(Reuters) – The U.S. job market “is still a ways off” from the progress the Federal Reserve wants to see before reducing its support for the economy, while current high inflation will ease “in coming months,” Fed Chair Jerome Powell said in remarks prepared for delivery at a congressional hearing on Wednesday. “Powell’s testimony was on the dovish side and the Treasury curve has steepened slightly in response, although we will look for clarity at this Q+A on Capitol Hill this afternoon.” “The testimony conveys a stay-the-course attitude. This is not very surprising because testimonies are rarely the preferred venues to convey policy shifts and because the FOMC hasn’t had a chance to discuss recent events, including yesterday’s CPI print. The press conference following the July meeting should be much more informative about the future course of Fed policy. “ Nick Note: What shocking testimony. Its like we are looking at completely different set of number. He is talking about a return to 2% inflation… And we are at 7%…… this is not going to happen without a complete reversal of Fed stimulation and massive increases in interest rates…..
U.S. producer prices surge more than expected in June
WASHINGTON (Reuters) -U.S. producer prices surged in June, leading to the largest annual gain in more than 10-1/2 years, suggesting inflation could remain high as robust demand fueled by the economy’s recovery from the COVID-19 pandemic strains the supply chain. The report from the Labor Department on Wednesday followed on the heels of news on Tuesday that consumer prices increased by the most in 13 years in June. There are, however, signs that inflation is close to peaking. Underlying producer prices rose at a moderate pace on a monthly basis in June. Federal Reserve Chair Jerome Powell in remarks prepared for delivery at a congressional hearing on Wednesday said “inflation has increased notably and will likely remain elevated in coming months before moderating.” Powell has long maintained that high inflation is transitory, a view shared my most economists and the White House. The producer price index for final demand increased 1.0% last month after rising 0.8% in May. A 0.8% increase in the cost of services accounted for nearly 60% of the increase in the PPI in June. Services rose 0.6% in the prior month. Goods prices climbed 1.2% after accelerating 1.5% in May. In the 12 months through June, the PPI surged 7.3%. That was the biggest year-on-year rise since November 2010 and followed a 6.6% advance in May. Higher commodity prices and increased labor costs due to a shortage of willing workers are driving inflation at the factory gate. Very low inventory levels because of supply chain issues are making it easy for producers to pass on the higher costs to consumers. Sectors at the center of the economy’s reopening have seen large price increases, though there were signs in June that inflation was broadening to other segments. Economists polled by Reuters had forecast the PPI increasing 0.6% in June and rising 6.8% year-on-year. U.S. stocks opened higher as Powell’s comments fueled hopes that the Fed would stick to its accommodative monetary policy. The dollar fell against a basket of currencies. U.S. Treasury prices rose. The U.S. central bank slashed its benchmark overnight interest rate to near zero last year and is pumping money into the economy through monthly bond purchases. That ultra-easy monetary policy stance, COVID-19 vaccinations and nearly $6 trillion in government relief since the pandemic started in the United States in March 2020 are whipping up demand. But inflation is likely nearing its peak. Excluding the volatile food, energy and trade services components, producer prices rose 0.5%. The so-called core PPI gained 0.7% in May. In the 12 months through June, the core PPI accelerated 5.5%. That was the largest rise since the government introduced the series in August 2014 and followed a 5.3% increase in May. “We believe this will be the peak in the pace of wholesale inflation as base effects ease, but ongoing friction between supply and demand will continue to keep prices sticky through 2021 and into 2022,” said Mahir Rasheed, a U.S. economist at Oxford Economics in New York. The Fed has signaled it could tolerate higher inflation for some time to offset years in which inflation was lodged below its 2% target, a flexible average. The Fed’s preferred inflation measure, the core personal consumption expenditures price index, jumped 3.4% in May, the largest gain since April 1992. Last month’s surge in the costs of services was led by a 2.1% jump in trade services, which measure changes in margins received by wholesalers and retailers. Twenty percent of the increase services was due to margins for automobiles and parts retailing, which rose 10.5%. There were also gains in the prices of machinery, hardware, building materials and supplies, guestroom rental, professional and commercial equipment and passenger transportation. Wholesale energy prices increased 2.1%. Food prices climbed 0.8%. Wholesale core goods prices rose 1.0% after gaining 1.1% in May. Some of the PPI components, which feed into the core PCE price index, were weak last month. Healthcare costs dipped 0.1% after gaining 0.2% in the prior month. Portfolio management fees fell 0.3% after rising 2.0% in May. Airline tickets rebounded 2.5% after dropping 1.3% in May. Nick Note. Its going to take a lot water to put out this inflation fire……. The Fed is really fucking up big time….
