r/stocks
This week: May US CPI inflation will break above 4% and ECB will start hiking on Thurday
Predicts May US CPI >4% and ECB rate hikes, signaling renewed inflation pressures and potential Fed hawkishness, implying market downside.
- Headline CPI is projected to exceed 4%, reigniting fears of persistent inflation.
- Core CPI rising to a seven-month high suggests underlying price pressures are accelerating.
- ECB rate hikes and potential Fed hawkishness increase the risk of tighter monetary policy.
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 quite alot for a core number in just one month.
If the Fed needs any help in becoming more hawkish again, the ECB may inspire them as they will aready start hiking this Thursday since inflation also picked up alot in Europa in recent months.
This was back when trump had some sane people keeping him in check
Are you insinuating that he will be a minority of those voting for rate hike and thus it won't matter?
The swing vote. Which is why him sticking around was so damned important. Guy is a fucking legend. There will be statues of Jay Powell in DC long after Trump’s have been torn down.
Ah so easy right?
Except it costs a lot to do that. How do you decide the flow is bullish or bearish? What if you are set up one and it doesn't flow that way? What if you wait for the flow to change? What if you don't wait?
You're failing to understand why the market has historically thrived on low rates. It does so when inflation is under control.
If rates are lowered in an inflationary environment, you trigger stagflation. Long term yields will spike, the yield curve will become more steep, the US dollar will lose safe haven status, AI companies will receive a short spike, and hard assets will rally to shield from inflation. For most companies, the cost of raw materials and wages would rise faster than they can raise prices. This in turn will squeeze corporate profit margins and eventually hurt stock valuations.
Think about it like this: When everyones pay cheque is worth less money, they ask for more money, or work somewhere else the pays more money. This in turn drives inflation and lowers corporate profits. It hurts the whole economy, it's bigger than the market, but eventually the market has to react.
He has a choice and he already made it. The rates are gonna go down by a quarter.
The Fed committee will be in open rebellion if he tries to force a rate cut.
Fed Warsh can’t force a rate cut anyway - that’s not under his authority
Unanimous decision is what leads policy decision at the Fed
Majority, not unanimous. Your point still stands, though.
Wasn’t it a split decision to maintain at the last meeting?
Yeah, there was already an opposition before the inflation numbers.
Bullshit. If he cut rates, the market and the economy would majorly freak out.
“Literally” every vote matters. Do you know how voting works?
So the plan is to hide the first deflated data cause even that one isn't good enough anymore? And now we will have a second deflated data that fits narrative even better?
Typical statecraft of 21 century I guess.
The market itself can actually enforce rates strongly. That said - there is a mathematical path to lowering rates if the Fed and the Treasury and the business community all collaborate. It would cost Americans tens of billions of dollars to achieve, but assume sociopathic + totalitarian... it's possible. Erdoganomics hasn't lost its supporters just yet.
Priced in absolutely exists. It's just what is priced in is the current distribution of probabilities. Ofc confirmation will still move the market because 100% certainty isnt what is priced in.