r/investing
This week: May CPI inflation will break above 4% and ECB will hike on Thurday
Predicts May CPI >4% and ECB rate hike, signaling renewed inflation pressure and potential Fed hawkishness, implying market downside.
- Headline CPI is projected to exceed 4%, reigniting fears of persistent inflation and prompting the Fed to maintain or increase hawkish stance.
- Core CPI rising to a seven-month high indicates broad-based price pressures beyond volatile energy costs, complicating the disinflation narrative.
- ECB's imminent rate hike signals global tightening momentum, which could constrain liquidity and negatively impact equity valuations.
For those wondering if markets have more room to fall..
On Wednesday US CPI data for the month of May will be released and having looked at the latest estimates from major firms, it's almost certain headline CPI will break above 4% again for the first time since April 2023. Estimates are 4.1 to 4.2% which will bring Fed hikes back into focus.
Core CPI is also expected to edge up to a seven-month high of 2.9%, which is more concerning since this strips out oil from the headline data. For the month of May alone core CPI could add 0.5% which is obviously alot.
If the Fed needs any help to become more hawkish again, the ECB may inspire them as they will start hiking already on Thursday since inflation has also picked up alot in Europa in recent months.
Isn't GDP growth basically 0% without AI spending?
Probably but also Government spending goes into GDP, and we are spending a lot of this dumb war...
I'm sure that there are a bunch of historical scenarios where 'GDP minus X equals no/negative GDP growth'.
GDP growth in the late 1800s was negative, if you just take out all the trains and factories.
Generally not a good idea to doctor the numbers.
Trains and factories created jobs and tangible products with a positive economic return. How many jobs are being created by AI, and how many AI companies are profitable?
In 2001 companies were plowing money into unused dark fiber. Dark fiber was called dark fiber because it wasn't being used. In 2008 hookers were buying multiple unused houses. In 2021 people were plowing money into unused blockspace and metaverse real estate. Railroads were building into big empty tracts of literal wild west hoping for settlers to fill the seats someday.
These were all speculative. AI is one of the few "bubbles" where every iota of capacity is being used. There are no dark GPUs. Devs are pulling vampire mode to squeeze every token out of their rolling 5 hour windows.
Trains and factories created jobs
They also mauled a lot of jobs. In contrast, software engineering jobs are rapidly rising. We just had a booming jobs report so strong the market is worried it was too good, lol.
You need three factors for Stagflation: high inflation, slow/stagnant GDP growth, and high unemployment. We literally only have one of the three.
The stock market is not the same thing as the economy. Just because stocks crashed does not mean we have stagflation.
It’s a stretch to even say that stocks crashed, we had one red day, and S&P is still up 8% on the year.
Next weeks gonna pump crazy
Stagflation also needs high unemployment.
People like you just like the word "stagflation" because it's so doomer-y.
In 1975, we had 9% inflation and 9% unemployment and low economic growth .
Today we 3.3% inflation (maybe it will go to 4) and 4.4% unemployment and average economic growth.
The reason stagflation is a problem is because we can't raise rates to combat inflation because it will make the high UE rate even higher.
And we can't lower rates to combat UE because it will make high inflation even higher.
That is not the situation today.
With how many gig economy jobs there are it’s conceivable we could be in a stagflation situation even if unemployment doesn’t get too crazy. Especially because a lot of these gig jobs get kicked in the teeth hard by fuel prices.
The fed has two mandates. Keep inflation steady (goal 2%) and maximum employment. Job growth has been doing well, but inflation has been creeping up steadily for months. Rate hikes are most definitely on the table and the further they put it off the harder it will be to bring down.
Unfortunately, the entire world, including the federal reserve disagree with your line of thinking.
Stagflation is not phase in the economic cycle, lmao. You are in fact financially illiterate
US GDP is essentially unsustainable US federal deficit spending and unsustainable AI infrastructure spending, and blinking red outside of those factors
A bump in the AI roadway will essentially mean immediate recession
it also means high unemployment
And if by some miracle cpi comes in lower than expected, prepare for markets to soar again. It's liie the traders can't see past the latest headline.