US Economic News

Meta Terminating Midtown South Office Lease Amid Cost-Cutting Push
https://www.zerohedge.com/markets/meta-t...tting-push

Peak inflation???

Gasoline Prices Keep Climbing, But Retail Gas Station Margins Plunge, With Many Now 'Under Water'
https://www.zerohedge.com/political/gaso...nder-water

(07-10-2022, 02:47 PM)Behappyalways Wrote: Peak inflation???

Gasoline Prices Keep Climbing, But Retail Gas Station Margins Plunge, With Many Now 'Under Water'
https://www.zerohedge.com/political/gaso...nder-water

OPEC just cut production significantly so away we go with oil prices again. Plus winter is coming for northern hemisphere. So expecting more energy inflation coming. 

Peak inflation probaby wont happen until at least early 2023 as peak monetary supply increase ended in March 2022 with first rate rise. Its been largely flat since past 6 months. This will reflect on inflation numbers probaby a year later at the earliest unless we get a sudden massive recession.

Honestly I do not know how the inflation number will go...so I will keep an open mind.

When recession starts to hit deeply(we are already seeing revised forecast by companies even though their last update was as recent as two weeks ago), inflation will go down pretty fast BUT when the recession is over, very likely inflation will shoot back up again.

US August CPI was down because gas and oil price dropped a lot and it pulled down the index while rentals and medical was up.... Now we have gas price going up again and also oil price ( oil price was up 5% yesterday even as s&p was down 2.8%). President Biden knows what is going to happen if it continues to trend up. If CPI for October goes up ( to be released in November), it would be very bad for their campaign. That's why you see Biden ' threatening' OPEC(Saudi Arabia)....and crazily drawing down their oil reserves to dampen oil price.

One thing to take note is small brother ( Saudi Arabia) shows that they are no longer going to listen to big brother(US).... That will have effect not only on oil price..

The Saudis have lots of bonds (sell bond, bond yield goes up and stock market falls) and US stocks and assets....this might not be good for stocks if they decide to 'de-risk' like Russia....

https://www.cnbc.com/2022/10/13/consumer...2022-.html

Higher than market expectations as inflation has remain stubbornly above 8%. My views still stands that the Fed has not been using the right policy tool to fight inflation. Use QT and I can assure you inflation will fall off the cliff.

This is because cheap money is fueling companies to hire aggressively and pay exhuberently. A simple doubling of QT means tech companies will find close to no funding and those excessive pay packages will be gone.

(13-10-2022, 08:48 PM)CY09 Wrote: https://www.cnbc.com/2022/10/13/consumer...2022-.html

Higher than market expectations as inflation has remain stubbornly above 8%. My views still stands that the Fed has not been using the right policy tool to fight inflation. Use QT and I can assure you inflation will fall off the cliff.

This is because cheap money is fueling companies to hire aggressively and pay exhuberently. A simple doubling of QT means tech companies will find close to no funding and those excessive pay packages will be gone.

For me its all about the Money supply.
https://fred.stlouisfed.org/series/M2SL
M2 supply has flatlined since march 2022 QE was finally stopped. 
However rate rising has not done much as its only now 3% vs 8% inflation, still stimulative 5% negative real rates. However sudden higher rates just means tighter credit markets, the money already printed is still sloshing around creating inflation.

The chart for M2 is up to august, i expect from october onwards we shall see a drop in the 21.7trillion level as QT starts up. This will fight inflation but may take at least a year or so to show up. 

If FED wanted a softer landing, they would just have to keep the M2 supply flat for longer and stop QE(this part already done) once your money supply start to flatline, it will roughly take 1.5-2years to show up with decelerating inflation. To target 2% just let money supply increase 2% a year (But FED doesnt have 1.5 years to wait as inflation is already skyhigh and they have to do something or look like fools.

However usually FED doesnt understand money supply well, otherwise they would have already known the massive jump of M2 from 15.5T to 21.7T levels(40%) in past 2 years would result in massive inflation after also 1.5-2yrs. Thats why we saw inflation pickup around 3q2021 last year after the march 2020 stimulus/QE started.

Cant do much now, FED already just reiterated its better to err on overcorrecting on inflation than under. and both QT and rate rises done together, guarantee markets will break. Just watch TEsla and Crypto and property, these are the last few market not capitulated yet, still many HODLers.

