What it looks like when inflation gets deeply entrenched in the broad economy, even as energy inflation backs off.
By Wolf Richter for WOLF STREET.
Inflation once it takes off and gets entrenched in the economy, has a tendency to dish up nasty surprises. It did that in the US for January and for December, it did it in Japan, and it did it in a super-nasty way in the Eurozone for February, based on data released today by Eurostat.
In the 20 countries that use the euro, the annual rate of the core Consumer Price Index – excludes energy products, such as gasoline, diesel, electricity, natural gas piped to the home, heating oil, etc. – spiked to a record 7.7%.
This index and the index for services inflation have been repeatedly cited by ECB President Christine Lagarde and ECB governors as reason for continuing the rate hikes:
This measure of core Inflation (CPI without energy products) started rising in mid-2021. By February 2022, the index reached a record of 3.1% in the data going back to 2002. In a sign that inflation was getting entrenched in the economy beyond the spike in energy prices, the core index spiked from there on.
Services inflation spiked to a record annual rate of 4.8% in February. Services include healthcare, education, housing, insurance, financial and legal services, telecommunications, streaming, subscriptions, air fares and lodging, repairs, cleaning, haircuts, etc. Services are where the majority of consumer spending goes.
Services inflation is a sign of just how fundamentally deep inflation has seeped into the economy beyond volatile food and energy products, and beyond supply chain debacles and the like. Inflation is very difficult to control once it reaches services, many of which are essentials that consumers cannot dodge or substitute:
As the biggest cost component for many services are wages, and wages have been increasing in the Eurozone, and they have begun to feed into services inflation, to the point where Lagarde has mentioned the connection as a worrisome trend.
The overall CPI rate dipped just a hair to 8.5%, from 8.6% in January, but rose in Germany (9.3%), France (7.2%), Spain (6.1%), Netherlands (8.9%), Ireland (8.0%), Slovakia (15.5%), and Malta (7.0%).
The energy inflation rate, on a year-over-year basis slowed to an annual increase of 13.7% in February, down from 18.9% in January, as natural gas prices plunged from the ridiculous spike last summer, and prices of gasoline and other fuels dropped in recent months, though they’re still far higher than they were a year ago.
Food inflation accelerated to a red-hot annual rate of 15.0% from 14.1% in January. Non-energy industrial goods inched up a hair to 6.8%.
Much like in the US and other parts of the world, overall CPI Inflation in the Eurozone began surging in early 2021, a year before Russia’s invasion of Ukraine, after years of reckless money printing that went hog-wild during the pandemic, which enabled massive government deficit spending directly into the consumer economy.
In October 2021, months before Russia’s invasion of Ukraine, the Eurozone inflation rate surpassed prior records. In January 2022, it hit the previously unthinkable shocker rate of 5.1%. Russia’s war in Ukraine initially fueled commodities inflation, but in recent months, prices of energy commodities have come down sharply.
And all the while, inflation moved beyond commodities further and deeper into the economy.
Inflation by Eurozone country.
|CPI by Eurozone Country, Feb. 2023|
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Oh, the Europe is so screwed with high inflation projectedto keep remaining high, if not getting higher!
So is the case with Japan, UK, Canada, Australia, and the US.
Also all these central banks printed money in tandem.
We may be looking at the BIGGEST Administrative and Governance FAILURE in developed world in the history of mankind, specifically with the scale of misery caused and productivity destroyed.
It’s not easy to EFF things up so grandly. You need a big bunch of really smart, qualified and powerful central banks to come together and work closely in a team, with their best intentions and efforts to pull off such MIRACLES!
I agree. Only the smartest of the intellectual-class experts could lead the world’s economies to the place they’re in now. We should thank them properly for their expensive expertise.
The Ukraine, on deck to join the EU as a “candidate for accession to the European Union” has a 2023 CPI YTD of 26%.
So that should help the overall EU stats.
