For the fourth month in a row the Federal Reserve’s favorite
inflation indicator has been on the rise.
The Personal Consumption Expenditures excluding food and energy (Core
PCE index) has risen to 3.5% year-over-year.
Amazingly, the Core PCE came in below the consensus estimate of
3.7%.
On a monthly basis, the increase was 0.4% for the month of
June. This would translate to 4.8% on an
annual basis if the Core PCE index would stay steady for 12 months.
You can see that the steepness of the curve has
lessened. I’m sure this will be talked
up on the financial media and by members of the Fed. We are still a long way from determining if
the transitory inflation thesis will prove correct but the fact of the matter
is, the Fed has gone all in on their transitory thesis.
During this week’s FOMC meeting and press conference, Jerome
Powell defined what “substantial further progress” meant. Chairman Powell had been using the phrase
over the course of the government shutdowns.
He had been stating that the Fed was administering an accommodative
policy to aid in the economic recovery.
Now that the National Bureau of Economic Research has declared the
recession over, the Fed has been dragging their feet in ending the purchases of
treasury bonds, mortgage-backed securities, and raising the Fed funds
rate. To be able to drag his feet
further, Powell came up with the phrase “substantial further progress” without
defining what that meant. This week he
defined the term as being synonymous with maximum employment. This has allowed Powell and company to
continue to kick the can down the road.
Also, during this most recent FOMC meeting, Powell had
admitted that progress had been made towards their goals. This would seem to mean that we are getting
closer to the moment the Fed will begin to taper their balance sheet
expansion. Bank of America ran a report
looking at changes in option premiums and it came to the conclusion that the
market believes the taper announcement will happen at Jackson Hole. This is where the next Fed meeting will take
place, which will be August 26th -28th.
To me, this seems too early for the Fed to make that kind of
announcement. We will still have states
paying pandemic related unemployment assistance until the beginning of September. Which means the picture on employment won’t
start to clear up until the end of September or beginning of October. In an unfortunate twist, the latest
unemployment figures that came out on Thursday showed an increase in the amount
of people getting the pandemic assistance!
Initial claims dropped by 24k but continuing claims rose by
7k and over 211k people were put back onto the pandemic assistance doles. In an effort to keep even more people on the
government dole, a
judge in Arkansas has ordered the state to resume federal pandemic unemployment
benefits. If the Fed has tied the
tapering of asset purchases to the unemployment rate, we have a long way to go
before “substantial further progress” will have been made.
Late last night, I got a tip from David at Live Better Now. He alerted me to a tweet from Jack
Posobiec. Jack is a former military
intelligence officer and a senior editor at the news website HumanEvents.com. Jack is known for having an ear (or two) to
the ground in DC. He’s been accused of
having a “mole” in the White House and seems to be in-the-know before the news
media. Last night he posted the
following:
Anyone who has followed Poso for any length of time will know, he does not write click-bait styled headlines or tweets to get views. While it seems like a stretch that another shutdown could happen, the truth is, those in power have enjoyed wielding it against those that aren’t in power. If we see another lockdown, we could see another crash in the stock market and more “accommodative policies” by the Fed. The CDC has really talked up the delta variant and has now “leaked” to the Washington Post their latest attempt to stir up fear. My guess is that this supposed “leak” was an attempt to gauge if another lockdown could take place. The problem those in power are facing is that Americans have grown Covid lockdown weary. What happens if the government mandates another lockdown and Americans don’t cower in fear? The government will look foolish and there is nothing that the narcissists in power hate more than looking ridiculous. Which brings me to my latest meme! In an effort to continue the power of memes over the narcissists in power I bring you… COVID VARIANT BINGO!
Now I’ve already taken care of the popular and
not-so-popular variants that have been posted to the WHO’s
website. What makes this exciting is
that four new variants have been discovered (P.3, P.2, B.1.427 &
B.1.429). Will they get Greek
labels? Only the “scientists” at the WHO
know for sure. Keep me up-to-date with
an email if I miss a new variant getting labelled. I would hate to miss the opportunity to see a
COVID VARIANT BINGO achieved.
One last thing…
Have a safe weekend. We’ll see you next week!
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