Posted on 02/26/2023 10:18:42 AM PST by Diana in Wisconsin
The possibility of a 2023 market rally ground to a halt last week amid an onslaught of unfortunate inflation and economic data that spooked investors and increased the likelihood that the Federal Reserve will continue its economically painful rate hikes campaign for longer than Wall Street hoped.
All major indexes notched their largest weekly losses of 2023 on Friday. The S&P 500 fell by 2.7%. The Dow Jones Industrial Average sank 3%, and the tech-heavy Nasdaq fell 3.3%.
What's happening: It appears that after months of steady decline, the pace of inflation is going sideways. January's Personal Consumption Expenditures price index -- the Fed's favored inflation gauge -- came in hotter than expected on Friday.
Prices rose a whopping 5.4% in January from a year earlier, the Commerce Department's Bureau of Economic Analysis reported. In December, prices rose 5.3% annually.
In January alone, prices were up 0.6% from the prior month, a higher monthly gain from December's increase of 0.2%.
This inflationary crab walk is almost certainly causing Fed officials to rethink their policy.
A paper presented Friday at the Booth School of Business Monetary Policy Forum in New York argued that disinflation will likely be slower and more painful than markets anticipate.
"Significant disinflations induced by monetary policy tightening are associated with recessions," said the paper. "An 'immaculate disinflation' would be unprecedented." (Immaculate, in this instance, refers to the possibility of inflation falling quickly to the Fed's 2% goal without any serious economic damage).
Several Fed presidents, governors and top economists were on hand at the Booth School forum to discuss the paper and monetary policy on Friday. The majority of those speaking expressed deep concern about the stubbornness of inflation and general market reaction.
(Excerpt) Read more at channel3000.com ...
"I anticipate further rate increases to reach a sufficiently restrictive level, then holding there for some, perhaps extended, time," echoed Boston Fed President Susan Collins at the conference.
Collins referred to inflation as "recalcitrant," a loaded million-dollar word that means uncooperative, or defiant to authority.
“price growth has moderated”
= still going up.
Gee, if only Congress would pass a $1.7 trillion dollar spending bill.
I know the sophisticated among us can trade and make money in any market, but I am, and have been, 99%out of the market. My portfolio has suffered, but no where near the average 30% drop. Trying to find productive places to park money is very hard right now.
I park mine in T-Bills.
At least I get some of my tax money back.
Y’all can’t get ahead of a government that
has a built in inflation rate of 3% minimum,
unless you are a thief like them.
Yup. My Gallon of OJ just went from $4.99 to $6.49.
First derivative is positive. Second derivative is negative.
How can it until we stop raising minimum wage and spending more than we make?
Fed hand tools are just making things worse. One used to actually be able to subsist and save a little before they acted up. Of course the whole inflation thing started on Biden’s day one when he began strangling energy.
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