1. Obtaining EU membership takes years. Ukraine just applied.
2. The inflation rates here are for the 20 EUROZONE countries that use the euro. Even after Ukraine becomes a member of the EU, it will take many more years before it might become a member of the Eurozone. This is a slow process. There are lots of requirements and qualifications to be fulfilled, including getting their inflation under control and stabilizing their currency against the euro. It takes years. For example, Croatia became a member of the Eurozone on Jan 1, 2023, which was 10 years after it had become an EU member (2013).
Ukraine will need many trillions for reconstruction. Is the eu signing up to pay for this?
russia will sign up ;)
West arrested some russian funds and property, most probably the funds will help Ukraine.
Build Back Better?
Wolf, how much effect of China’s latest QE going to affect this global inflation?
That’s all eaten up over there.
“This index and the index for services inflation have been repeatedly cited by ECB President Christine Lagarde and ECB governors as reason for continuing the rate hikes…”
But apparently not for higher rates now. This is how inflation gets “entrenched” … turning Teddy Roosevelt on his head, policymakers speak bigly and carry a soft stick.
The growth of credit and the money supply is the biggest driver of inflation. Higher interest rates will do little. It will take the central banks to stop printing money and stop buying treasuries. GLWS!
True enough, but interest rates are also a major driver of the growth of credit. They represent the price of credit, and like anything else, people can buy more of it when you lower its price.
But a restrictive level of interest rates is a dynamic variable. Financial conditions are an excellent indicator of just how tight monetary policy is. The December FOMC minutes show the Fed openly worried that reducing the pace of rate hikes might ease financial conditions. It tried to offset this risk by substituting tougher action with tougher talk (RIP Teddy) and shift the narrative to the “terminal rate”. They lost that bet, as stock prices have since taken off again (easing financial conditions). That unsurprisingly brought progress on reducing final inflation to a halt.
Also true that the central banks could be doing a better job of shrinking bloated balance sheets. Here is the US, for example, the Fed still has a multi-trillion-dollar hoard of MBS, which isn’t even a purely monetary asset. It’s conceivable even current rates might be high enough given sufficiently firm action on the balance sheet, but that doesn’t seem to be on the radar.
Bottom line is monetary policy isn’t all that tight, and tough talk isn’t going to substitute for action in the form of some combination of higher rates andor more meaningful balance sheet trimming.
It’s not good enough to put a higher cost on credit. As long as the federal government continues to issue bonds it can never repay the money supply will get ever larger and that is the biggest driver of inflation! World wide inflation will grow exponentially until it is Venezuela 2.0 then POP! The world central banks will keep funding ever growing spending no matter how tough they Jaw Bone. When the public wakes up and stops buying bonds then it will be ” The Lender of Last Resort” to the rescue. Cash out re-fi will start to perk up as home owners grapple with runaway inflation no matter the interest rate or terms because they never intend on repaying. Can you say 2008?
“When the public wakes up and stops buying bonds”
The thing is, yields are rising, and short term T-bills are becoming increasingly attractive vs stocks or any other asset really.
If the USG really has a sovereign debt crisis, I don’t think you’re any better off holding dollars.
“ It’s not good enough to put a higher cost on credit…”
I didn’t say it was. But we need to distinguish between necessary and sufficient conditions. It’s not sufficient to put a higher cost on credit, but it’s necessary. Without higher interest rates, expansion of government credit would be offset in the corporate sector and banking system, simply moving the center of inflation from one place to another.
we all know this, yet Powell NEVER gets asked about whether his policies are the core root of inflation and if he thinks not, please explain how it isnt?
i would love to see Wolf and some of the people who post here as the reporters questioning Powell. it would be a massacre.
i continue to say that the amount of assets still on the balance sheets of the central banks needs to be brought down much faster. they should be doing down at the same pace they went up.
Good point but if there’s anything that “they” don’t want it’s a honest look at the economy … that’s why we have that chummy Mike McKee as bloombergs point man for all the fed and finance numbers speak. It’s a game master the game and make a lot of money. It’s not about what’s right or what’s in the best interests of the country or world at large … and that’s why it’s collapsing
Which puts the ECB in a bind.
The Euro is as much a political instrument as an economic.
In 2011 this was shown when the Greeks tried to blackmail the EU with regards to them leaving the Euro (note: if you decide to play bluff poker do not openly show your cards to the opponents, especially if you don’t even have a pair). The problem wasn’t so much them leaving the economic part but the political fallout of the Euro not being able to keep Greece.
To prevent a country from actually leaving the Euro the ECB has gone on a rate repression spree.
As it stands now they either risk countries leaving or get the inflation entrenched in the economy.
To prevent either they are desperately trying to fine tune these rate repression measures but as of yet the only result is the inflation getting entrenched.
I think the root of the problems associated with the handling of the greek debt crisis is that policy makers had little knowledge about finance. Not that the financial experst speak with one voice… .
Looking back, greek didn’t had to leave the eurozone but should have been allowed to default. Would have made the restructuring cheaper, and could have allowed for post default spending to boost the economy. More importantly the greek electorate would have gotten a voice.
Wolf, thank you for the information you give about Europe. It is amazing how politicians and banks here continue to justify the war in Ukraine, covid and disruption of supply chains. They don’t want to admit that it was their fault because they flooded the markets with freshly printed notes
Lagarde is going for a 50 basis point hike. The markets rose. Bostik favors a slow and steady 25 basis hike … the markets rose, and then 10 year feel back some from its high of 4.091.. the markets rose. Delta pilots agreed to a 34% pay increase over 4 years or 8.5% per year after suffering no hardships other than extended vacations. The Markets rose.. That sounds like entrenched service inflation to me with a sleepy Fed.
Another amazing surprise today: As yields (interest rates) soar on all US Treasury durations today, the Dow soars by over 286 points and rising. Apparently all of the interest rates that matter don’t matter at all to the market valuation of equities! Imagine that!
P/E ratios and earnings aren’t all that good. Earnings quality isn’t all that good. And the cost of credit is rising. Go figure.
MW: Inflation data pushed the 10-year Treasury yield above 4%. How much higher can interest rates go?
Someone did a 100 year study of inflation,once it starts it’s a 2-3 year process . This is going to hurt
These 100-year observations were valid for an ever-growing population. The game changer is the baby boomers’ retirement. Now instead of net contributing, this largest generation on earth taps on their RE equity to consume at a higher pace.
It’s a slow regime shift that already crossed its inflexion point. The best thing is to figure out a way to improve productivity while getting used to the deterioration of living standards.
In terms of “earth,” I don’t know. But in the US, the millennials are the largest generation, and they have entered their peak earnings and spending years.
Yap, I meant the US population.
Boomers are 22% population holding half of the assets.
Demographic trends structurally changed, with the fertility rate falling from 3.7 down to 2. We are short on qualified labour supply and have a large supply of retirees living from their assets.
Tacit open Southern border policy, questionable employment stats and high focus on service CPI all point to labour playing a central role during this decade.
LOL look at those charts! How many G’s are those inflation astronauts pulling? “We have liftoff, Whoa whoa whoooooooooaaaaaaaaaaaa!!!!!”
Paragraph 7, A => As
Thank you, again, and again, and …
But Bostic “firmly in quarter-point rate rise camp” and Warren wants new ZIRP fed to replace the exiting mega dove. US markets don’t need data, just kind words from the financial wizards. Europe markets are sure to respond positively next open as it seems “Financial Wizards>Inflation Data” for the moment.
To the kind charitable folks of Europe – The USA had to take Harry and Meghan recently, any chance you could take Warren and Bostic in exchange? Just asking for a friend…
You’d have to ask the English, now after Brexit Harry is solely their property, though Megan was born in the US so I think that’s your guys problem. Luckily, here in Canada we are a little too “backcountry” for them.
With Warren hating Powell this much, he can’t be all bad, LOL.
She called him a “dangerous man” during the confirmation hearings in Oct 2021. That’s when I realized that he must have some qualities somewhere, which he exposed in 2022 finally.
We’re going to keep high inflation and so we’re going to keep high interest rates (over 5%) for a LOOOOONG time. Everyone is getting used to it, like in the 1970s. There is no political will to really crack down on inflation. And so we’re going to have lower asset prices for longer.
Just how would you suggest that they ‘crack down’ on ‘inflation?’
I’m in the camp that believes that the Fed is doing pretty good if they raise to 6% in 25 basis points increments. I don’t want a huge blowout recession that will cause the Fed to push rates back to 0% and start QT all over again. This kind of inflation takes a long time to get back into the bottle. You cannot do it in just a few months without blowing up the economy.
There may be just enough political will to go that far, or maybe not quite that far, unless the economy really tanks.
If everyone gets used to higher rates and higher inflation, and lower asset prices, then that’s what we’ll get.
“I don’t want a huge blowout recession that will cause the Fed to push rates back to 0% and start QT all over again.”
How about a recession that DOESN’T “cause” the Fed to reimpose ZIRP and QE and ultimately more QT all over again? In other words, how about the Fed actually demonstrating unambiguously that the Fed Put is dead?
I’m with P on this: Might as well bite the bullet and get the damn operation over with ASAP, rather than continue to drag it out fo’ eva’.
It appears inevitable that GUV MINT, especially FRB ( admittedly quasi GUV, but totally MINT ) will screw up what ever they try to do — or so it seems the last 50 years or so of their meddling/experimentations.
At this point in time, it appears possible, perhaps to the point of probable that Dr. Doom has it correct.
Isn’t she for the little guys? Not sure why she hates the fruit of their labor. She’s hell bent on devaluing them. Bernie, too.
Well, my guess is that they are very concerned about causing massive unemployment for the little guys. Right now, the little guys may be suffering the effects of inflation but at least they are working and they can put food on the table. So I cannot really fault Warren and Bernie for their line of thinking.
The way the economy has been run for the last 50 years is “Market Capitalism for the Poor, Socialism & Bailouts for the Rich” – leading to enormous disparities in income and wealth. No one in their right minds can say that this is a fair way to run the economy.
Another great report Wolf! Did you notice Redfin just announced the first YOY price decline in residential real estate since they have been keeping records(2015)? Next month will be a shocker as the the two numbers of YOY are now moving in opposite directions. Thank you for the single source of sanity and facts not hype.
Yes. The NAR is one month or maybe two months from a YOY decline in the national median price, which would be the first since Housing Bust #1, even with flat month-to-month prices.
If there is a month-to-month price decline for its February data, released in March, it will blow through the YOY decline line because of the huge spikes last year.
Yes and that number will be just Splendid! Thank you again for all you do.
It is very hard to explain what you are talking about but a chart just spells it out.
I just raised my consulting rates with my clients. No pushback at all.
I just said I am following the published inflation rate, and am raising them in parallel as inflation goes up. Everyone now knows the score, and they are raising prices to their customers down the chain as well..
This inflation is totally entrenched baby… the spiral is now raging and getting the economy off it is going to take a long time and going to hurt in the end..
Yep agreed. Just today, I received an email that Duke is raising electricity rates.
My service providers raised their rates across the board.
I didnt get raise to match inflation.
So, I am looking to cut services .
Agreed. I don’t know a single person from my smallish circle of friends and family who received a raise anywhere near inflation rate in the last couple of years. I keep reading about wage gains though?
I think wage gains on average haven’t really kept up with inflation, wolf had a great article a while back where it looked like job hoppers saw the largest gains, people who stayed put saw lower gains on average. In my company a few of us got bumps above inflation and another 20% in living out allowances but that was a panic move after we lost a good number of experienced people. Pretty sure companies like mine are hoping for a recession, we aren’t the best in our industry, but a whole lot better than lower end of companies so they’ll be hoping to poach at lower rates if some of those start downsizing
You don’t know anyone on Social Security?
I don’t know. I’m in the kicking and screaming camp when it comes to inflation. I’ve pulled back on spending out of principle.
People are running out of money,they can only squeeze a tube of toothpaste so far .Then it’s empty = 50% of consumers are broke?
The rate increases are too small and at this point something needs to shake the markets and the public. The longer the Fed takes to get to positive real rates, the harder it will be to bring down inflation. Negative real rates crushes the working class.
I feel sorry for the fixed income folks and anyone with savings! They will be crushed over time.
How about the people without savings? The savings rate is weirdly low right now. And consumer debt is inching upward. What will they do, eat the wonderful “experiences” they shelled out for?
Yes and they will have to cook it up on their 50k Dodge Charger exhaust manifold if they manage to keep the repo man stumped. Who knows things have a habit of working out. I thought it was all over when 911 happened. The markets were closed for 2 weeks and the country was in shock. I try to remember just how utterly resilient the US is!
Funny, NiSource energy just communicated to me that customers may soon experience relief in their natural gas and electric bills, due to recent price declines in the commodity market for energy! z.🤣
Dow’s up over 400 points in final half-hour of session as all durations of US Treasuries soar above 4% yield!
It had been declining since mid-Feb, with few small ups in between. Nothing goes to heck in a straight line.
Looking at these inflation rates in the Eurozone, it makes me think Lagarde is trying to solve all problems via money printing and inflation.
Over half the Eurozone countries are experiencing inflation in the 8-20% range. If that is not hyperinflation, what is?
On top of that, they’ve pegged interest so much lower than the inflation rate, the hyperinflation may get much worse.
She’s only playing with the savings and future of 500 million or so citizens, so maybe it’s not a big deal. sarc.
Lagarde was an architect of the PIIGS bailout, making her the ECB Chair and expecting fiscal discipline was always a joke. The all wanted easy money and thst’s what they got. The central banks did not cause inflation, they merely set the table for the lazy governments to take advantage of low rates without any thought of when the bills would come due. Gonna be an interesting year or two!
Bobber, sorry to disappoint, but as brazilian, let me tell you with some authority: 8-20% yoy inflation isn’t hyperinflation, far from it. It is painfull, specially to the poor, but hyperinflation is something like 100% per month…
Now, inflation of over 10% yoy, left unchecked, get momentum and become 20-50% yoy in about a decade. And then it becomes even tougher to control, and get’s really out of control. Because little by little, your society gets to index everything to inflation or to another currency/commodity/whatever that retains value better then your currency.
Sooner or later, having commodities or real estate emerges as a store of value?
Real estate, commodities (gold, mostly) and mostly foreign currencies emerges are stores of value, yes. Not because they beat inflation, but because they are the least dirt rags in the garbage dump. They will lose to inflation, but less then other stuff.
But that only happens in truly hiperinflationary economies, not this kid’s stuff at USA at the moment.
For example, nn Brazil between 2012-19 we got an average of 6% yoy inflation (~41% over seven years. Real estate got utterly crushed. But because of the high inflation, not so much in nominal terms. My rent stayed flat over the period, and prices stayed flat also, while I got to enjoy 10-15% yearly yields on my CDs…
We’ll, no matter what label you put on it, 10% inflation is disastrous for people on fixed pensions, such as defined benefit plans. The private pension you thought would pay all your living expenses in retirement won’t even buy you a shopping cart to put your sleeping bag in.
The instabilities central banks created are unbelievable.
I suspect that the big inflation in the Baltic countires is mainly due to their small size. They have an rapidly growing economy that looks more and more like central europe. Of course there will be inflation. 10 years ago there was still a wage difference of 10x. And those people are just as high educated.
So many bad news around us but the market is UP and UP and UP :-)
Nah, look at the chart. The S&P had a shitty February and declined further yesterday. Today it’s up. Nothing goes to heck in a straight line, LOL
Today’s Silvergate enters the chat…
The DOW is off its all time highs by a paltry 3,000, still soaring at over 30,000. Nothing goes to heck in a straight line, alright. Nothing goes to heck period, apparently. From “soft landing” to “no landing.” The economy remains grotesquely overheated. Powell failed miserably stepping the rate hikes all the way back to a quarter point.
Global liquidity (spending money) still plays a part in our economy, even with the US increasing rates, they need to spend it somewhere.
I agree why would you tell wallstreet that you firmly believe a 25 basis point increase is enough?
I thought they promised not to make decisions based on the volitility of the market?
How does the Eurozone manage to have such a wide spread in inflation rates?
Eurozone is a Frankenstein of financial engineering. I’m still wondering when Italy will implode on its 130% GDP debt
Inflation is reducing that, LOL
Italy has less than $3T in debt priced in USD. The US is 10-11X and counting, with a similar (130%… and counting) burden, both likely to be divided by a shrinking GDP, while rates are rising.
Wolf is correct that they are inflating away debt. Probably a reason they don’t actually raise rates above inflation: it might work for the little guy!
Simple. It all depends on how much money their governments thorw in front of the bus. If you start subsiding energy, or food, or rents, or whatever, inflation will be lower for a whiel… until the country’s creditors pull the rug.
Folks finally came to think thought inflation would not rekindle. Maybe at this point they have moved on to think 1920s-1930s dynamics will never rekindle. But I see the Russia-Ukraine thing and think, I didn’t expect the return of something like that, either, and here we are. So much for declaring victory.
Big differences in living standarts and bigger differences in wages.
If an engineer earns 10x less just 500 miles to the east without any border, visa, currency restricion… it’s just a matter of time. Companies move labour to the east, people move to the west, those countries with doubel diggit inflation had two decades of double diggit growth.
Looking forward to your comments once the FED releases its new dot plot.
Good to see Greece and Spain scoring low on your list – often known as countries with regular high unemployment, perhaps that is the key – lying flat movement. Doesn’t the inflation doctor prescribe high interest rates and high unemployment as a remedy, I’m ready to take my medicine… could do with sometime off.
Some economists link the Phillips Curve to inflations …
… but, as they say, lay all those economists end-to-end and you still won’t reach a conclusion.
Luckily oil is probably at or around the median price over the past 10 years. Nat gas actually hit 1999 prices about a week ago. You can almost say energy has not had any inflation over the past 10 years.
Oil prices are lower right now than anytime between 2010 and 2015.
Just think if energy prices go up again. I don’t think Nat gas is going to stay in the 2’s very long. For the past 10 years the range was in the mid 3’s. So it can go up a little more just to get to normal.
Really, were pretty lucky oil and nat gas has not seen the inflation increases that housing, food, and services have for the past 10 years even though demand keeps going up almost every year. (except for covid).
NG can easily stay in the 2s if the industry has capex to drill Haynesville shale and Marcellus shale both are economical at 2 usd/mmbtu with 10 percent ror and permian gas is still zero or negative due to no pipelines out due to permitting through Austin area of Texas to gulf coast take at look at the 5 year futures to really understand NG prices. The commodity has monthly swings based on weather and other variables that don’t impact many of the market prices the product receives . Not that much actual NG trades at the spot price more are sold at idex pricing over a bit longer period
What I see from travel data: demand flipped from 3-digit YoY growth into a 2-digit YoY contraction. Recession it is.
Only these data points point to a 1% reduction in oil demand this year.
Ah, and it’s a 3-5 months leading indicator for collateral consumer spending because you first buy tickets then do shopping, book accommodation, rent a car, go for dinners, take tours etc.
It’s a grim outlook for oil&gas.
Both technically and fundamentally I disagree. Even if consumption is contracting (by 0.5% in US 2022= statistical noise). That’s why Putin is PO’d.
Those with physical STUFF are sick of being pushed around by paper. The Saudi’s may breakeven at under $20, but they won’t sell for less than… today’s price. Even that’s lower than they want.
Plus there’s now the Biden Put. He came out and said he’d put a floor under the market at $70… if we get back down there again.
However I also heard a call for $10 oil recently and I wouldn’t have believed paid NOT to produce (negative prices!?!)… until it happened.
I think everybody is sick of these central bankers at this point. Their little game of devaluing the currency to supposedly “help” the economy is a bullsh!t lie. It doesn’t work and causes extreme pain, as we are now witnessing.
Doing absolutely nothing to intervene would have been better than this nonsense. What’s clear is that we have deranged lunatics in control.
When Jerome From Hell’s Bowels went on 60 minutes for his softball interview where the spineless yellow bellied sycophant reporter was kissing his feet, he should have manned up and told the truth: “We are taking this opportunity to steal the fruits of the labor of the middle class and working poor under the guise of helping, when in reality we are feeding our pig faces.”
Well said! The Fed is the biggest wealth transfer thief and con job in the history of the galaxy. I can’t speak for the other known galaxies. Sadly… LMAO.
The inflation finally got to me. My Vodka just went from $19 to $24. Criminal.
If I totaled all the expenses for cigs and alc I avoided by quitting a few decades ago, it would be an impressive sum. But it takes a whole different art of coping. I learned the ecstasy of quitting things. I harnessed my native cheapness.
Crap! Time for beefeaters!
You can keep the low price by going with the 2x distilled. It’s pretty good after a handful of peanuts and saltines.
Thailand had an inflation spike in 2022, mirroring the trend in many countries. But now, strangely, inflation seems to be cooling off: “Thailand is projected to experience an average inflation rate of 2.4% in 2023 according to FocusEconomics Consensus Forecast panelists.”
Thailand’s annual % inflation:
So having my U.S. $ in four-week Treasury bill rollovers, and converting small tranches to baht with the dollar is pumped real high, I can maybe beat inflation by a couple of percent or more here in Thailand.
Lots of people projected 2.4% inflation in the US at the end of 2023 too. Let’s see how it will pan out.
1) EU CPI plunged. In June the y/y plunge might bottom. $TNX entered Nov 9/10 gap. TNX might plunge after a 3Y bull run.
2) Natgas in dived in a bungie plunge to the area between 2020 and 2021 lows. Crude oil for half prices. Lower rates and energy prices might enhance industrial productivity in Europe and US.
3) SPY monthly line chart. Every green bar close is a lower low. But since
May (C) > July (C) > Nov (C) > Jan (C) are losing their down thrust.
4) SPY red bars monthly close : Feb 2023 > Dec 2022 > Sept 2022, but Mar 2023 is blocked by a Lazer. Spy might get it up in a sling shot, for a quickie
5) SPY Lazer : Aug 2004 to July 2006 lows, parallel from Mar 2015 high.
6) We might enter recession after the quickie. If and only if SPY test the Lazer and lose it’s grip…
The euro zone and the West Central Bankers denounced history, thinking they could magically change the inflation formula and print their way to perpetual prosperity!
Former President of the Deutsche Bundesbank
That isn’t his quote but I would luv to hear what he has to say today as the constant thorn in Mario Draghi’s Whatever It Takes side!!!!
Key ECB rate 3% with overall inflation of 8.5%. Is the ECB sure they got their Taylor rule calculator properly configured?? Or did they steal this know-how from the Czech National Bank which keeps its rate at 7% with inflation at 17.5%?? Is this a race in who will have the most negative real rates? I can’t describe how disgusted I am by this all – covidism, climatism and all the other nonsense feeding into this artificial inflation feedback loop triggered by our elites. I mean I could describe it but you wouldn’t let me comment given your strict policies. But seriously – can someone please comment what would be the appropriate rate applying the Taylor rule?
Interesting how it’s all so universal between the developed countries. I think we can rule out domestic politics. Seems more likely it’s the herding of the central banks and/or the cause of their herding, COVID.
That or china which may have had anti-inflationary impacts brining a billion workers to the global system and dumping to chase share.
European stock markets seem to be shrugging it off. The FTSE100 just recently exceeded 8,000 points for the first time. The CAC40 (France) and DAX40 (Germany) are similarly going parabolic, a big contrast from the US.
Does anyone know why?
Misprint? CPI by Eurozone Country, Feb. 2022 should be 2023?
Yes, thank you!