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Kashkari’s remarks show he’s in a decided minority in an increasingly hawkish Fed, which on Wednesday wrapped up a two-day meeting with an unexpected result: with inflation on the rise, most Fed policymakers now see a case for starting interest rate hikes sooner. Just three months earlier the clear majority of policymakers favored no change to the current level of borrowing costs; on Wednesday, the central bank's quarterly summary of economic projections (SEP) showed 11 of 18 Fed policymakers penciling in at least two quarter-percentage-point rate increases by the end of 2023. ... At least some of Kashkari's colleagues may...

We are in the wake of The Fed flood. And its not a half-step, but a flown-blown boogie. The Fed sold a record $756 billion in Treasury securities this morning in exchange for cash via overnight “reverse repos.” This was up by a stunning 45% from yesterday’s operations of $521 billion. There were 68 counterparties involved. Yesterday’s overnight reverse repos had matured and unwound this morning, to be more than replaced by today’s Fed Flood. The result? The Fed’s balance sheet tops $8 trillion! This is truly The Wake of the Fed Flood!

The Federal Reserve surprised the market Wednesday with projections that future interest rate hikes will come a bit sooner than expected. Gold bugs in particular were disappointed. The price of gold fell 4% Wednesday and was lower again Thursday, falling below $1,800 an ounce for the first time since early May. While it's true that gold often rises along with inflation fears, Wall Street may have already priced in this scenario. Investors appear to be selling gold now due to expectations that the Fed is taking the threat of inflation more seriously and may move more aggressively to tamp it...

A Fox Business contributor wasn’t having it with the money printing-obsessed Federal Reserve raising its inflation target and moving up expectations for an interest rate hike only in 2023. Kaltbaum Capital Management owner and president Gary Kaltbaum tore into the Fed for its money-grows-on-trees behavior. Kaltbaum stated during the June 16 edition of Making Money with Charles Payne: “We’ve been hearing for years their inflation target of 2 percent, and now it's 3.6 [percent]. And last I looked, we’re in June of 2021, and they’re talking about what they’re going to do in 2023.” He did not let up: “I...

The Federal Reserve indicated Wednesday it may raise interest rates sooner than previously anticipated as the United States comes out of the coronavirus pandemic. But Federal Reserve Chairman Jerome Powell played down expectations, claiming discussion of the change at the Federal Reserve is highly premature. The central bank forecasts it would raise interest rates twice by the end of 2023 after previously estimating there would be no interest rate hike until 2024.

Ahead of The Federal Reserve meeting today, here are some interesting numbers that they won’t consider. 🙂 The US export price index (end use) for all commodities for 17.43% year-over-year in May. The import price index rose 10.83%. We were seeing a surge in commodity prices, like lumber and copper. But today we are seeing some air let out of the commodity tires with copper and nickel both down 4%. Gold and silver are up today. Here is a Tweet by famed investor (The Big Short) Michael J. Burry.

Students, go to Fred and type in PPI Final Demand. Create a chart and choose Change From Year Ago. What you will find is that the PPI Final Demand is up 16.8% in May since the same month last year. Now ain’t that a kick in the head.

According to Zumper, national rent growth has accelerated to nearly 5% for 2 bedroom units. And the expected change in rent over the next 12 months is 9.5%. Of course, national home price growth (ignored directly in the inflation numbers) is 13.16% YoY according to Case-Shiller. Rent growth is highest away from traditional mega coastal cities like Seattle, San Francisco, Boston and New York City, and is highest in interior cities like Spokane WA, Gilbert AZ, Knoxville TN, Durham NC, and … Cleveland??? The Federal Reserve thinks they are fixing a hole in the economy, but they are creating inflation....

Singer Billy Joel almost got it right in his song “We didn’t start the fire.” The Federal Reserve started the asset bubble fire. The famous Buffett Indicator is signalling a massive stock market bubble or serious overheating. Here is your first assignment for class. Plot the Buffett Indicator (Wilshire 5000 Total Market Full Cap Index/GDP *100 against The Federal Reserve Balance sheet). It should look like the following: How about Robert Shiller’s cyclically-adjusted price-to-earnings (CAPE) ratio? It is climbing rapidly and is above Black Tuesday’s spike in 1929 but still below the peak of the dot.com bubble. In terms of...

A picture is worth a thousand words. The good news? Job openings soared to an all-time high of 9.3 million. The bad news? There are 2.64 million more job openings than people who want a job. It would seem that employers will have to pay a premium to attract those who claim to want to work, but aren’t in the labor force. Why is Powell And The Fed keeping so much monetary stimulus going? And why does Biden want to pump $8 trillion into an already overheated economy?

