US Economic News

[specuvestor]

Forgot to update last week... Think market not ready for Dec uptick

Nov CPI 3.1%
Nov Core CPI 4.0%

As of 19 Dec Cleveland Fed expecting
Dec CPI 3.33%
Dec Core CPI 3.93%

Nov PCE 2.92%
Nov Core PCE 3.43%
Dec PCE 2.99%
Dec Core PCE 3.32%

Oct CPI 3.24%
Oct Core CPI 4.03%

As of 15 Nov Cleveland Fed expecting
Nov CPI 3.10%
Nov Core CPI 4.06%

Oct PCE 3.09%
Oct Core PCE 3.55%
Nov PCE 2.98%
Nov Core PCE 3.56%

[specuvestor]

Frankly market held up extremely well despite the Dec uptick with 80% chance of March Fed cut built in which I think is nuts but PCE seems coming off even faster than forecasted. I think Core CPI has to come below 3% for Fed to start cutting 25bps


Dec CPI 3.352%
Dec Core CPI 3.93%

As of 12 Jan Cleveland Fed expecting
Jan CPI 2.97%
Jan Core CPI 3.81%

Dec PCE 2.70%
Dec Core PCE 3.02%
Jan PCE 2.31%
Jan Core PCE 2.75%

Forgot to update last week... Think market not ready for Dec uptick

Nov CPI 3.1%
Nov Core CPI 4.0%

As of 19 Dec Cleveland Fed expecting
Dec CPI 3.33%
Dec Core CPI 3.93%

Nov PCE 2.92%
Nov Core PCE 3.43%
Dec PCE 2.99%
Dec Core PCE 3.32%

[CY09]

https://www.businesstimes.com.sg/propert...rty-losses

The increasing interest rate environment and poor leasing outlook due to the work from home trend has now wrecked US office building values. The decrease has been about 20% this year. As loans come due, banks are evaluating if it is worth to refinance these properties and are asking ppl to top up to reduce the debt amount when refinancing. This itself may lead to a vicious cycle of declining values as ppl get less loan amount to buy or keep properties

[specuvestor]

Looks like a second shot of higher inflation did the work of spooking the market and drowning the March rate cut hope. All in I think Fed is doing a good job this cycle with moderate 3 cuts this year (my guess is starting June with 3 consecutive cuts before Nov elections) sans the initial slow reaction of "transitory inflation", which by design or otherwise pulled US from a zero rates environment. "New Normal" is dead after ~10 years

Cleveland Fed Jan forecast last month seemed more inline than market expectations

Jan CPI 3.09%
Jan Core CPI 3.86%

As of 13 Feb Cleveland Fed expecting
Feb CPI 3.06%
Feb Core CPI 3.70%

Jan PCE 2.30%
Jan Core PCE 2.74%
Feb PCE 2.24%
Feb Core PCE 2.60%

Frankly market held up extremely well despite the Dec uptick with 80% chance of March Fed cut built in which I think is nuts but PCE seems coming off even faster than forecasted. I think Core CPI has to come below 3% for Fed to start cutting 25bps


Dec CPI 3.352%
Dec Core CPI 3.93%

As of 12 Jan Cleveland Fed expecting
Jan CPI 2.97%
Jan Core CPI 3.81%

Dec PCE 2.70%
Dec Core PCE 3.02%
Jan PCE 2.31%
Jan Core PCE 2.75%

[specuvestor]

Bond market continue to be bipolar going from 6 rate cuts starting from March early this year, now to 2 rate cuts in 2H24. Mood swing to the other extreme probably wrong and Fed forecast of 3 cuts probably right with their focus more on growth than inflation per se when they raise their GDP forecast to 2.1% from 1.4% and inflation to 2.6% from 2.4%

Fed is trying to pre-empt and engineer a no landing

Forgot to update last month... inflation seems to be sticky at these levels probably for 1H24 with stronger energy prices:

