While acknowledging the potential risk that the Fed will be wrong about inflation, Jay Powell is doing his best Arthur Burns imitation, the Fed Chair from 1970 to 1978, by focusing so much on ‘substantial progress’ in the labor market (even though we have a record number of job openings) and being so nonchalant on inflation in thinking that it’s just going to …
Another tiny step towards a taper
So the groundwork is further being laid for a beginning of a trimming of Fed asset purchases, albeit at crab walk like fashion. After highlighting that last December the Committee would be buying US Treasuries of “at least $80b per month and of agency MBS by at least $40b per month until substantial further progress has been made toward its maximum employment and …
Possible outcomes
I said right after the last FOMC meeting that when QE is fully on the yield curve historically has steepened and when the knob starts to turn it off, it flattens. If we hear today about more talking about tapering but without specificity, if we hear the word 'transitory' a lot, if we hear the word 'patient' often, and if we hear about Delta throughout the press …
Consumer confidence/Mfr’g
The July Conference Board Consumer Confidence index rose .2 pts m/o/m to 129.1 and that was better than the estimate for a drop to 123.9 (which would have followed the decline in the UoM survey). The m/o/m gain was all in the Present Situation as it was up .7 pts while Expectations were little changed at 108.4 vs 108.5 in June. Off a ten year high, one year inflation …
17% home price inflation/Durable goods
As the Fed debates what to do tomorrow, they are presiding over home price inflation as of May running at a near 17% y/o/y run rate according to S&P CoreLogic. It is quite astonishing that after the experience of the mid naught’s, they are again repeating this type of shelter inflation all over again. There are of course different characteristics but we have a …
A few things of note
As Apple is the king of global product and material procurement, it will be really interesting to hear tonight how they are managing thru the current logistical challenges. While commodity prices are only one component of the inflation debate, albeit a notable one, the CRB index yesterday closed at the highest level in 6 years and the CRB raw industrials index …
New home sales
New home sales in June totaled 676k, well below the estimate of 796k and is down from 724k in May which was revised down by 45k. With an increase in the homes for sale combined with the sales slowdown, months’ supply rose to 6.3 from 5.5 and that is the highest since April. Hopefully this will then lead to lower home price gains. After 20%+ y/o/y price gains in the …
“Hey Jay”
With August upon us and many readers likely at the beach, here is some levity from my side of the vocal debate on what the Fed should do this week and that is begin the withdrawal process from the current QE overdose. Please hum the melody as you read the lyrics. With thanks and credit to the Beatles. "Hey Jay"Hey Jay, don't make it bad. Take easy money and make it …
Succinct Summation of the Week’s Events – 7/23
Positives 1)Delayed by two weeks, those still getting pandemic unemployment assistance fell by 553k and those continuing to receive the emergency kind declined by 576k. 2)Housing starts in June totaled 1.643mm, 53k more than anticipated, partially offset by a 26k unit downward revision to May to 1.546mm. Breaking it down, single family starts made up 1.16mm of …
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US PMI, some stag and more flation/Rents
The US Markit July manufacturing and services composite index softened to 59.7 from 63.7 with a mixed bag of these two main components. Manufacturing rose 1 pt m/o/m to 63.1 but services fell to 59.8 from 63.7. Markit said weaker services was seen where "firms linked this to labor shortages and difficulties acquiring stock" and blame inflation "as some firms noted …
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Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor.