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A capture of inflation, dilution and stimulus /2024As we see by the chart, we had a series of events mostly around mega-stimulus for Covid and a massive dilution of currency as triggering events. Inflation rose and is now back down close to the desirable 2% inflation. We don't want prices to go back to where they were, that is deflation and is not healthy for an economy. We want prices to stay near the same year after year with modest inflation. When inflation rises too fast, we increase interest rates to slow down spending, to reduce inflation. The best we can do is work on wage growth to accommodate the inflation from our past years while maintaining modest inflation. At 2.4% inflation currently, there really is pretty much nothing to fix anymore, we just need to keep it around where it is, a little lower really and work on modest wage growth. Looking at this data, it really looks like the vast majority of the culpability of that inflation we had came from 2020, one of the single worst years financially as a country with inflation starting to rise immediately in 2021, and exacerbated some in 2021. Looking at this chart, there is a tangible possibility that we see >10% inflation by 2027 Here is the M2 money supply chart:
ECONOMICS:USIRYYEducation
by EncryptShawn
Lower inflation do not mean things will become cheaperLower inflation and interest rates do not necessarily mean that prices will decrease. If I annualize the inflation numbers instead of focusing on the monthly figures, the overall picture becomes much clearer. 2 and 10 Year Yield Futures Ticker: 2YY, 10Y Minimum fluctuation: 0.001 Index points (1/10th basis point per annum) = $1.00 Disclaimer: • What presented here is not a recommendation, please consult your licensed broker. • Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises. CME Real-time Market Data help identify trading set-ups in real-time and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
ECONOMICS:USIRYYLong
by konhow
7
$USIRYY -CPI# *M print (post AA+)- Awaiting CPI# numbers readings for ECONOMICS:USIRYY on August 10th (today) post US being Down-Graded to AA +. While on the 9th of August ECONOMICS:CNIRYY came deflationary on the other side of the world Consensus sits at 3.1% (0.1% increase) and some to 0.3% increase at 3.3% for ECONOMICS:USIRYY Economists forecast Inflation rising up again on a steady pace for the rest of 2023 and the entering of 2024 for coming down YoY from 9.1% to 3% On the last ECONOMICS:USINTR Rate Hike Decisions following a Month of Breath, our pal, Jerome Powell stated during his speech regarding Fed's seeing inflation coming up on months to come not being total uder control. This was aswell one of many reasons they didn't felt confident to stop the Rate Hiking . He aswell stated that Federal Reserve does not see Inflation coming down to their Target Norm of 2% CPI by 2025, and they fimrly prompt a 'Soft Landing'. How about another joke, Powell ! It's not about Money , its about sending a Message . Everything Burn ... TRADE SAFE *** Note that this is not Financial Advice Please do your own research and consult your own financial advisor before partaking on any trading activity based solely on this idea.
ECONOMICS:USIRYY
by Mr_J__fx
5
Grain Market and Bread Prices - Its Potential TrendIn today’s tutorial, we will track the potential prices of this important staple, wheat, which is used to make our bread. In these studies, we will use a combination of technical analysis and fundamental developments to support this view. Chicago SRW Wheat Futures & Options Ticker: ZW Minimum fluctuation: 1/4 of one cent (0.0025) per bushel = $12.50 Disclaimer: • What presented here is not a recommendation, please consult your licensed broker. • Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises. CME Real-time Market Data help identify trading set-ups in real-time and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
ECONOMICS:USIRYYLong
by konhow
2
Rolling 5-Year InflationInstead of using the monthly inflation print, a 5-year (60-month) SMA is used to chart US inflation. The SMA is used to cut back on noise from “transitory” inflation, giving a better view of the broader inflation environment realized over the past half-decade. Said differently, it illustrates the inflation environment which policymakers and central bankers are/were “dealing with.” For a more short-term-oriented view of regime change, an EMA might be used in place of an SMA. A shorter-term view is likely to be more useful in the context of near-term interest rate cuts. Historically, inflation tends to evolve from one “regime” to another. The implications of a regime change are enormous, and I am growing in my conviction that we are now in a new regime, as evidenced by the SMA breaking through a key level (explained below). Since inflation prints (or, any macro data, for that matter) are a fool’s game to predict with a high degree of precision, I used a pseudoscientific approach which yielded 3.25% as the key level for inflation to “break through” to a new regime. Using 3.25% also gives us a “round” number, making it easier to quickly put inflation prints in context (for me, at least). My commentary and some ideas to consider: Why 3.25% is important: it had not been “breached” since 1996. Put another way: the prevailing inflation environment has reached a level not seen in 28 years. Why is 1996 important? A look back over the past century provides hindsight of when prior inflation regimes began and ended. After the “1970’s” (colloquially), we entered a new era which realized a prolonged downtrend in inflation worldwide. 