Posts Tagged ‘CPI report’

SHELTER COSTS STILL DEFLATIONARY

SHELTER COSTS STILL DEFLATIONARY

Courtesy of The Pragmatic Capitalist

Last Friday’s CPI report was hardly cause for concern with regards to the inflation outlook.  The core year over year rate was astonishingly low at just 1.2% while the exclusion of food and energy actually reduced the year over year rate to just 1%.  While the PPI reports are clearly showing higher rates of inflation, it’s also clear from the consumer inflation data that these costs are not getting passed along.  This is just one more clear sign of weakness at the household sector.

While food and energy tend to catch the media spotlight (they are the most volatile and noticeable after all) they’re not the largest components of consumer costs even if you combine the two.  Shelter costs are by far the largest input in the consumer cost equation.  A look at last week’s data shows the deflationary tendencies in this data. Econoday highlighted this over the weekend:

“In the core, shelter costs continued to stand out—as weak.  Just when you thought they could not get softer, they did.  Shelter costs were flat in August after rising only 0.1 percent in each of the prior fourth months. Again, this reflects the weak housing market and also a sluggish travel market for lodging while away from home. Shelter costs are so week that on a year-ago basis they were down 0.5 percent in August.”

When we actually include housing costs in the equation we get a similar deflationary trend.  Based on my data housing costs are just marginally deflationary at -0.25% year over year.  I’ve taken the CPI data a step further and actually added the Case Shiller data.  Since roughly 70% of Americans are homeowners, I replaced 2/3rds of the housing component in the CPI data with the house price data.  Thus, we still account for the rental costs, but don’t entirely ignore the real cost of a mortgage.

The BLS has a relatively controversial way of calculating the housing component of the CPI – they use what is called owners equivalent rent (OER). This estimates what your house might rent for if you were so inclined. What’s misleading here is that the data doesn’t really reflect consumer costs and thus psychology. The last decade is a prime example. Rising home values have a wealth effect. Consumer spending is bolstered in such an environment.  Likewise, consumer spending will deteriorate…
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Big Blah (CPI)

Big Blah (CPI)

Courtesy of Karl Denninger at The Market Ticker

Oil can and graph with American dollar

From the Bullcrap Lie Society (BLS) of our government this morning:

On a seasonally adjusted basis, the Consumer Price Index for All Urban Consumers (CPI-U) rose 0.4 percent in November, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months the index increased 1.8 percent before seasonal adjustment, the first positive 12-month change since February 2009.

Most of the change was due to energy; gasoline was up sharply (as we saw yesterday in the PPI.)

Core was a literal zero.

Food was up a bit, but I continued to be puzzled by the difference between gasoline and "fuel oil."

Why?  Because "fuel oil" (that is, heating oil) is exactly the same thing as #2 diesel – that is, road diesel fuel.  The only difference is the tax (and the presence of dye in the heating oil to denote that the tax has not been paid.)  But for the legal (tax) issues you can run "heating oil" in your diesel car or truck, and vice-versa – they are identical products.

Used vehicles were also up materially – a reflection of the distortion from "cash for clunkers" still present in the data (it hit its maximum in October at +3.4%)  Prices for new vehicles were also up (again, the maximum was in October) – again denoting the "back-door" bailout of the automakers from cash-for-clunkers.  Unlike the new vehicle deal however, which you got a tax credit for, the buyer of a used car just got plain old-fashioned screwed through price-jacking caused by constraints in supply.  (Just wait though – in the new year when people can’t make the payments on those CFC deals, you’ll see what happens to used car prices…. supply and demand you know.. )

Medical care was up as usual (gee, how come it keeps rising faster than overall inflation?) and shelter costs were down (remember, this is not "housing", as that would expose reality – it is "owners equivalent rent")

All in all a blah report – but given the PPI that’s expected – the fun and games in the CPI report resulting from yesterday’s PPI should show up in a month or two.

 


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Phil's Favorites

What if it Doesn't End Badly?

 

What if it Doesn’t End Badly?

Courtesy of 

The past decade has been one of endless prosperity. At least in risk assets. Since 2011, the S&P 500 has gained nearly 300%.

The return on certain individual securities makes the overall stock market look like a savings account. Over the same time, Apple and Amazon have gained more than one thousand percent. Netflix more than two thousand percent. Tesla more than sixteen thousand percent. $10,000 invested in Bitcoin five years ago is worth $1.2 million.

GameStop is up 200% in th...



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ValueWalk

Inside Morgan Stanley: Power Struggles, Internal Politics, and Two Sides to Every Story

By Adam Torkildson. Originally published at ValueWalk.

Personal Investments

Was it a minor violation of a corporate policy or more about inside politics? That is what people familiar with recent changes at Morgan Stanley are asking today in light of the financial service company recently parting ways with one of their top performers.

Thane Stenner headed a significant team for Graystone Consulting, a business unit of Morgan Stanley that handled nearly $20 billion of assets for institutional clients out of its San Francisco office. One of the top-performing teams across the entire Morgan Stanley/Graystone system, Stenner and his tea...



