, 2022 1 min read

August's CPI unnerved the stock market because its core inflation rate was higher than expected. August's PCED will be released on September 30 and is likely to show a lower rate of inflation. Consider the following: (1) The core CPI inflation rate tends to be higher than the core PCED. That's because the inflation rates of both durable goods (especially furniture & bedding) and

Ed Yardeni

Inflation Shocks The Markets

Sep 13, 2022 1 min read paid

August's CPI report shocked the financial markets. It was widely expected to confirm that inflation peaked around June based on the drop in gasoline prices during July and August and mounting evidence that durable goods inflation is moderating. The problem is that in the nondurable goods category of the CPI, food inflation remains high, offsetting some of the improvement in energy-related prices (table below). While overall goods inflation

Ed Yardeni

Inflation Expectations Falling Fast Along With Pump Price

Sep 12, 2022 1 min read

We believe that it is the pump price of gasoline prominently posted daily at every service station in America that has the most immediate and largest effect on inflationary expectations. It soared earlier this year and so did inflationary expectations, which fell sharply during July and August along with gasoline prices (chart below). August's CPI is out tomorrow morning and is expected to be down 0.1% m/

Ed Yardeni

Divine Disinflation In NM-PMI Survey

Sep 6, 2022 1 min read

Investors are rooting for "divine disinflation." We all want inflation to come down without a painful recession. We want the Fed to tighten one more time by 75bps and then to pause for a while. This morning's release of August's survey of non-manufacturing purchasing managers was consistent with this wishful thinking. That might explain why the S&P 500 rallied after the report

Ed Yardeni

Peak Freight Rates As US Keeps On Trucking?

Sep 5, 2022 1 min read paid

US freight rates increased 28% y/y during July, but declined almost 2% m/m. That's according to the July Cass Freight report We expect that August's report, out in mid-September, will confirm that freight rates have peaked just as peak shipping season encompassing both back-to-school and the holidays begins.

Ed Yardeni

Fed Wants To See Fewer Help Wanted Signs

Aug 30, 2022 1 min read paid

The S&P 500 fell just below its 50-day moving average today partly because the labor market remains hot. July's JOLTS report showed that there were 11.2 million job openings for 5.7 million of the unemployed (chart below). In addition, the Consumer Confidence Index (CCI) rebounded slightly from July's low as only 11.4% of CCI survey respondents said jobs are hard to

Ed Yardeni

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