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??)

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 …