Delta variant risks WILL spark market correction
The highly contagious Delta variant of Covid-19 has fast become the dominant strain around the world, spreading beyond Asia. Countries with low vaccination rates like Australia have had no choice but to reimpose draconian lockdowns, but in other places such as America and Britain despite the fact most adults have had at least one vaccine dose, are seeing infection rates skyrocketing and may have to impose lockdowns
The Delta variant that was first detected in India is spreading rampantly everywhere and is threatening to undo more than a year of progress in getting the virus contained. Countries including France, Australia, Malaysia, Indonesia and Bangladesh have all announced fresh lockdowns in the last couple of weeks and there are fears more cities and regions will fall victim to stay-at-home orders if the Delta strain continues to rage. Nick Note: I am sorry to report with less then half the adult population vaccinates in America and 10% of vaccinated people getting infected lock downs will sooN be back…… And the economy and markets will be devastated….. HAVE A NICE DAY
Futures extend gains as Powell says economy ‘a ways off’ from bond taper
WASHINGTON (Reuters) – The U.S. job market “is still a ways off” from the progress the Federal Reserve wants to see before reducing its support for the economy, while current high inflation will ease “in coming months,” Fed Chair Jerome Powell said in remarks prepared for delivery at a congressional hearing on Wednesday.
“Inflation has increased notably and will likely remain elevated in coming months before moderating,” Powell said, restating the U.S. central bank’s faith that current price increases, despite the concerns they are raising about unmoored inflation, are tied to the reopening of the economy and will prove fleeting.
Meanwhile “there is still a long way to go” in repairing a labor market that is 7.5 million jobs away from its pre-pandemic level, with the burden falling hardest on lower-wage workers and major ethnic and minority groups, and the overall participation rate still depressed, Powell said. Combined, the remarks show Powell holding to the Fed’s core narrative that a fast-evolving recovery will bring millions of people back into jobs if it continues, that inflation will remain anchored over time around the Fed’s 2% target, and that there is no reason to rush any tightening of monetary policy. Ongoing Fed bond-buying and a target interest rate held near zero “will ensure that monetary policy will continue to deliver powerful support to the economy until the recovery is complete,” Powell said. Powell is scheduled to appear before the U.S. House of Representatives Financial Services Committee at 12 p.m. EDT (1600 GMT). On Thursday, he will testify before the Senate Banking Committee at 9:30 a.m. EDT (1330 GMT). At the Fed’s last policy meeting, some officials indicated the Fed may need to pull back faster than anticipated because of the jump in inflation. Powell restated that Fed discussions are underway about when it might be appropriate to reduce the central bank’s $120 billion in monthly bond purchases, and that employment gains are expected to continue. There was no mention in his testimony of the risks of the emerging Delta variant of the coronavirus, but a strong expectation that the recovery should continue unimpeded. “Job gains should be strong in coming months as public health conditions continue to improve and as some of the other pandemic-related factors currently weighing them down diminish,” Powell said. Nick Note: Inflation is close to running out of control… The Fed should be tapering right now. And the job market is dead in the water because THEIR BACK….. AS IN THE CORONAL19 VIRUSE DELTA!
U.S. consumer prices surged in June, topping all estimates
https://youtu.be/gATrg2O7Aeo
rices paid by U.S. consumers surged in June by the most since 2008, topping all forecasts and showing higher costs associated with the economy’s reopening continue to fuel inflationary pressures. The consumer price index jumped 0.9 per cent in June and 5.4 per cent from the same month last year, according to Labor Department data released Tuesday. Excluding the volatile food and energy components, the so-called core CPI also rose 0.9 per cent. The core increased 4.5 per cent from June 2020, the largest advance November 1991. Used vehicles accounted for one third of the gain in the CPI last month, the agency said. The outsize increase in the June CPI was also driven in large part by the pricing rebound in categories associated with a broader reopening of the economy including hotel stays, car rentals, apparel and airfares. Expectations that those increases will normalize help explain the Federal Reserve’s view that inflation is transitory. The median forecasts in a Bloomberg survey of economists called for a 0.5 per cent gain in the overall CPI from the prior month and a 4.9 per cent year-over-year increase. Treasury yields climbed following the data, while the dollar jumped and S&P 500 futures fell. The year-over-year figures have shown outsize gains in recent months partly because of so-called base effects — the CPI retreated from March through May of last year during the pandemic lockdowns. While the annual figures are expected to peak, it’s not yet clear how much moderation will occur over the coming months. Household spending on merchandise, fueled in part by government stimulus, has left businesses scrambling to fill orders while facing shortages of materials and labor. That dynamic is contributing to higher costs, which often feed through to consumer prices. Meanwhile, the lifting of pandemic restrictions is propelling purchases of services like travel and transportation, another contributor to inflationary pressures. Fed Chair Jerome Powell has said that recent price increases are the result of transitory reopening effects, though more recently acknowledged the possibility of longer-term inflationary pressures. Sustained constraints in the production pipeline raise the risk of an acceleration in consumer inflation. “Bottlenecks, hiring difficulties and other constraints could continue to limit how quickly supply can adjust, raising the possibility that inflation could turn out to be higher and more persistent than we expect,” Powell said after the June Federal Open Market Committee meeting. Economists have been watching to see whether price pressures broaden out to categories other than those that are just now rebounding after pandemic-related lockdowns. Nick Note: The Fed has over stimulated and are about to lite off a Inflation fire storm. They better taper and soon before they lose the system.