1996 became a clear demarcation point upon identifying waves of “lower highs and lower lows” in the years since. Further, 1996 roughly coincides with the end of a series of markedly higher “waves” of inflation. I feel it is relevant to also point out the dramatic changes in the world since we last saw 3.25% in 1996. 1. Internet In 1996, the internet as we know it today was in its infancy. This is obviously a change of biblical proportions in the way we live, and never before in human history has the entire world been connected in this manner (i.e., we are the guinea pigs of computing). Entire libraries could be filled with commentary on the internet’s impact on the economy, so I will defer to the experts for opinions. That said, it has generally been disinflationary. 2. Tech Giants Today, the 6 highest weighted S&P 500 stocks account for ~25% of the index. In 1996, of these six, only MSFT and AAPL were “established” companies, and even then, AAPL was in the midst of an identity crisis and was nowhere near the trillion dollar behemoth it is today. As for the remaining four: NVDA was founded three years prior in 1993, and in 1996 laid off ~1/2 of its then-100 employees. GOOG was still a research project of a pair of PhD’s and wouldn’t launch for another two years. AMZN was still in its first year of operations as an online bookstore, a far cry from its monstrous scale today. And, finally, the founder and brainchild of META, Mark Zuckerberg, was 11 years old, and the term social media was still about a decade away from entering even the fringes of society’s lexicon. This is all to say, nearly 1/4 of the proxy for the “equity market” - the S&P 500 - is driven by ENTIRELY NEW “inventions” (or products, services, goods, etc.). In the context of inflation, NONE of these “inventions” have EVER existed in an economy with inflation “above 3.25%.” There is a mammoth amount of capital that is put towards tracking the S&P 500, and in order to balance weights when tracking, it involves the buying and selling of all its constituents together. Having been untested in a transition to a “higher” inflation regime, it remains to be seen how the heavyweights of the S&P will hold up. Should they demonstrate an inability to “absorb” inflation, it would likely result in a broader sell off of the S&P, and would be exacerbated by a rotation to fixed income should interest rates remain elevated and offer yield which is more attractive than uncertainty as to when the “absorption” will occur, if it does at all. 3. China In 1996, China was still in its second stage of economic reforms, privatizing SOE’s, and would not enter the WTO for another five years. The consequences of China’s reforms have been enormous, and are potentially the most important influencer of inflation over the past thirty or so years. Again, this is another topic that could fill a library, and I will not elaborate more. That said, the effects of China’s reforms have been largely disinflationary. It is uncertain whether this trend will continue, as China is now facing a host of serious financial issues which could reach a boiling point. In particular, China is now the dominant player in commodity markets, virtually controlling the supply and/or demand for many of the world’s raw materials. How this interacts with China’s navigation of financial issues is uncertain, but has potential to be highly disruptive to global supply chains, which would push inflation higher. 4. Government Debt The US’ prolonged wars in Afghanistan and Iraq, on which the country spent several trillion dollars over nearly two decades, were still several years from occurring. Unlike other wars in the 20th Century and in recent history, these wars were largely financed through government debt. In the opinion of many, these wars were considered to be failures. Largely agreeing with this notion, the expansion of deficit spending to finance “lost” wars not only diverted monies from useful purposes such as infrastructure and education, but also hastened the government’s need to “inflate away” its debt. According to a paper by Brown University’s Watson Institute, the interest expense alone on the debt used to finance these wars will likely exceed $2 TN by 2030. To put this in perspective, when considering the 2022 federal outlay for highway spending amounted to $47 BN, these interest payments on war debt are roughly equal to FIFTY YEARS worth of federal highway spending. To make matters worse, the debt from the US’ wars pales in comparison to the bonanza in government spending in response to COVID. A whopping $5 TN in stimulus was doled out in a matter of months. It will take years to determine the ultimate effect the stimulus money will have had on the economy’s “intangibles”. For now, it is clear this spending spree has bloated the government’s debt, and input can be argued the US is running a dangerously high Debt/GDP ratio - a bellwether of inflation. How does the government plan to dig itself out of this hole? Logic points towards the path of least resistance, which in this case means “inflating away the debt.” We very well may have already begun to see this process set in motion. Inflation, by its nature, carries political implications, which has often led to charged discourse and sensationalized media headlines. This rings particularly true in election years (this year) and in times of collective struggle (the COVID era). Unfortunately, this can muddy the waters when trying to make sense of the data prints. My aim was to make a simple illustration which can uncover a regime change in inflation. It is up to the user to determine whether the regime change signal holds validity.
