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?

US GDP Q1 GDP Forecast To Be 6%! Time For Fed To Take Foot Off The Pedal? (Purchasing Power Of US Dollar Continues To Drop)

According to the Atlanta Fed GDPNow forecast model, US Q1 GDP is growing at 6.047%!

The Covid epidemic certainly resulted in a major hit to US GDP, particularly with state and local governments shutting down businesses. But GDP rebounded in the latter half of 2020 as state and local governments eased-back on the lock-downs. But US GDP has settled in at a whopping 6.047% for Q1 2021.

One of the reasons is the staggering growth in money stock (growing at 27.1% year-over-year as of February). The Federal Reserve figures for March will be released on April 27th. But the extreme money printing by The Federal Reserve has crushed the purchasing power of the US Dollar.

If the economy is growing at a hot rate, shouldn’t The Fed slow down its money printing?

Here is President Biden and Treasury Secretary Janet Yellen asking The Fed for more money.

Bitcoin Breaks $61,000 .. Then Retreats, VIX Volatility Index Crushed By Fed Money Printing

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.

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??)

Americans With Highest Incomes See Lowest Inflation

Thanks a boatload Joe Biden, Janet Yellen and Jerry Powell.

Low-income Americans bore the brunt of job losses when the pandemic arrived. Now they’re getting hit hardest by price increases as the economy recovers.

The headline consumer inflation rate in the U.S. remains subdued, at 1.7% — but it masks large differences in what people actually buy.

Some of the biggest price hikes of recent months, for example, have come in gasoline. A gallon of regular is up 75 cents since late last year –- adding more than $60 a month to the budget of someone who fills up with 20 gallons a week.

Food-price inflation is running at more than double the headline rate, and staples like household cleaning products have also climbed.

CPI “inflation” is considerably higher than “Core” inflation that The Fed watches.

Lower-income households general consumer more food as a percentage of their household budget.

“C’mon man, I gave you $1,400 to cover the inequities created by The Federal Reserve.”

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.

Why Is US Inflation So Low? Households Stashing Stimulus Checks In The Banks (Or Paying Down Debts)

There is a great fear about inflation in the US. And why it remains so low DESPITE the trillions in stimulus spending by the Biden Administration.

According to a survey by The New York Fed, consumers are expected to spend less than 25% of the latest stimulus checks. The checks are expected to be used to pay down debt and add to savings.

(Bloomberg) — U.S. consumers are socking away 42 cents of every dollar received from the third round of pandemic stimulus checks sent out in March, according to a new poll by the Federal Reserve Bank of New York.

Less than 25% of the funds are being spent and the remainder is being used to pay down debts, according to the New York Fed survey data, published Wednesday.

Eligible adults and children began receiving the $1,400 stimulus checks last month under the American Rescue Plan Act. Households surveyed received $3,162 on average, the New York Fed said. Respondents reported 13% of the funds were expected to be spent on essential items on average, and 8% on nonessential items.

Inflation is only 1.4% year-over-year.

The New York Fed’s Inflation Expectations Median 1 year ahead rate is 3.09%.

C’mon man!

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 …