Inflation is Nearly Beaten with Rate Cuts Coming, Says Top Federal Reserve Official

[Frodo]

June (not March) seems to be the month they will most likely start cutting interest rates:

Top Federal Reserve official says inflation fight seems nearly won, with rate cuts coming

[jaichind]

Most likely correlated with

https://www.bloomberg.com/news/articles/2024-01-16/new-york-factory-index-slumps-to-lowest-level-since-may-2020

"New York Factory Index Slumps to Lowest Level Since May 2020"

[Open Source Intelligence]

This board has become such a joke: post everything that supports my side and ridicule everything that supports the other side.

[Progressive Pessimist]

Good timing, intentional or not.

[Frodo]

This article goes into a lot more detail about why it will be more challenging to return to the pre-pandemic world with only 2% inflation even though we are well within striking distance:

Fed's inflation puzzle still missing a piece or two

Though I remember the Federal Reserve looking to increase the target inflation rate to just a tad over 2% (maybe ~2.5%) pre-pandemic when deflation was a much bigger concern at the time.  

[The Economy is Getting Worse]

Core inflation is still running at twice their target, and now supply chains seem to be disrupted once again with the Red Sea and Panama Canals blocked. Oil also seems set to rise on geopolitical risk, having recently broken out.

If they cut, it's because something breaks (ie US unable to sell off their treasuries after the reverse repo liquidity runs out).

[Frodo]

So it is looking like May or June, which is just as well.  Inflation may be going down, but let's make sure the beast is dead before we start celebrating:

Federal Reserve signals that interest rate cuts aren't imminent, leaving them unchanged for now

[oldtimer]

So it is looking like May or June, which is just as well.  Inflation may be going down, but let's make sure the beast is dead before we start celebrating:

Federal Reserve signals that interest rate cuts aren't imminent, leaving them unchanged for now

Stop kidding yourself that the FED is going to change rates before November.

They have no reasons to cut (the economy booming), they have reasons to raise (economy overheating + another round of government stimulus).

[Beet]

CPI-U is the lowest since March 2021, but still higher than during the Trump administration or any time before that. Yet Austan Goolsbee pointed out that the latest employment report showed 0.2 fewer hours worked, indicating hidden weakness in the labor market. The Fed is between a rock in a hard place. Trump wants it not to cut and still hopes we run into a recession this year. If you're Biden, you're hoping the economy can stay strong without rate cuts.

[Open Source Intelligence]

Is anyone outside of the financial press talking about NYCB? They've lost 50% of their market capitalization the past week and appear very SVB-like.

[DK_Mo82]

Is anyone outside of the financial press talking about NYCB? They've lost 50% of their market capitalization the past week and appear very SVB-like.

I have family with accounts there, they are doing a bank run in the morning lol, the end may be near and who knows how far contagion goes from there, has most to do with commercial/office real estate delinquencies 

[DK_Mo82]

NYCB with 7% deadcat bounce today, they prob survive to the weekend anyway

[Fmr. Pres. Duke]

I don't see the Fed cutting rates as long as the economy is humming along and the job market is strong. There is no reason to, and cutting too early could mean inflation ticks up again.

[DK_Mo82]

I don't see the Fed cutting rates as long as the economy is humming along and the job market is strong. There is no reason to, and cutting too early could mean inflation ticks up again.

Yeah this is what gets missd in the discussion... Why cut rates necesarily if you are at inflation and growth and full employment, what to say natural rate of interest has returned to historically more normal level? Free money doesn't have to be the norm. The fact that it was the norm for over a decade after great recession may be the anomaly

[jaichind]

https://www.axios.com/2024/02/29/inflation-federal-reserve-january

"Fed's favorite inflation measure confirms quicker price gains in January"

Fed rates will stay elevated as it should be.

[Electric Circus]

CPI-U is the lowest since March 2021, but still higher than during the Trump administration or any time before that. Yet Austan Goolsbee pointed out that the latest employment report showed 0.2 fewer hours worked, indicating hidden weakness in the labor market. The Fed is between a rock in a hard place. Trump wants it not to cut and still hopes we run into a recession this year. If you're Biden, you're hoping the economy can stay strong without rate cuts.

The number that caught my attention recently is that quits are back to where they were before the pandemic. The headline numbers still tell us that this is not a bad time to be looking for a job in most sectors. However, given the mixed signals on inflation, I'm eager to see how this month's numbers pan out.