But if you have cash like me its happy days, some decent bargains just starting to show up on the SGX , which is still STI above 3k a bit too high.

Thanks Bluekelah,

Then why not reduce the money supply as well. The Fed holds a large amount of corporate bonds such as Apple, Verizon, A T & T, selling it back to the market, reduces money supply and resolves the inflation issue

https://www.thestreet.com/investing/appl...al-reserve

If we look at what we already know in Oct.
US inflation still hot, unemployment rate low.
Fed will hike to ard 4% or more by the end of the year.
US Treasuries will be ard 5%

SG property/commercial loan interest rate will go up significantly, even though it will lag somewhat.
In general, landlords (whether invested in residential or commercial) will need to fork out much more.
The increase is going to be very significant and there is little chance ALL increases in loan repayment can
passed on to the tenant for next year's rental revision.

If extremely low interest rates and QE gave rise to huge appreciation of SG properties & over valuation of growth stock. We will see what will unfold as the conditions are reversed.

(13-10-2022, 09:58 PM)BlueKelah Wrote:

(13-10-2022, 08:48 PM)CY09 Wrote: https://www.cnbc.com/2022/10/13/consumer...2022-.html

Higher than market expectations as inflation has remain stubbornly above 8%. My views still stands that the Fed has not been using the right policy tool to fight inflation. Use QT and I can assure you inflation will fall off the cliff.

This is because cheap money is fueling companies to hire aggressively and pay exhuberently. A simple doubling of QT means tech companies will find close to no funding and those excessive pay packages will be gone.

For me its all about the Money supply.
https://fred.stlouisfed.org/series/M2SL
M2 supply has flatlined since march 2022 QE was finally stopped. 
However rate rising has not done much as its only now 3% vs 8% inflation, still stimulative 5% negative real rates. However sudden higher rates just means tighter credit markets, the money already printed is still sloshing around creating inflation.

The chart for M2 is up to august, i expect from october onwards we shall see a drop in the 21.7trillion level as QT starts up. This will fight inflation but may take at least a year or so to show up. 

If FED wanted a softer landing, they would just have to keep the M2 supply flat for longer and stop QE(this part already done) once your money supply start to flatline, it will roughly take 1.5-2years to show up with decelerating inflation. To target 2% just let money supply increase 2% a year (But FED doesnt have 1.5 years to wait as inflation is already skyhigh and they have to do something or look like fools.

However usually FED doesnt understand money supply well, otherwise they would have already known the massive jump of M2 from 15.5T to 21.7T levels(40%) in past 2 years would result in massive inflation after also 1.5-2yrs. Thats why we saw inflation pickup around 3q2021 last year after the march 2020 stimulus/QE started.

Cant do much now, FED already just reiterated its better to err on overcorrecting on inflation than under. and both QT and rate rises done together, guarantee markets will break. Just watch TEsla and Crypto and property, these are the last few market not capitulated yet, still many HODLers.

But if you have cash like me its happy days, some decent bargains just starting to show up on the SGX , which is still STI above 3k a bit too high.

Having cash is good in this environment, but then raises the issue of what to do with it? Having a substantial sum immediately to hand to jump on opportunities is obviously good, but it looks as if we are on quite a long road before markets fully accept the inevitability of a major recession. Inflation/reduction in spending power/overstocking in the big US market means that we are likely to see a serious downturn developing. Meanwhile interest rates in Singapore are increasing rapidly, to levels I can't remember seeing for a long time, and the yield curve is significantly inverted. Currently about 3.6% for 6 months. Personally, I am taking some of that dry powder and putting it into short term Singapore T-Bills which I intend to hold to maturity and into Singapore Savings Bonds, which offer lower interest rates but are more flexible. While the rates are not in line with inflation, they are still better than holding cash, and have the added safety advantage of getting some reserve money out of the banking system. We are not at a 'Lehman' moment yet, but I suspect that we will get there and it will feel at least as bad as the dark days of late 2008 - and some safe reserves will help to ride out the storm, at least psychologically.

You might want to look at tlt when you feel that the rates has peak ( and probably on the way down as recession sink in)...but the minus is that USD might depreciate...