Inflation

Homebuilders' Sentiment Plummets

Jul 18, 2022 1 min read

The National Association of Home Builders/Wells Fargo Housing Market Index, a survey designed to gauge market conditions, found builder sentiment dropped 12 points to 55 in July. That marked the largest one-month drop in the survey’s 37-year history with the exception of April 2020, when the reading plummeted 42 points to 30 during the pandemic lockdown. The S&P 500 Homebuilding Index, which is highly

Ed Yardeni

The Rent Is Too D@mn High!

Jul 13, 2022 1 min read

The Fed's ultra-easy monetary policies, in response to the pandemic, caused home prices to soar, and now rents are soaring. Over the 24 months through May, the median single-family home price is up a whopping 44.5%. This year's jump in mortgage rates only exacerbated the affordability problem facing first-time would-be homebuyers. As a result, many of them have no choice but

Ed Yardeni

Inflation Remained Persistent In June

Jul 13, 2022 1 min read

The bottom line on June's headline CPI release is that it was higher than expected and showed few signs of peaking. The 9.1% y/y jump beat expectations of an 8.8% increase and exceeded May's 8.6%, though the core rate edged down from 6.5% in March to 5.9% in June. Moreover, June's inflation was broader-based than widely anticipated:

Ed Yardeni

Will June's CPI Inflation Rate Be the Peak?

Jul 12, 2022 1 min read paid

June’s CPI will be out tomorrow. Bloomberg is showing consensus estimates of up 1.1% m/m (8.8% y/y) for the headline and 0.6% m/m (5.8% y/y) for the core inflation rates. Both y/y estimates are up from May’s rates of 8.6% and 6.0%.

Ed Yardeni

Is the Bond Market Anticipating Peak Inflation?

Jul 11, 2022 1 min read

The 10-year US Treasury bond yield has recently stabilized around 3.00%. That calm reflects a remarkable increase in the comparable TIPS yield that has been offset by a drop in the expected-inflation component of the nominal yield. What's going on? Consider the following: (1) Until the past few weeks, the daily TIPS yield has been highly correlated with the monthly real bond yield, defined as

Ed Yardeni

Gold Losing Its Shine

Jul 9, 2022 1 min read

Gold hasn't been a good hedge against inflation over the past highly inflationary year. That's not surprising since this precious metal's price is inversely correlated with the 10-year TIPS yield and with the trade-weighted dollar (charts below): (1) The TIPS yield fell to a record low of -1.19% on November 9, 2021. It then moved higher, especially this year, closing at

Ed Yardeni

Goldilocks & the Fed

Jul 8, 2022 1 min read paid

Was today’s June employment release a Goldilocks report? Payroll employment rose 372,000, and wages increased 0.3%—not too hot, not too cold. The problem is that consumer prices have been rising faster than wages for the past year or so. As a result, the purchasing power of our Earned Income Proxy for private wages and salaries in personal income has been significantly eroded by higher prices (chart)

Ed Yardeni

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

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)

Ed Yardeni

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