[The Economy is Getting Worse]

https://www.axios.com/2024/02/29/inflation-federal-reserve-january

"Fed's favorite inflation measure confirms quicker price gains in January"

Fed rates will stay elevated as it should be.

They should be raised higher. The rates haven’t slowed the casino stock market, including sh**tcoins and meme stocks.

[Hollywood]

https://www.axios.com/2024/02/29/inflation-federal-reserve-january

"Fed's favorite inflation measure confirms quicker price gains in January"

Fed rates will stay elevated as it should be.

They should be raised higher. The rates haven’t slowed the casino stock market, including sh**tcoins and meme stocks.

This is correct.  I have a friend that quitclaimed their home just to buy bitcoin, and his commitment was convincing enough for me to buy 1 Bitcoin at 30k.  I'm out.  He's going to hold until 80-100k.  Bitcoin literally hit a record of 69k as the stock market crashed.  Bitcoin has now bounced back to 67.3k after dropping to 61.5k.  There's so much money moving from dollars to bitcoins.  There's literally a massive debt market to buy bitcoin and other cryptocurrency.  Michael Saylor announced his plan to raise 600M yesterday just to buy more Bitcoin. 

There is so much money being funneled into tech stocks, or companies that hope to utilize tech in their product.  There are also tech companies that are blowing due to their investment in cryptocurrency.   We have car companies that can't move EVs, and advertising companies adopting terrible AI products.  There's obviously a bubble.  This is due to the dollars overall weakness in comparison to other investment vehicles.   The sophmoron on the sideline doesn't want 5% interest when they see friends and influencers earning massive profits with crypto and tech plays.  I can throw away 20k on bitcoin for s##ts and giggles, but most people can't.

[Tintrlvr]

https://www.axios.com/2024/02/29/inflation-federal-reserve-january

"Fed's favorite inflation measure confirms quicker price gains in January"

Fed rates will stay elevated as it should be.

They should be raised higher. The rates haven’t slowed the casino stock market, including sh**tcoins and meme stocks.

This is correct.  I have a friend that quitclaimed their home just to buy bitcoin, and his commitment was convincing enough for me to buy 1 Bitcoin at 30k.  I'm out.  He's going to hold until 80-100k.  Bitcoin literally hit a record of 69k as the stock market crashed.  Bitcoin has now bounced back to 67.3k after dropping to 61.5k.  There's so much money moving from dollars to bitcoins.  There's literally a massive debt market to buy bitcoin and other cryptocurrency.  Michael Saylor announced his plan to raise 600M yesterday just to buy more Bitcoin.  

There is so much money being funneled into tech stocks, or companies that hope to utilize tech in their product.  There are also tech companies that are blowing due to their investment in cryptocurrency.   We have car companies that can't move EVs, and advertising companies adopting terrible AI products.  There's obviously a bubble.  This is due to the dollars overall weakness in comparison to other investment vehicles.   The sophmoron on the sideline doesn't want 5% interest when they see friends and influencers earning massive profits with crypto and tech plays.  I can throw away 20k on bitcoin for s##ts and giggles, but most people can't.

Are you asserting that the item with no value basis that people are taking out huge loans to invest in precisely because they see it reaching new record values isn't a bubble, but AI and EVs are a bubble?

[Hollywood]

https://www.axios.com/2024/02/29/inflation-federal-reserve-january

"Fed's favorite inflation measure confirms quicker price gains in January"

Fed rates will stay elevated as it should be.

They should be raised higher. The rates haven’t slowed the casino stock market, including sh**tcoins and meme stocks.

This is correct.  I have a friend that quitclaimed their home just to buy bitcoin, and his commitment was convincing enough for me to buy 1 Bitcoin at 30k.  I'm out.  He's going to hold until 80-100k.  Bitcoin literally hit a record of 69k as the stock market crashed.  Bitcoin has now bounced back to 67.3k after dropping to 61.5k.  There's so much money moving from dollars to bitcoins.  There's literally a massive debt market to buy bitcoin and other cryptocurrency.  Michael Saylor announced his plan to raise 600M yesterday just to buy more Bitcoin.  