The New York Times had a story raving about the tremendous jobs report. The Labor Department’s report that the economy added 559,000 jobs in May, an acceleration from April, buoyed Democrats and the Biden administration on Friday, adding new fuel to the president’s claims that vaccinations and his economic program are beginning to get the economy back on track after a halting recovery from pandemic recession. “This is historic progress,” Mr. Biden said in remarks from Rehoboth Beach, Del. “Progress that’s pulling our economy out of the worst crisis it’s been in in 100 years.” Really Joe? Labor force participation...

Yesterday’s GDP report was great with real GDP growing at a 6.4% annualized pace. To get 6.4% annualized GDP growth, The Federal Reserve had to print a massive amount of money. Even with a great GDP report (preliminary), M1 money velocity is at a historic low. In other words, the US economy got relatively little for all the money it is printing. Things improved if we look at the broader definition of money, M2. Again, despite the excellent real GDP report, M2 velocity for Q1 actually declined since The Fed went ballistic printing money. Again, the bang for the buck,...

I reported over the weekend an unusual video surrounding digital currencies that Federal Reserve chairman Jay Powell made last week: Federal Reserve Board Chairman Powell in Unprecedented Video Issues Commentary on Digital Currencies. Now we have Federal Reserve Board Governor Lael Brainard following up this morning with a speech on digital currencies via webcast at the Consensus by CoinDesk 2021 Conference, Washington, D.C. that even includes reference to an MIT-Federal Reserve test of a central bank digital currency. This morning she told the group:

Federal Reserve Governor Lael Brainard pressed the case for a digital dollar, saying Monday that a cryptocurrency backed by the central bank could provide a variety of benefits. Providing financial services to the nearly 1 in 5 Americans considered “underbanked” is one of the advantages Brainard cited in a speech to a conference presented by Coindesk. She also cited the safety of a Fed-backed system, as well as improvements in efficiency and cross-border payments, or transactions between people in different countries. While stressing the importance of moving forward carefully, Brainard said the Covid-19 pandemic strengthened the need for a system...

The infamous financial crisis in the late 2000s caused a fundamental shift in the role of The Federal Reserve and Federal government. The cause of the financial crisis? One of the root causes was loans to subprime households coupled with the now famous ALT-A (aka, NINJA loans) which helped fuel a price bubble that burst. Home prices in the USA (according to FHFA’s purchase-only index) is growing at 12.2% year-over-year, a rate even higher that during the 2000s housing bubble. Like in 2005, there is a visible spread between home price growth and wage growth. The spread today is even...

For the past several years, the Federal Reserve has been exploring the potential benefits and risks of CBDCs from a variety of angles, including through technological research and experimentation. Our key focus is on whether and how a CBDC could improve on an already safe, effective, dynamic, and efficient U.S. domestic payments system. We think it is important that any potential CBDC could serve as a complement to, and not a replacement of, cash and current private-sector digital forms of the dollar, such as deposits at commercial banks. The design of a CBDC would raise important monetary policy, financial stability,...

Share Article via Email Inflation accelerated at its fastest pace in more than 12 years for April as the U.S. economic recovery kicked into gear and energy prices jumped higher, the Labor Department reported Wednesday. The Consumer Price Index, which measures a basket of goods as well as energy and housing costs, rose 4.2% from a year ago, compared to the Dow Jones estimate for a 3.6% increase. The monthly gain was 0.8%, against the expected 0.2%.

Booming stocks, internet-driven “meme” investments and the black box of hedge fund financing pose increasing risks as the U.S. economy emerges from the coronavirus pandemic and investor appetite soars, the Federal Reserve warned on Thursday in its latest report on financial stability. “With investors ebullient on expectations for a strong rebound, it is important to closely monitor risks to the system and ensure the financial system is resilient,” Fed Governor Lael Brainard said in a statement released alongside the U.S. central bank’s semi-annual report, which reiterated some longstanding concerns and highlighted new ones. Commercial real estate remains potentially vulnerable, the...

Treasury Secretary Yellen conceded that interest rates may have to rise to keep a lid on burgeoning economic growth brought on in part by trillions in stimulus spending.

WASHINGTON—Federal Reserve Chair Jerome Powell on April 14 pushed back on warnings about a rising federal budget deficit and national debt due to an aggressive fiscal response to the pandemic and said the “current level of the debt is very sustainable.”“There’s no question of our ability to service and issue that debt for the foreseeable future,” he said during a virtual interview hosted by the Economic Club of Washington, D.C.He warned, however, that the national debt is growing “meaningfully faster” than the U.S. economy.“That’s by definition, unsustainable over time. It’s a different thing to say that the current level of...