Surprising amounts of death will arrive in these us regions
https://youtu.be/-oBOk6-num4
(CNN)When you compare states with high vaccination rates to states that are lagging, the difference in the number of people getting Covid-19 is staggering. Over the past week, states that have fully vaccinated more than half of their residents have reported an average Covid-19 case rate that is about a third of that in states which have fully vaccinated less than half of their residents, according to a CNN analysis of data from Johns Hopkins University and the Centers for Disease Control and Prevention. Alabama, Mississippi and Arkansas are the only states to have fully vaccinated fewer than 35% of their residents. Average daily case rates in each state were among the 10 worst in the country last week. Vermont leads the nation with about 66% of its population fully vaccinated — and while case rates there increased compared to last week, the state still had the lowest case rate in the country last week, with an average of less than one new case per 100,000 people each day.
Covid-19 cases rise in US hotspots States that have fully vaccinated more than half of their residents reported an average of 2.8 new Covid-19 cases per 100,000 people each day last week, compared to an average of about 7.8 cases per 100,000 people each day in states that have vaccinated less than half of their residents. “We really need to get more people vaccinated, because that’s the solution,” Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, said Monday on “CBS This Morning.” “This virus will, in fact, be protected against by the vaccine.” Across the country, more than 99% of US Covid-19 deaths in June were among unvaccinated people, said Dr. Rochelle Walensky, director of the US Centers for Disease Control and Prevention. Dr. Howard Jarvis, an emergency medicine physician in Springfield, Missouri, told CNN on Monday that his sick patients are all unvaccinated. “If they’re sick enough to be admitted to the hospital, they are unvaccinated. That is the absolute common denominator amongst those patients,” he said. “I can see the regret on their face. You know, we ask them, because we want to know, are you vaccinated? And it’s very clear that a lot of them regret (not being vaccinated).” The pace of vaccinations has dropped sharply in recent months. About 246,000 people initiated vaccination each day over the past week, down 88% from the April peak, and about 278,000 people became fully vaccinated each day over the past week, down 84% from the April peak, CDC data shows. About 56.2% of Americans 12 or older are fully vaccinated. Nick Note: What they forget to tell you is fully 10% of those infected and hospitalized are fully vaccinated people…… The next wave is upon us…. Pfizer has said we need a third shot and they are working on it as we speak,,,,,,
Double Digit Negative interest rates here we come. But not before we get a 4% handle on the 30 year bond……..
Markets are dazed and confused as witnessed by the 30 year bond reaching a recent high of 2.25% then plunging last week to 1.9%, As the Fed changes gear and puts out the inflation fire it started it will have to raise rates and i expect the 30 year bond to go as high as 4%. Slamming on the brakes… When they figure out they have tightened to much as the economy sucks shut they will panic and push the pedal to the metal and we will then start the negative interest rate plunge… to double digit negative rates. What really drives this is the coming wave of deaths and shut downs as the mutant strains of the covid19 virus sweeps across the globe like the angel of death.. Governments are hand strung… The pressures on the politicians are enormous as special interest from the airline and hospitality industries prevent what we should have done a long time ago. A global 6 week shut down and massive vaccines with yearly booster shots and testing and quartering of all travelers…. In the real world that is NOT going to happen. So we are destined to idiots making things far worse then they need to be….. Sorry about that. But i did not do it so don’t blame Nick……So take matters into your own hands and protect yourself and loved ones.
