US CPI Information Out
The CPI came out and it was a doozy. Things are on fire. The YoY for both the CPI and Core were up a great deal. This was to be expected especially with how energy is on fire.
In this video I discuss the report along with the situation in oil and one concerning piece of data that could \put a halt to a lot of this if it continues going forward.
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It was seen coming. This is the transitory inflation of the Central Bank scammers
Dont let ideology cloud your views. This is transitory, we will be in a much different place in a year. Contrary to the online bs, this was caused mostly by lockdown of the global economy and supply chain disruption.
Some commodities are already showing some cracks.
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Dropping knowledge per the usual! Yeah inflation is real, took way longer than expected.
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The supply chain disruptions are still a major issue. However, we are seeing some commodities reversing already.
Most dont understand the difference between cyclical and secular cycles.
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Cool video. How long is transitory however? And how long can the Fed continue to remain so accommodative?
Don't get me wrong, I mostly agree with you. After all, rising commodities, chip shortages and supply-chain bottlenecks all feed into rising US CPI.
However we cannot ignore that with recovering consumer spending and unemployment, inflation is also being pushed from the demand side. Supporting this, the rise in prices is starting to be more broadly spread across CPI items, rather than being driven by massive increases in few selected ones (remember the used cars narrative?)
Summary:
In this episode, Task discusses the recently released data on US inflation, particularly focusing on the Consumer Price Index (CPI) for October. Task highlights the high inflation rates, attributing them to supply chain disruptions and soaring energy prices, especially oil. He predicts that economic conditions will eventually drive down the demand for energy, leading to a reversal of the current situation, but acknowledges this might take some time. Task also touches on the implications of inflation on people's purchasing power, mentioning challenges with real earnings and potential cutbacks on discretionary spending. Additionally, he discusses trends in various sectors like the automobile industry, durable goods, and the impact of the chip shortage on car production. The episode concludes with Task emphasizing the persistent problem of inflation and the need to monitor energy prices like oil, which have far-reaching effects on various industries.
Detailed Analysis:
Task opens the episode by addressing the recently released data on US inflation, specifically focusing on the CPI numbers for October. He mentions the high inflation rates, with the CPI standing at 4.6 for the year over year and a staggering 6.2 for the month over month. Despite these numbers, Task argues that the inflation picture is still heated due to ongoing supply chain disruptions and surging energy prices.
The discussion then shifts to the energy market, particularly oil, which Task describes as "on fire." He highlights the elevated prices of oil, mentioning WTI prices nearing $85 per barrel, attributing the increase to supply chain issues, geopolitical factors, and OPEC's decision not to increase production. Task predicts that economic conditions will eventually reduce the demand for energy, leading to a shift in the current situation, but acknowledges that this transition might take some time.
Task also touches on the impact of inflation on people's purchasing power, citing a decrease in real earnings of 0.9% month over month. He explains how this decrease affects individuals, especially those on fixed incomes or living paycheck to paycheck, forcing them to cut back on discretionary spending due to higher expenses on essentials like food and energy.
Furthermore, Task discusses trends in various sectors like the automobile industry and durable goods. He predicts a potential glut of cars by the middle of next year, leading to price drops as dealers aim to clear out old inventory before the release of new models. Task also mentions the alleviation of the chip shortage in the automobile industry, leading to increased production.
In conclusion, Task emphasizes the ongoing issue of inflation and the need to monitor energy prices like oil, which have cascading effects on various industries and consumer spending. He hints at possible signs of economic challenges ahead, mentioning changes in consumer behavior such as reduced spending on items like cars and dining out. Task highlights uncertainties in the global markets, referencing disinflation in Europe and the importance of monitoring developments in China.