CPI comes in hotter than expected, S&P 500 down 1%

Food and energy are the least of his problems with respect to current inflation rates.

5 rate cuts are def still on the table - you forget it’s an election year grasshopper, and Biden has nothing of substance to run on.

And yes, I do know he doesn’t control rates, but unfortunately the Fed has become way to politicized just like everything else.

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The 5+ rate cuts narrative from the fall has basically lost all of its momentum.

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Good

So far, the call for 5 or 6 cuts has been more wishful thinking. The remaining gap to get where they want it will come slower than the optimists want.

Your election year comment is valid. But Biden will use the old "it's the economy stupid" politics. Even though many are struggling with high prices, the national numbers will provide talking points.

I am not trying to make this thread political. Only responding to your point. He will have election year talking points without 5 cuts based on several key numbers. I don't think we see that many cuts even with the election year politics.

I mean trump basically bullied Powell to cut rates did he not?

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5 rate cuts are def still on the table

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Not without a severe drop in the economy. JPow has been consistent thus far with keeping the Fed on track, despite what the market wants, so there's no reason to believe he will change directions now.

And let's be clear on this, what we're seeing is the impact of this:


***NOTE: the spike from April to May 2020 is from the Fed announcing changes to Regulation D, not COVID money***

If you accept that inflation is too much money chasing too few goods, then you can take from M1 that inflation isn't going to go down easily until we get the money supply back down (~50% of the COVID excess has come out since the April 2022 high) to somewhere around May 2020's number.

What we saw after May 2020 was a frickton of liquidity injected into the market in a ridiculously short time period and that's going to take time to excise out. That still-resident excess is what's fueling latent demand and that latent demand is expressing itself through inflation stickiness even though rates have continued to remain high.

If the economy continues to track the way it has over the last 6 months, I wouldn't expect anything more than two cuts this year with neither coming before we get into at least Q3 (likely Q4, but it's too far out to do more than flip a coin on that).

We likely needed another small hike last year, but we seem to be walking a fine line between fighting inflation and keeping more banks from going under.

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I mean trump basically bullied Powell to cut rates did he not?

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No, the high yield bond market did that.

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The 5+ rate cuts narrative from the fall has basically lost all of its momentum.

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I've amazed at how tethered people have been to this wishcasting for years now. On the way up, they would act us if there was some big mystery to unravel, when, in fact, Powell was just straight up saying every time exactly what he was going to do!