Fed’s Barkin against taper due to labor market state
President of the Richmond Federal Reserve Thomas Barkin stated on Monday that he is against tapering coronavirus asset purchases due to the current condition of the labor market. “If the labor market can clear relatively quickly, then maybe it can happen sooner, but if it takes longer for the labor market to reopen, it goes a little later,” the official stated, adding that he hopes the threshold for pulling back on asset-buying will be triggered “relatively soon.” Barkin noted that a reduction of both types of Fed purchases steadily may be the best taper strategy as it is easily communicated and understood by markets. On Tuesday Barkin said: The U.S. Federal Reserve should taper in the least dramatic way possible when the time comes, Federal Reserve Bank of Richmond President Thomas Barkin said on Tuesday. “I have some preference for the least drama way of moving back to normal,” Barkin said during a webcast interview with MNI Market News.Barkin added he was undecided on whether the Fed should begin to wind down its purchases of mortgage-backed securities before Treasuries but that there was some downside to being too intricate. “I am open minded to it,” Barkin said. “I think whatever we do also has a third criteria which is just simplicity. Is it easy to communicate, do people understand it? I think there is some downside to trying to get too clever in how you move left and how you move right.” Nick Note: I have made many fortunes on Federal Reserve fuck ups. As often reported in these pages they rely on complicated rather dubious mathematical formulas… rather then plain old horse sense. They are creating bubbles in the stock and real estate markets. And still not creating jobs. Giving endless amounts of money to finance houses… and buying corporate debt creates a bubble in real estate and a bubble in the stock market. How does giving endless mortgages created jobs? Builders are not building more, people are bidding up the price on existing houses. Buying endless amount of corporate debt does not create jobs, it creates endless share buybacks and overinflated share prices.. Again not a job creating mechanism… Oh and i forgot to add too much money chasing a fixed amount of goods and services creates embedded inflation and among the masses inflation expectations. Soon the formulas will catch up with reality in the real world and the Fed will slam on the brakes, the dreaded tapper and interest rats will shoot up……. then plunge….
Inflows into equity funds smash records… The Stupid Money HAS Arrived
https://youtu.be/Xa2TrSYCJI4
First-half 2021 inflows into global equity funds are the largest on record Investors are pouring into global equity funds with a fervour never seen before. About $580bn has been added to the sector in the first half of 2021, putting the category on track for a record inflow, according to data provider EPFR. Strategists with Bank of America estimate that if the pace of inflows continues at the same clip for the remainder of the year, equity funds will take in more money in 2021 than in the previous 20 years combined. Equity funds have ploughed those inflows into an ever rising stock market, with major indices climbing to a series of record highs in the past week as the economic recovery from the pandemic gains momentum. The S&P 500 is up more than 15 per cent this year, while the FTSE all world index has gained slightly more than 12 per cent. Relatively low bond yields — and the fact that more than $12tn-worth of debt trades with a yield below zero — have amplified the appeal of the $117tn global stock market. “There has been a real seismic change in the economy and where the earnings growth is coming from,” said Diane Jaffee, a portfolio manager with asset manager TCW. “Even with the most conservative estimates of inflation, your real return on bonds is negative.” First-half 2021 equity inflows surpass those of previous 20 years The inflows have been broad based, with large additions to both global funds as well as funds that buy US, Japanese or European stocks. Investors have in recent weeks also shown a preference for both growth and technology stocks in the US, as they debate how long inflation will remain elevated and whether the so-called reflation trade will continue to wobble. Additions to sovereign bond funds have, by contrast, been relatively muted this year at $33bn, the EPFR data showed. Jaffee said she expected investors to continue to favour stocks this year, particularly those in the US where the country has rolled out Covid-19 vaccinations at a much faster pace than most developed markets. But she and others have warned that a jolt to bond yields — for example from a policy mis-step by the US central bank — remain the big risk. “While we’re at little risk of overtightening just now, the policy miscommunication issue is very much on the table,” said Nicholas Colas, the co-founder of DataTrek. Colas noted that US stocks did well even in the aftermath of the 2013 taper tantrum, when the Federal Reserve chair prompted market volatility by saying the central bank would at some point curtail its bond-buying programme. But Colas added: “While the 2013 taper tantrum period was fine for stocks, we can’t entirely discount the possibility that this time could be different.” Nick Note: Their must be clowns. Everyone is indeed buying…. Getting to the time when I must sell.
Treasury bond yields plummeted, causing repercussions in the market
Violent charge Treasury bond yield It is causing repercussions in the global financial market. The stock prices of fast-growing technology companies hit new highs and lowered corporate borrowing costs, but they have triggered new concerns about the prospects of financial returns.