ECONOMICS:USIRYY
by ltstrudw
ISM GAUGES POINT TO HIGHER INFLATIONISM surveys show that prices are rising ; during April services and manufacturing prices advanced 10% on average. The problem? Look at the chart comparing these price indexes to the traditional CPI inflation reading, ISMs are usually forward looking. Inflation 2.0 is coming ----------------------------------------------------------------------------------------------------------------- Las encuestas ISM muestran que los precios están subiendo, durante abril los precios de servicios y manufactura avanzaron 10% en promedio. El problema? Mira el gráfico que compara estos índices de precios con la lectura tradicional de inflación CPI, los ISM suelen ser prospectivos. Inflación 2.0 está por llegar
ECONOMICS:USIRYY
by yamilbocanegra
1
⚡️ INFLATION IN THE US WILL GO TO THE SKY 🚀🚀🚀📣 Hello! I believe that inflation in the US will not go anywhere and the 2% target that the Fed has set for itself will not be achievable anymore. Here is a 100-year triangle on the CPI chart and I believe that already in this decade, that is, until 2030, it will be broken up and the Fed will have very big problems. After the triangle breaks up, inflation will soon exceed the peak of the 80th year and soar to 18-20%, then after the correction we will see a new ATH, it will be just inevitable. We can hope, of course, that everything will be fine – no one forbids this to you or me. But we have to be ready for the worst times right now, that's my opinion. ⚠️ Please analyze the information received from me and always think first of all with your own head. I wish you good luck in making your own trading decisions and profit ✊ Bye!
ECONOMICS:USIRYY
by AnonymousTraderAcademy
4
INFLATION REBOUND ?Consumer Confidence vs INFLATION The Red Phase was the fall of the CC which lead the Inflation data fall. -> Of course, when consumers doesn't trust the market, spending fall. The Yellow Phase describes the effect of the CC falling: IF FALL. As leading indicator, the rebound of CC show the expansion which is represented by the Green Phase. -> As we can see, as soon as CC take points, the Inflation rebound too. Not like 2008, this time, CC took 30pts. ⚠️I envisaged a continuation of the fall of the Inflation data but a big chance of rebound in the Inflation. Moreover, the last seen consolidation of the inflation and the rebound of the CC at the pic of the Inflation is worrying. We see Strong Economic datas even showing signs of expansion. This delay between inflation and CC has not been that big during 2008. At the first rate cut there is a big chance of explosion of the Inflation as seen in 2006/2008 or pre-covid. ⚠️
ECONOMICS:USIRYYLong
by ThinkAboutIt75
Improved CPI, but Market Collapse – What is Happening?Just about 1.5 years ago, inflation reached the highest point in recent decades. The January inflation number for 2024 was released on February 13th. Its CPI has improved from 3.4% for December to 3.1%. However, the major US stock indices collapsed more than 1% on the same day. Why is there such nervousness surrounding improved inflation, and what are its implications? Mirco E-minin Dow Jones Futures & Options Outright: 1.0 index points = $0.50 Symbol code: MYM Disclaimer: • What presented here is not a recommendation, please consult your licensed broker. • Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises. CME Real-time Market Data help identify trading set-ups in real-time and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
ECONOMICS:USIRYYShort
by konhow
Exploit the inflation response?In the United State's history of inflation, we can observe a specific pattern anytime the inflation rate spikes. First in 1935, and again in 1969. Each time this happened we saw two additional spikes each about 4.5-5 years apart. Given the recent spike in inflation in 2022, we may again see another two additional spikes in inflation. One around 2027, and another around 2032. Thanks to the recent spike, we were able to observe first hand how the market reacts to the policy response on inflation which is to increase rates. Further - it is likely that when the market reacts unfavorably to the increase in rates, it will bottom out in approximately 10 months like it did in October of 2022 meaning we will be able to have an idea of when to go stop shorting and enter long positions. TLDR: market should pump til' like 2027 all things held constant xD.
ECONOMICS:USIRYY
by The_Gains