Money Sense

[DKG]

U.S. stocks are moving back and forth in volatile trading this morning as Wall Street weighed the implications of hotter-than-expected January inflation data on the path forward for interest rates.



The January Consumer Price Index (CPI) released by the Bureau of Labor Statistics Tuesday morning showed prices rose 0.5% in the first month of the year, and 6.4% on an annual basis, more than economists expected.



Core CPI, which strips out the volatile food and energy components of the report, climbed 0.4% over the prior month and 5.6% year-over-year, also higher than forecast.



Bloomberg consensus estimates called for a 6.2% rise in CPI over the year and jump 0.5% month-over-month. New seasonal adjustments released by the BLS on Friday also switched December's initial reading of a 0.1% monthly drop in headline inflation to an increase of 0.1% in the year's final month. Forecasts called for a 5.5% annual increase and 0.4% monthly rise in the core CPI reading.

[DKG]

The U.S. risks defaulting on its debts as early as July unless the borrowing limit is raised, the nonpartisan Congressional Budget Office said in a report on Wednesday.



The federal government on Jan. 19 reached its approximately $31.4 trillion debt ceiling -- which legally caps how much the U.S. can borrow to pay for what tax and other revenue doesn't cover -- and the Treasury Department has since been using "extraordinary measures" along with its current cash flow to keep the government's obligations paid.



The U.S. budget deficit is on track to surge over the coming decade, the Congressional Budget Office said Wednesday, with cumulative deficits of $18.8 trillion — nearly 20% higher than the agency projected last May.

[DKG]

Despite the aggressive interest-rate hike campaign, inflation remains uncomfortably hot: The Labor Department reported last week that the consumer price index rose 0.5% in January, the most in three months. The annual inflation rate also surprised to the upside at 6.4%, underscoring the stickiness of high consumer prices that have broadened throughout the economy.



That raises the risk that the Fed hikes interest rates much higher than previously forecast — and keeps them elevated for longer.

[DKG]

Wall Street's main stock indexes fell more than 1% on Tuesday as gloomy forecasts from retailers Home Depot and Walmart added to worries that a sharp rise in interest rates and high inflation were taking a toll on the US economy.



In morning trading, the Dow tumbled 488 points, or 1.4%, at 33,338, the Nasdaq slid 1.8% and the S&P 500 was down 1.5%.



Home Depot fell 5.4% to a three-month low after the No. 1 domestic home improvement chain warned of weakening demand and issued a dour profit forecast for 2023.



Smaller rival Lowe's fell 4.8% ahead of its results next week.



Walmart, the world's largest retailer, shed 0.2% after it forecast full-year earnings below estimates and painted a grim picture of hotter-than-expected food inflation squeezing profit margins.



"Walmart is a bellwether for how the consumer is doing and the fact is that they envision that the consumer may be getting to that point of having to pull back," said Art Hogan, chief market strategist at B Riley Wealth.

[DKG]

The Federal Reserve's preferred inflation gauge rose last month at its fastest pace since June, an alarming sign that price pressures remain entrenched in the U.S. economy and could lead the Fed to keep raising interest rates well into this year.



Friday's report from the Commerce Department showed that consumer prices rose 0.6% from December to January, up sharply from a 0.2% increase from November to December. On a year-over-year basis, prices rose 5.4%, up from a 5.3% annual increase in December.

[DKG]

The next bull market in stocks won't happen until the Federal Reserve cuts interest rates to bail out the US government, according to Bank of America. BofA said that high rates will result in a staggering increase in interest payments on America's $31 trillion debt.

The bank said US government debt is expected to soar by more than $21 trillion over the next 10 years.

[Anonymous]

The next bull market in stocks won't happen until the Federal Reserve cuts interest rates to bail out the US government, according to Bank of America. BofA said that high rates will result in a staggering increase in interest payments on America's $31 trillion debt.

The bank said US government debt is expected to soar by more than $21 trillion over the next 10 years.

With high and increasing debt levels doesn't that just translate into higher interest rates due to more inflation DKG?



If the national debt continues to increase at its current rate the only ways to lower interest rates is through excessive belt tightening and a period where interest rates more than double



Or else there could be a big reset to start over again which would likely usher in a huge recession and a lot of economic pain

[DKG]

The leading indicators are in negative territory except for unemployment. It seems the bullish confidence in America's economy may take another hit after analysts warned the Fed could hike rates up to 5.5% –despite the fact they're already sitting at a 16-year high. What this means is that the coming recession caused by reckless government spending throughout G20 countries combined with sustained increases in interest rates will be deeper and longer.

[Anonymous]

This recent article from Forbes magazine forecasts a recession in late 2023 or by early 2024:



https://www.forbes.com/sites/billconerly/2022/11/01/the-recession-will-begin-late-2023-or-early-2024/?sh=f71f4b31add8">https://www.forbes.com/sites/billconerl ... 1f4b31add8">https://www.forbes.com/sites/billconerly/2022/11/01/the-recession-will-begin-late-2023-or-early-2024/?sh=f71f4b31add8

[Anonymous]

[Lokmar]

The ONLY reason it doesnt feel like a recession right now is because people are starving for replacement goods. You STILL cant get a fucking car in a reasonable time. Other durable goods are starting to pile up though. By Q3, most of the needs will be satiated. Thats when the SHTF.

[Herman]

The ONLY reason it doesnt feel like a recession right now is because people are starving for replacement goods. You STILL cant get a fucking car in a reasonable time. Other durable goods are starting to pile up though. By Q3, most of the needs will be satiated. Thats when the SHTF.

The markets tanked today after the Powell said bigger rate increases are coming. Jesus H, those central banker folks are crazy.

[DKG]

The Central Bank of Canada has announced a pause in interest rate hikes while the Fed has said more interest rate hikes are imminent and will be higher than previously expected. The result of this has been the CDN dollar is dropping and the markets took a huge plunge yesterday. The foolishness of interest rate hikes continues.

[DKG]

Expect food inflation to get worse in Canada at Canada left interest rates alone while the US moves in the other direction. The CDN dollar is being pushed downward making food imports more expensive.

[Thiel]

The Fed had four consecutive jumbo sized 75-basis-point hikes. The smart money is on the Fed hiking interest rates a half percentage point at their next meeting March 21 and 22.