Inflation

US Remains Energy Independent

Jul 5, 2022 2 min read

In America we just celebrated our Independence Day. We should also celebrate that we've been energy independent since 2019. So why are gasoline prices so high? Consider the following: (1) The latest data show that during May, the US produced 19.6mbd of crude oil and petroleum products, while petroleum products supplied (a measure of total demand) was 19.7mbd. (2) US crude oil field production rose to

Ed Yardeni

Inflation Is Global & Local

Jul 1, 2022 2 min read

Inflation has soared around the world over the past year. At first, last spring, it was attributed to “transitory” supply-chain problems that have turned out not to be transitory but persistent. Then all last year, excessively stimulative US fiscal policy fueled a demand boom that worsened the global supply shock caused by the pandemic. Early this year, Russia’s invasion of Ukraine exacerbated energy and food inflation around the world.

Ed Yardeni

Oil Prices Might Be Peaking

Jun 24, 2022 2 min read

The best cure for high oil prices is high oil prices. They are boosting production, while weighing on demand. As a result, crude oil prices may be peaking, which would certainly help to cause overall inflation to peak. Consider the following recent developments: (1) US petroleum output rose to 19.4mbd during April, with crude oil field production rising to 11.9mbd, natural gas liquids at 5.5mbd, biofuels at

Ed Yardeni

The Best Cure for High Commodity Prices

Jun 20, 2022 1 min read paid

In the commodity pits, traders often say: "The best cure for high commodity prices is high commodity prices." That's because when a commodity price soars, it depresses demand for the commodity and stimulates the supply of it. History shows that an even better cure for high commodity prices is a recession. During the late phase of economic expansions, the economy tends to boom. That drives up

Ed Yardeni

Small Business Owners Depressed But Still Hiring

Jun 14, 2022 1 min read

Inflation is depressing, and it is depressing everyone—including consumers, business people, and investors in stocks and bonds. For example, consider May’s survey of small business owners conducted by the National Federation of Independent Business (NFIB): (1) Owners expecting better business conditions over the next six months decreased four points to a net negative 54%, the lowest level recorded in the history of the 48-year-old survey! (2) Inflation was

Ed Yardeni

Uncle Sam Isn’t Santa Claus

Jun 12, 2022 1 min read

Following Friday’s CPI shocker, the financial media seem to have concluded that the Fed will have no choice but to raise the federal funds rate faster than planned to bring inflation down—causing a recession. The Fed is now expected to raise the federal funds rate on Wednesday by 75bps rather than 50bps. The two-year Treasury note soared 23bps on Friday to 3.06%, implying investor expectations that the

Ed Yardeni

Protracted Inflation

Jun 10, 2022 2 min read

Inflation is no longer transitory or persistent. It is protracted. The headline and core CPI inflation rates have yet to peak because rapidly rising energy prices continue to put upward pressure on the headline rate directly and on the core rate indirectly by boosting energy-related costs like transportation. The headline and core rates for May were 8.6% y/y and 6.0% y/y. Here are a few quick

Ed Yardeni

Quantitative Tightening Begins

Jun 5, 2022 1 min read paid

In recent conversations with our accounts, we have been hearing more concern about the Fed’s second round of quantitative tightening (QT2), which started this month. QT1, which lasted from October 1, 2017 to July 31, 2019, pared the Fed’s balance sheet by $675 billion. Under QT2, the Fed will reduce its balance sheet by running off maturing securities. From June through August, that will involve dropping its holdings

Ed Yardeni

Inflation May Be Peaking

May 27, 2022 2 min read paid

The headline and core PCED inflation rates both edged down in April to 6.3% and 4.9%, raising expectations that inflation is peaking. That's consistent with our view that the headline PCED inflation rate should peak between 6%-7% during H1-2022 and fall to 4%-5% during H2-2022, and 3%-4% next year. The FOMC is still likely to raise the federal funds rate by 50bps at

Ed Yardeni

Three Related Signals of a Global Economic Slowdown

May 26, 2022 1 min read

The widely followed proxy for the expected inflation rate in the 10-year TIPS market dropped in recent days from over 3.0% to 2.6%. Is that just volatility? Or, is it signaling a global economic slowdown since it is highly correlated with the nearby futures price of copper, which has also been weak lately? The expected inflation rate is also highly correlated with the Emerging Markets MSCI stock price

Ed Yardeni

Homebuilders Slammed As Sales Fall, Costs Soar

May 24, 2022 1 min read

There's lots of stagflation in the new home market. During April, new home sales (registered when contracts are signed) dropped 16.6% m/m and the months' supply of new homes jumped to 9.0 from 6.9 in March. Here's more: (1) The m/m sales declines were widespread in the South (-19.8%), Midwest (-15.1), West (-13.8), and Northeast (-5.9)

Ed Yardeni

A Stagflationary Day

May 19, 2022 1 min read

Today's batch of economic indicators has been unambiguously stagflationary. Consider the following:

Ed Yardeni

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