Marc Chandler – Market And Central Bank Reactions To Inflation, Geopolitical Pressures, And The Energy Sector
Marc Chandler, Managing Partner at Bannockburn Global ForEx and Editor of the Marc to Market website, joins us to discuss the reactions in the general markets, bond yields, and currencies after the hot CPI reading of 6.2% in the middle of this week. We delve into the trend in global central bank tightening policies and Marc postulates that the Fed may need to increase the pace of it’s tapering program, to be able to address market inflation concerns.
Next we look at the interesting phenomenon of the US dollar getting a bid on the back of higher inflation readings, and what may be happening on the short end of the yield curve to cause this. We review some of the significant geopolitical developments that have occurred recently that may have an effect on oil and natural gas sector. We wrap up with the sobering narrative that higher energy prices and short-term inflationary periods often precede recessionary periods.
Click here to visit Marc’s website and keep up to date on his daily market and data commentary.
Breaking Down This Week’s Inflation-driven Sell-off And Looking Ahead To Next Week
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Jim Cramer – CNBC – 1 hr ago
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“The S&P 500 pulled back slightly this week, though it remains a stone’s throw from record highs as we saw some intra-week volatility on the back of hotter than expected inflationary data.”
“Thinking through the current market dynamics, “rampant inflation” will no doubt remain a talking point of the “inflationistas” and as a result, we think it important to provide some thoughts on the matter, in addition to those Jim shared on Mad Money this past Thursday, when he commented that “you need to remember that [Wednesday’s CPI reading] a backward-looking indicator; there’s a very real chance this will be as bad as it gets, which would mean an inflation driven sell-off [like the one we saw on Wednesday] is indeed a buying opportunity.”
Inflation Has Run Hot for a Long Time, and the Fed Knows It
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By Lisa Beilfuss – Barron’s – Nov. 12, 2021
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“Wall Street finally saw what America has been feeling.”
“The 6.2% year-over-year surge in consumer prices during October stunned economists, rattled investors, and likely horrified policy makers. It marked the fifth straight month that the consumer-price index exceeded 5%, and signaled the largest jump in consumer price inflation since July 1982.”
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https://www.barrons.com/articles/inflation-has-run-hot-for-a-long-time-and-the-fed-knows-it-51636757733
Brace for 20%+ Inflation!
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by Sean Brodrick – November 13, 2021
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“I’m not talking about Weimar-Germany hyperinflation. I AM talking about the kind of inflation we haven’t seen since the 1970s, running in the high teens or over 20% — maybe even higher.”
“The reason we know this is due to data from the Bureau of Labor Statistics (BLS), which tracks official inflation and has a bunch of numbers behind the scenes. Specifically, I’m talking about prices for intermediate demand.”
“The BLS measures four stages of intermediate demand, tracking the prices in the pipeline of products moving from producers to consumers:”
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Hey, everything said here is right on. I just wonder how many people reading this would be in lower income brackets or unable to capitalize on opportunities. Maybe it should be written in third person passive voice(they, them…) instead of (you, your..)
Yeah well, it it was an article that someone else wrote, and I posted it due to the relevance to the inflation topic, not because I felt most people here were lower income.
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If you click on the link you can see the whole article, and even email them over your suggestion if you like.
Confusion Over Line 5 Shutdown Highlights Biden’s Tightrope Walk on Climate and Environmental Justice
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By Kristoffer Tigue – November 12, 2021
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https://insideclimatenews.org/news/12112021/line-5-biden-environmental-justice/
Gold Breaking Out Amid Loss of Investor Confidence in the Fed
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David Erfle – Friday November 11th, 2021
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“The news headlines this week, along with the rising gold price, is implying investors across the globe have finally accepted that inflation will continue to run hot. Despite the best efforts by central banks to convince them that surging prices of most everything is transitory, December Gold futures are headed for their biggest weekly gain in six months. The gold price has also moved sharply above both its 50-day and 200-day moving averages.”
“Inflation fears are returning to the fore, with China’s higher-than-expected consumer and producer prices being the latest in a series of red flags about risks to the world economic outlook. China’s October Consumer Price Index (CPI) climbed 1.5% compared to a year ago, exceeding market forecasts of 1.3%. Factory gate inflation climbed 13.5%, which was its highest print in 26 years.”
“Amid the reaction to the U.S. CPI data this week being the highest in over three decades, the gold price managed a headline grabbing technical breakout above key resistance at $1835 as real yields tumbled to fresh record lows. ”
“After last month’s inflation data exceeded expectations, gold was pressured by investors fearing the Fed raising interest rates sooner than previously anticipated to tame inflation. Higher interest rates tend to dampen demand for gold, which is a zero-yielding asset.”
“However, since the Fed continued its “inflation is transitory” mantra during the FOMC meeting last week, markets are finally beginning to realize the world’s largest central bank is between a rock and a hard place regarding monetary policy. The Fed “using its tools” has been unable to bring inflation down without reaching maximum employment, and the economy is unable to reach maximum employment under President Biden’s authoritarian mandates.”
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https://mailchi.mp/913085ed001c/david-erfle-weekly-gold-miner-sector-op-ed-1600294?e=3ac1473fe4
Gold Reaches ‘Escape Velocity’
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Michael Ballanger – Streetwise Reports (11/11/21)
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“In physics (specifically, celestial mechanics), escape velocity is the minimum speed needed for a free, non-propelled (non-manipulated) object (asset) to escape from the gravitational influence of a massive body (resistance), thus reaching an infinite distance from it (breakout).”
“Having just witnessed the singular most impressive performance for gold since March of 2020, last week marked the passing of a couple of significant milestones with the first being the seemingly inescapable pull of the three moving averages (50, 100, 200-day) and of even greater significance was the second: it was the first Non-farm Payroll Report (“jobs report”) Friday where the number came in as a significant “beat” (higher than Street forecasts) but where gold and silver refused to decline. In fact, not only did gold rise against a strong U.S. dollar, but it also blasted through and away from resistance, closing on the highs for the day and the week.”
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https://www.streetwisereports.com/article/2021/11/11/gold-reaches-escape-velocity.html
Transitory inflation: inflation that goes here to there, round & round, in & out of your wallet & Dos y Doe
Jerome Powell Can’t Sleep
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Portfolio Wealth Global – 11/12/2021
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“Inflation is absolutely crushing savers in 2021! If you’re in the lower-income brackets and not capitalizing on the hottest jobs market in decades, by improving your skills and training, you’re literally seeing everything in your life rising in price. And there’s not much you can do about it until this supply chain nightmare unwinds.”
“Even then, housing rents continue to go up and in 2022 they’re expected to go way up!”
“U.S. consumer prices soared 6.2% YoY in October, far higher than expected and accelerating from September’s results.”
“These numbers pressure the FED into acting, but Jerome Powell has already said numerous times that he is not worried, that he thinks the FED has the right pulse for things, and that because of the distortions in the economy, we’re seeing temporary occurrences that are hard to predict or time. This just creates trust issues for Powell, who looks to be wrong more than he’s right.”
https://mailchi.mp/portfoliowealthglobal/home-run-up-20-in-two-hours-370516?e=7d25bb8e3f