(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.
Of course, the CS Fear Barometer is falling thanks to massive Fed money printing and balance sheet expansion.
The CS Fear Barometer measures investor sentiment for 3-month investment horizons by pricing a zero-cost collar. The collar is implemented by the selling of a 10% OTM SPX call option and using the proceeds to buy an OTM put. The CSFB level represents how far out-of-the-money that SPX put is. The higher the level, the greater the fear.
The Biden epic spending spree and The Federal Reserve’s epic money printing has resulted in a host of outcomes. First, cryptocurrency Bitcoin finally hit $61,000 today before backing-off.
The massive increase in The Fed’s money printing (M2) has stimulated stock market growth (S&P500) along with cryptocurrencies Bitcoin and Ethereum. The out-of-control money printing has essentially killed-off stock market volatility (VIX).
Biden and Powell are Natural Born (Volatility) Killers.
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.