It's July people. Auto production always goes haywire in July because of annual retooling shutdowns. But the effects are always fully reversed in August.

September rate cut nailed on at this stage.

PPI hospital prices increased by only 0.1% m/m in June and the massive 1.3% m/m surge in May was revised down to a 0.6% gain. In addition, PPI physicians prices fell by 0.4% m/m in June. Portfolio management prices only increased by 1.0% m/m.

The PPI components that feed into the Fed’s preferred PCE deflator inflation measure were significantly lower than expected for June and it looks like May’s PCE gain could be revised down too, albeit only slightly.

Our post-CPI estimate that the core PCE deflator increased by 0.19% m/m in June has, post-PPI, been cut to only 0.12% m/m. In addition, we think that May’s increase could be trimmed from 0.08% to 0.05%. That would be enough to pull the annual core PCE inflation rate down to 2.5%.

$NYCB isn't the canary in the coalmine that signals bad CRE loans are a systemic threat to the banking system. Here's the industry-wide delinquency rate. 👇

Capital Economics: "Donald Trump’s plans for a universal 10% tariff on all imports and tariffs of up to 60% on imports from China specifically would subtract up to 1.5% from US GDP and trigger a rebound in inflation that could force the Fed to raise interest rates again."

A 10% tariff on all imports. Up to 60% on imports from China. A Donald Trump win in November could mean lower US growth, rebounding inflation and higher rates. But his other isolationist policies would have an even bigger impact on global GDP growth

“.. hard to say which is more remarkable: that #GDP growth accelerated last year following the Fed’s most aggressive tightening campaign in decades, or that core inflation nevertheless fell back to the 2% target in annualised terms over the second half of the year. Either way, it

Apologies, our %m/m estimate was off by 0.001%. We will try harder.

“.. new data on rent inflation released this week raise the possibility that the disinflationary process won’t stop there, with a period of below-target inflation a growing risk.” - @CapEconUS #CPI

No, we don't really think CPI rent of shelter inflation is going to fall that far - the BLS will eventually revise up its New Tenant Rent Index data. But even with an upward revision, that's a lot more disinflation coming down the pipe.

About that "last mile is the hardest" nonsense. Remember rent of shelter accounts for 43% of the core #CPI basket. So if it does fall from 6.2% in Dec to -1% that would subtract 3.1% points, leaving core CPI Inflation at sub-1% by end-2024. Jan rate cut maybe?

Our 2024 S&P 500 forecast is one of the more bullish in the market. New analysis shows why the index could see another bumper year – and why it might not be all about the 'Magnificent 7'. For more on the EPS outlook, P/E ratios and AI, and bubble risks:

We're Team #PCE rather than #CPI, but there's a possible upward revision to the portfolio management component coming that could add 0.14% to the core PCE inflation rate.

“.. the more worrying development is that the CPI-trim and CPI-median core measures both rose by a larger 0.4% m/m. The pick-up in underlying inflation pressures means there is little chance of the Bank [of Canada] cutting interest rates until at least the second quarter.” 🇨🇦

The collapse in the NY Fed manufacturing index to -43.7 in Jan is going to attract a lot of attention from the perma bears, but we'd caution it's more likely noise rather than signal.

We estimate that core PCE prices increased by 0.17% m/m in Dec, which means the 3m annualised rate fell to 1.5%, the 6m annualised rate remained at a below-target 1.9% and the 12m rate dipped to 2.9%. Ignore the disinflation deniers, it's happening. Rate cut March.

“The surge in Chapter 11 business bankruptcy filings .. is not as bad as it looks, as many of them related to the WeWork failure. Excluding those, bankruptcies trended lower at the end of 2023 and, with corporate bond yields falling .. the worst may already be behind us.”

The jobs print "was not quite as good as it looks at first glance." Besides the negative revisions, the gain "was once again concentrated in only a few non-cyclical sectors .. the 33,000 decline in temporary jobs is also a concern." - @CapEconUS #NFP