There is so much money being funneled into tech stocks, or companies that hope to utilize tech in their product.  There are also tech companies that are blowing due to their investment in cryptocurrency.   We have car companies that can't move EVs, and advertising companies adopting terrible AI products.  There's obviously a bubble.  This is due to the dollars overall weakness in comparison to other investment vehicles.   The sophmoron on the sideline doesn't want 5% interest when they see friends and influencers earning massive profits with crypto and tech plays.  I can throw away 20k on bitcoin for s##ts and giggles, but most people can't.

Are you asserting that the item with no value basis that people are taking out huge loans to invest in precisely because they see it reaching new record values isn't a bubble, but AI and EVs are a bubble?

No.

[Open Source Intelligence]

https://www.axios.com/2024/02/29/inflation-federal-reserve-january

"Fed's favorite inflation measure confirms quicker price gains in January"

Fed rates will stay elevated as it should be.

They should be raised higher. The rates haven’t slowed the casino stock market, including sh**tcoins and meme stocks.

This is correct.  I have a friend that quitclaimed their home just to buy bitcoin, and his commitment was convincing enough for me to buy 1 Bitcoin at 30k.  I'm out.  He's going to hold until 80-100k.  Bitcoin literally hit a record of 69k as the stock market crashed.  Bitcoin has now bounced back to 67.3k after dropping to 61.5k.  There's so much money moving from dollars to bitcoins.  There's literally a massive debt market to buy bitcoin and other cryptocurrency.  Michael Saylor announced his plan to raise 600M yesterday just to buy more Bitcoin.  

There is so much money being funneled into tech stocks, or companies that hope to utilize tech in their product.  There are also tech companies that are blowing due to their investment in cryptocurrency.   We have car companies that can't move EVs, and advertising companies adopting terrible AI products.  There's obviously a bubble.  This is due to the dollars overall weakness in comparison to other investment vehicles.   The sophmoron on the sideline doesn't want 5% interest when they see friends and influencers earning massive profits with crypto and tech plays.  I can throw away 20k on bitcoin for s##ts and giggles, but most people can't.

Are you asserting that the item with no value basis that people are taking out huge loans to invest in precisely because they see it reaching new record values isn't a bubble, but AI and EVs are a bubble?

We're in everything bubble right now. Gold likewise is skyrocketing. The theory there is it's some central bank(s) doing the buying. For Bitcoin it's a whale but identity of the whale is unknown. Meanwhile look at Nvidia's stock price. It's phenomenal growth if you bought at the bottom, but the notion this will turn into a flat plateau when done is ridiculous. Ditto gold, ditto Bitcoin. The 7 stocks that were carrying the entire stock market have become 4 with a meh 3.

[Open Source Intelligence]

FT Alphaville this morning:

https://www.ft.com/content/755e6ea8-f57a-45fd-81a7-eacf60fc88aa

Office loans ‘living on borrowed time’
You can’t extend and pretend forever, as it turns out

The bill could soon come due for mortgages on commercial properties whose valuations have taken a dive since Covid-19.

See the following chart from Goldman Sachs:

The notable change is how much the 2024-maturity bar grew in just a year. About $270bn of last year’s commercial mortgage maturities were delayed until this year.

   For borrowers, there’s a clear reason to delay. With US rates above 5 per cent, refinancing these mortgages is an expensive proposition at best, and at worst is simply not feasible. Across the entire CRE market, refinancing costs are the highest they’ve been in at least 20 years, says GS.

And lenders agreed to “extend and pretend” (ie modify loans) because the alternative is foreclosing on office properties valued far below where they were when those loans were originally made.

How far below? On average prices have dropped 33 per cent, and in some areas they’ve slid more than 60 per cent, says GS, citing Real Capital Analytics:

   For lenders, modifications and extensions are still better alternatives to foreclosures and liquidations, given the current trajectory of property prices. For context, the average sales price for US offices has fallen by 33% since the 2019 peak on a per square foot basis, according to data collected from Real Capital Analytics (RCA). Central business districts of some cities like as Seattle, Los Angeles, and San Francisco, where distressed sales represent a large share of transaction volume, have seen average office sales prices fall by over 60% since the start of the pandemic, discounts that lenders are likely unwilling to accept.

   All of this begs the question, says GS: How much longer can borrowers modify loans and extend maturities before lenders start demanding repayment or foreclosing on properties?

The problem is that with each slightly high US inflation print, a quick pace of Federal Reserve rate cuts looks ever less likely. Sharply lower rates are what could possibly save US commercial property markets from a broader reckoning.