Mar CPI 3.48%
Mar Core CPI 3.80%

As of 10 Apr Cleveland Fed expecting
Apr CPI 3.43%
Apr Core CPI 3.65%

Mar PCE 2.65%
Mar Core PCE 2.74%
Apr PCE 2.60%
Apr Core PCE 2.66%

[Behappyalways]

"Literally Gas Lighting": The Hilarious Reason For Today's PPI Miss: Seasonally Adjusted Gas Prices
https://www.zerohedge.com/markets/litera...gas-prices


https://m.youtube.com/watch?v=RFcKLuR8G9...ZW5uaXM%3D

[dreamybear]

Looks like the high interest rate environment biting the regional banks.

------------------------

What You Need To Know About the First US Bank Failure of 2024
https://www.investopedia.com/first-bank-...st-8640452

Why Hundreds Of U.S. Banks Are At Risk Of Failing
https://www.youtube.com/watch?v=8BfG20F2I3E

[weijian]

hi dreamybear,

Are bank failures actually in the ordinary course of events? That is, if there are NO bank failures in a year, then it is an anomaly year. Below is what Microsoft Co-Pilot replied:

Total Bank Failures (2000-2024): Since January 1, 2000, there have been 569 bank failures in the United States. On average, this translates to approximately 25 bank failures per year1. In 2023, there were five bank failures, which is below the historical average.

Historical Trends:
Great Recession (2008-2012): During this period, bank failures surged, averaging 93 per year.
Post-Recession Decline (2015-2020): The U.S. witnessed an average of fewer than five bank failures per year.
Recent Years (2021-2022): No banks failed in either 2021 or 2022.

Overall Trends:
Between 1941 and 1979, an average of 5.3 banks failed per year.
From 2001 to 2007, the average was just 3.57 bank failures per year.
Since the end of the Great Depression, bank failures have generally been uncommon23.

In summary, while bank failures are relatively common historically, they have become rarer in recent years. The financial landscape has evolved, and regulatory measures have contributed to greater stability in the banking sector.

[CY09]

https://www.businesstimes.com.sg/propert...7-discount

The sale was for a Grade B office building in New York City. But the fact that prices have tumbled 67% price from its 2018 purchase shows the struggles and oversupply of office space. With so many commercial office selling at discounts, I wonder how much beating will US REITs listed here show. Manulife US has been very slow in selling while Keppacific has been shoring up valuation by injecting CAPEX at twice the amount compared to its peers.

There is a second order problem here where a lower commercial building value means less taxes earn for the state. New York and California are running very high deficits. Wonder how much more they can last

[specuvestor]

2024 Fed target cuts reduced to 1 due mainly to 4 hawkish members looking at no cuts this year while both the chair and vice chair are more moderate

Market however looking at 2 cuts this year versus a hike back in April. Mood swing continues but US equity markets amazingly buoyant even as core PCE inflation target inexplicably raised to 2.8% from 2.6%

May CPI 3.27%
May Core CPI 3.42%

As of 12 Jun Cleveland Fed expecting
Jun CPI 3.15%
Jun Core CPI 3.52%

May PCE 2.62%
May Core PCE 2.56%
Jun PCE 2.55%
Jun Core PCE 2.60%

Bond market continue to be bipolar going from 6 rate cuts starting from March early this year, now to 2 rate cuts in 2H24. Mood swing to the other extreme probably wrong and Fed forecast of 3 cuts probably right with their focus more on growth than inflation per se when they raise their GDP forecast to 2.1% from 1.4% and inflation to 2.6% from 2.4%

Fed is trying to pre-empt and engineer a no landing

Forgot to update last month... inflation seems to be sticky at these levels probably for 1H24 with stronger energy prices:

Mar CPI 3.48%
Mar Core CPI 3.80%

As of 10 Apr Cleveland Fed expecting
Apr CPI 3.43%
Apr Core CPI 3.65%

Mar PCE 2.65%
Mar Core PCE 2.74%
Apr PCE 2.60%
Apr Core PCE 2.66%