U.S. Consumer Prices Increased in March by Most Since 2012, But Core Inflation Still Only 1.6% YoY (Is Bitcoin The New Inflation Hedge?)

(Bloomberg) — U.S. consumer prices climbed in March by the most since 2012, adding to evidence of budding inflationary pressures as the economy reopens and demand strengthens.

The consumer price index increased 0.6% from the prior month after a 0.4% gain in February, according to Labor Department data Tuesday. A jump in the cost of gasoline accounted for almost half the overall March advance. The median estimate in a Bloomberg survey of economists called for a 0.5% rise.

Excluding volatile food and energy components, the so-called core CPI increased 0.3% from a month earlier, the most in seven months and reflecting rising rents and auto insurance.

CPI YoY rose 2.6% while CORE CPI YoY rose only 1.6%. Owners Equivalent Rent of Residences remains at 2% YoY.

Once again, lower and middle income households consumer larger proportions of food and energy in their budgets than high income households. Yet The Federal Reserves focuses on what impacts the higher-income households.

The Covid epidemic led to a slump in CORE inflation, but inflation has picked up since then. But not much.

It looks like Bitcoin is acting as an inflation hedge while gold has not.

If the Fed REALLY wanted inflation, all they have to do is revert to earlier methods of calculation. Then we would like to see a rush to gold and silver again.

Here is this AM reaction to the inflation report. Bitcoin surged overnight, but gold surged on the CPI report.

Random Length Lumber Futures are up 74% since Biden’s inauguration.

I wonder if steaks at Charles Mulligan’s Steak House have increased in price?

Producer Prices SCREAM Inflation, 4.2% YoY (Highest Since 2011) After Powell Tells Congress That Inflation Risk Is Low

In March, Fed Chair Powell told Congress that inflation risk remains low.

The Bureau of Labor Statistics this morning reported that US Producer Price Index Final Demand year-over-year rose a whopping 4.2%, the highest rate since 2011.

Producer prices (output) are a measure of the change in the price of goods as they leave their place of production (i.e. prices received by domestic producers for their outputs either on the domestic or foreign market).

Even without food, energy and trade, Final Demand Prices rose 3.1% year-over-year.

Of course there is going to be inflation with Biden’s multi-trillion spending spree and The Fed’s prodigious money printing.

Now, defenders of The Fed flag will say that 4.2 is still low. But with Biden and Congress going wild with spending, its only just begun.

Equity managers need to thank Powell and Yellen (Powellen??)

Fed Signals It’s Ready to Wield Power Over Short-Term Rates (Wizard Of Rates??)

Gee, I thought The Fed already had control over short-term rates.

Federal Reserve Chairman Jerome Powell stands ready to pull some of the central bank’s policy levers in between regularly scheduled meetings, if that’s what it takes to keep short-term interest rates under control.

He noted recent downward pressure on rates during the Federal Open Market Committee’s March 16-17 meeting, according to minutes released Wednesday, and said it might be appropriate adjust the interest on excess reserves rate (known as IOER), the amount the Fed pays on its facility for overnight reverse repurchase agreements or both. Action could come at a regular meeting or between them to keep the fed funds rate, the central bank’s main policy benchmark, “well within” 0% to 0.25%, he said.

Repo and Treasury bill rates have been flirting with zero — and even trading below sometimes — since the beginning of the year as reserve balances at the central bank swell. Market participants have told the Fed that a rapid expansion in reserves could keep driving money-market rates lower, with the earliest and most pronounced moves in the overnight secured funding markets.

It seems like Powell and the FOMC have pretty good control over short-term interest rates already.

Repo rates are also under control, too bad money printing isn’t.

Powell doesn’t have much control over the 10-year Treasury Notes or 30-year Mortgage rate.

Pay no attention to that man behind the curtains.

Taylor Rule (Rudebusch) Calls For Fed Funds Target Rate Of 2.66% (Fed Rate Is Currently At 0.25%)

Amazingly, The Federal Reserve keeps stoking the asset bubble with near zero interest rates. Despite the fact that the Taylor Rule (Rudebusch specification) is calling for a Fed Funds target rate of 2.66%.

Uber-dove Charles Evans, President of the Chicago Federal Reserve, is calling for more gas on the asset bubble fire with a TR estimate of -1.13 for the Fed Funds Target Rate.

I call this The Fed Fire.

Reversal Of Fortune! Gold Rises As Bitcoin And Ethereum Fall Along With The US Dollar, Hindenburg Omen Nonexistent With Fed Money Pumping

It is a slow economic news and equity markets are flat. But we are seeing activity in cryptocurrencies (Bitcoin and Ethereum) and Gold. Gold is up and Bitcoin/Ethereum are down.

Is this a reversal of the trend over the last year?

And the US Dollar is going down.

And the infamous Hindenburg Omen is nowhere in sight, thanks to The Fed.

The German airship Hindenburg flying over Wall Street.

Topsy-Turfy! Fed’s Assets At $7.7 Trillion, Up $3.5 Trillion in 13 months, 10Y T-Yield UP, Gold Down, Bitcoin Up

Financial markets are topsy-turfy after the Covid panademic struck.

The Federal Reserve rode to the rescue and increased their balance sheet by $3.5 trillion in just 13 months (white line). While some would think that the US Treasury 10-year yield would fall, … it has been going up from 0.543% on March 9, 2020 to 1.726% today (blue line).

Gold initially shot up in price following The Fed’s massive asset purchases (gold line), but has tapered off. While Bitcoin (electric green line) has risen to $57,664.77.

And the S&P500 index is soaring with Fed stimulus.

Gold is up, the Dollar is down.

With the Biden/Pelosi multi-trillion dollar spending spree under way, look for The Fed’s balance sheet to absorb much of the Biden/Pelosi spending spree.

Ain’t that a lot of …

The Scream! Buffett Indicator Sky High Along With Home Prices As Money Printing Has Goes Wild!!

The Scream! Out-of-control money printing, dead money velocity and collapsing purchasing power of the dollar.

(Bloomberg) — With U.S. equity indexes rising to fresh records again this week, one of Warren Buffett’s most-famous catchphrases comes to mind: Investors should “be fearful when others are greedy.”

Any Buffett disciple who checks in on the billionaire investor’s favorite market valuation metric these days may get the urge to shriek in terror.

And then there are home prices at 38% higher than the peak during the 2005 housing bubble.

Here is what causing me to shriek in terror. Out-of-control money printing, dead money velocity and collapsing purchasing power of the dollar.

MML: US M1 Money Stock Growing At 357% Year-Over-Year With Velocity Of 1.22 (M2 Growing At 27.1% Year-Over-Year With Velocity Of 1.135)

MML stands for Modern Monetary Lunacy.

M1 money stock is growing at a whopping 357% year-over-year as M1 velocity has collapsed to an anemic 1.22.

M2, a broader measure of money, is growing at 27.1% year-over-year with a dismal velocity of 1.135.

Since velocity equals GDP divided by money, The Federal Reserve had better hope that GDP does increase with the trillions that the Biden Administration is throwing at the problem. But since higher taxes won’t be realized for at least a year, there will be even more money printing.

Biden and Yellen must feel that they are flush with cash like Jean Ralphio from Parks and Recreation.

Maybe Biden, Yellen and Powell watched Parks and Recreation and took it literally. Here is how Biden et al will spend all that stimulus money.

Biden’s Snake Juice?