Posts filed under “Federal Reserve”

Much Ado About Nothing

Ecochartscpi_
Everybody seems to be all abuzz about today’s CPI number. Its no big whoop.

Why? At this point, I think we can all agree that a 1/4 point increase at the June FOMC meeting is a foregone conclusion. So that makes today’s data more or less irrelevant to that meeting. Even if the inflation data comes in extremely benign, its but one point in a data series. Its doubtful it will impact the Fed’s thinking about the next tightening in any meaningful way.

And the August FOMC meeting is so far away, and there will be so much additonal data between now and then, including 2 NFP reports, that today’s CPI will have long been forgotten.

By August, the Fed will most likely be forced to acknowledge that either a) the economy has slowed enough that the tightening cycle is over;  or 2) Inflation has gotten away from us and we need to keep tightening. By August, even Greenspan would have to admit that Goldilocks is dead . . .

Either way, today’s data point, at least as far as the Fed is concerned, won’t change very much.

On the other hand, a benign number — or even one that hits consensus — could light up the markets. The sentiment readings have all hit extremes, with the Put Call ratio, the Bull/Bear  ratio, and the percentage of stocks above their 200 day moving average at levels typically associated with intermediate bottoms.

UPDATE June 14, 2006

Mike Darda adds:

The
headline CPI rose 0.4% m/m in May while the core CPI
rose 0.3% for the third consecutive month.
The headline CPI is up
4.2% on a year-to-year basis while the core CPI is up 2.4% y/y. Three-month growth in the core CPI
(annualized, not compounded) has risen to 3.7%, the fastest pace in a decade.
Owners’ equivalent rents, which make up nearly one-thir
d of the
core CPI, advanced 0.6% m/m during May and 5.5% A.R. during the last three months, the
fastest since 1990. On a year-to-year basis, rents are up 3.3%.

Nothing to see here folks, move along.

Core_inflation_june

As Art Laffer said last night, there’s no inflation here . . .

Category: Economy, Federal Reserve, Inflation, Markets

How the Fed Chief Gains Credibility

Category: Federal Reserve

What Happens if Inflation Is Overstated?

Category: Data Analysis, Economy, Federal Reserve, Inflation, Markets, Real Estate

A Consensus is Developing: Blame Greenspan

Category: Economy, Federal Reserve, Fixed Income/Interest Rates, Inflation, Markets, Psychology

Tracking Bernanke

Category: Federal Reserve

Ben Steps Up

Category: Federal Reserve

NFP Day — Abandoning the Over?

Category: Economy, Federal Reserve

NYTime’s Comment

Category: Federal Reserve, Financial Press, Media

Worst Case Scenarios: Why the Fed Tends to Overtighten

Category: Economy, Federal Reserve, Fixed Income/Interest Rates, Psychology

Recent Housing Data: Charts & Analysis

Category: Economy, Federal Reserve, Investing, Real Estate