It took several months to reach an investor consensus that strong economic growth and rising inflation will cause interest rates to rise sharply, but it has now broken down. For those involved in the transaction, with The past few days Across Wall Street, in the context of what Jim Cullen, portfolio manager of Morgan Stanley Investment Management Company, described, “In the context of peak growth, peak inflation, and peak policy stimulus, investors are suddenly forced to think about how to reposition themselves.” The market has taken clues from the Fed’s consideration of signals that it will cut monetary support earlier than previously expected, and it looks like it may raise interest rates within ample time to prevent inflation from getting out of control.At the same time, as the United States has lifted most of the restrictions on the coronavirus pandemic, it has become more contagious Delta variant It is now prevailing in the country-strategists believe there is little room for unexpected growth upside. The 10-year U.S. Treasury bond yield peaked at 1.77% in March, fell by 0.11 percentage points in just two trading days this week, and briefly fell below 1.3% on Thursday. “Cash costs are falling, and people are looking for places to deploy cash,” Karen said. “This supports the broader asset market.” The U.S. benchmark Standard & Poor’s 500 Index hit 8 highs in the past 9 trading days. Apple, the largest company in the index, closed at a high on Wednesday, setting its first closing high since January, and then profited on Thursday. Vomiting. In fact, since inflation expectations peaked in May, the stocks of fast-growing companies such as Apple have been pushing the market to rebound, reversing the months of rotation of value stocks. The fate of these stocks is more closely related to the economic cycle. Year-to-date returns on growth stocks in the Standard & Poor’s 500 index surpassed the returns on value stocks on Tuesday after lagging for most of the year. From the beginning of the year to mid-May, the S&P 500 Technology Index rose less than 1%. But since then, as of Wednesday’s close, stock prices have risen by more than 15%, and shares of Microsoft, Salesforce and Qualcomm have all risen by more than 10%. Since mid-May, value stocks have begun to get involved. As interest rates fell and investors began to question the durability of the US economic boom, banks were particularly lagging behind. The decline in long-term Treasury yields threatens the profitability of banks’ lending to customers, and this is reflected in the closely watched KBW Bank Index, which has fallen 5% since mid-May.
“The market may be at a major turning point,” said Maggie Patel, portfolio manager at Wells Fargo Asset Management. “There is a feeling that after the middle of the year, the amazing recovery growth we have will slow down.”
In early trading on Thursday, the nervousness about the economic recovery came to the fore in the broad stock market sell-off, causing the S&P 500 index to drop by more than 1% at the opening. Capital Investment’s macro market economist Oliver Allen said: “We don’t expect re-inflation and rotation transactions to return to their former glory,” adding that “the room for further improvement in growth expectations is limited.” The corporate bond market has been synchronizing with the Treasury bond market. As government bond yields rose earlier this year, the yields on higher-rated bonds in the corporate bond market also rose—albeit to a lesser extent. Now the sharp reversal of U.S. Treasury bonds has sent investment grade Corporate bond yield According to data from Ice BofA Indices, it fell to its lowest level since February. Margaret Kerins, global head of fixed income strategy at BMO Capital Markets, said that she expects a sharp drop in borrowing costs to prompt many companies to enter the bond market. “If you haven’t posted it yet, you have to jump on it now,” she said. “How can you not use it?” Some investors and analysts have become more cautious because credit is provided to increasingly risky companies at low interest rates. BlackRock this week lowered its outlook for US high-yield bonds, warning that potential yields are too low to compensate for the risks involved in providing loans to such low-rated companies.
In recent weeks, the yield on junk bonds has fallen below 4%, this week setting the lowest level since ICE BofA Indices began tracking the data in 1992.
While others are cautious, they are still optimistic about the resilience of the US market in the context of supportive growth, even if they expect interest rates to retreat and rise later this year. “The market is like a pendulum. They go too far on the one hand, and they go too far on the other,” said Adrian Miller, chief market strategist at Concise Capital Management. “We worried that inflation went too far in March. We were too complacent today.” Nick Note: The most confused markets i have ever seen. As the Wall Street fucks scour their historic models to see what to plug into their algorithms. The problem is their is no historic model and even the Fed is lost. Its run away inflation, Bubble stock and real estate markets and debt markets that are lost in Never Never land. And to to it off their back! The mutated corona virus know as the Delta variant will suck shut the economy again. And their goes the bubble markets and with soaring inflation the Fed is fucked up the ass….. And treasury is lost in the wilderness… Janet baby let me hear you squeal like a pig………