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Zero Hedge

Bond Bloodbath Blows Up Stocks As Redditors-Revenge Hammers Hedgies (Again)

Courtesy of ZeroHedge View original post here.

Bonds and stocks were both battered today...

Source: Bloomberg

Which is why we wheeled out the deer!

Today was the worst day for equity/bond investors since March 2020...

...



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Politics

What is fascism?

 

What is fascism?

A Donald Trump supporter wears a gas mask and holds a bust of him after he and hundreds of others stormed the Capitol building on Jan. 6, 2021. Roberto Schmidt/AFP via Getty Images

Courtesy of John Broich, Case Western Reserve University

Since before Donald Trump took office, historians have debated whether he is a fascist.

As a teacher of World War II history...



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Biotech/COVID-19

How does the Johnson & Johnson vaccine compare to other coronavirus vaccines? 4 questions answered

 

How does the Johnson & Johnson vaccine compare to other coronavirus vaccines? 4 questions answered

The Johnson & Johnson vaccine only requires one dose. Phill Magoke/AFP via Getty Images

Courtesy of Maureen Ferran, Rochester Institute of Technology

Editor’s note: On Tuesday, Feb. 24, the U.S. Food and Drug Administration released the results of its trial of the Johnson & Johnson coronavirus vaccine. The FDA found the vaccine to be safe...



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Digital Currencies

Bridgewater Explains When It Will Invest In Bitcoin

Courtesy of ZeroHedge

Two weeks ago, Bridgewater founder Ray Dalio called Bitcoin "one hell of an invention" adding that:

"I expect Bridgewater to soon offer an alt-cash fund and a storehold of wealth fund in order to better deal with the devaluation of money and credit that we consider to be a major risk and opportunity, and Bitcoin won’t escape our scrutiny.”

And now, after significant attention that his comments received, Senior Portfolio Strategist Jim Haskel sits dow...



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Kimble Charting Solutions

Is Rising Inflation About To Hit U.S. Economy In Big Way?

Courtesy of Chris Kimble

Inflation seems to be a thing of the past… but current trading in bond and commodity markets tell us that it could become a thing of the future!

Inflation hasn’t been an issue, or even on our radar, since the 1980s. Sure, the 2007 surge in oil prices offered some concern but the financial crisis killed any thoughts of inflation.

So what’s got us concerned about inflation in 2021?

Today we take a look at long-term charts of two potential inflation indicators: Crude Oil ...



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Chart School

RTT browsing latest..

Courtesy of Read the Ticker

Please review a collection of WWW browsing results. The information here is delayed by a few months, members get the most recent content.



Date Found: Saturday, 29 August 2020, 05:46:16 PM

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Comment: Low liquidity means price can MOVE fast either way!



Date Found: Saturday, 29 August 2020, 05:52:11 PM

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Comment: if you have 100% of life savings in stocks alone, please adjust for a crash...



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Mapping The Market

The Countries With The Most COVID-19 Cases

 

The Countries With The Most COVID-19 Cases

By Martin Armstrong, Statista, Jan 12, 2021

This regularly updated infographic keeps track of the countries with the most confirmed Covid-19 cases. The United States is still at the top of the list, with a total now exceeding the 22 million mark, according to Johns Hopkins University figures. The total global figure is now over 85 million, while there have been more than 1.9 million deaths.

You will find more infographics at ...



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The Technical Traders

Adaptive Fibonacci Price Modeling System Suggests Market Peak May Be Near

Courtesy of Technical Traders

Our Adaptive Fibonacci Price Modeling system is suggesting a moderate price peak may be already setting up in the NASDAQ while the Dow Jones, S&P500, and Transportation Index continue to rally beyond the projected Fibonacci Price Expansion Levels.  This indicates that capital may be shifting away from the already lofty Technology sector and into Basic Materials, Financials, Energy, Consumer Staples, Utilities, as well as other sectors.

This type of a structural market shift indicates a move away from speculation and towards Blue Chip returns. It suggests traders and investors are expecting the US consumer to come back strong (or at least hold up the market at...



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Lee's Free Thinking

Texas, Florida, Arizona, Georgia - The Branch COVIDIANS Are Still Burning Down the House

 

Texas, Florida, Arizona, Georgia – The Branch COVIDIANS Are Still Burning Down the House

Courtesy of Lee Adler, WallStreetExaminer 

The numbers of new cases in some of the hardest hit COVID19 states have started to plateau, or even decline, over the past few days. A few pundits have noted it and concluded that it was a hopeful sign. 

Is it real or is something else going on? Like a restriction in the numbers of tests, or simply the inability to test enough, or are some people simply giving up on getting tested? Because as we all know from our dear leader, the less testing, the less...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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Feb. 26, 1pm EST

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Phil will discuss positions, COVID-19, market volatility -- the selloff -- and more! 

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