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Realistbear

Fed May Have To Hike Again

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http://biz.yahoo.com/ap/060801/economy.html?.v=8

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Consumer Spending Is Sluggish in June

Tuesday August 1, 8:48 am ET

By Martin Crutsinger, AP Economics Writer

Consumer Spending Is Weak for 4th Straight Month in June; Rising Gasoline Prices Are Blamed

WASHINGTON (AP) -- Consumer spending was weak for a fourth straight month in June as rising gasoline prices left Americans with little to spend on other items.
A key measure of inflation rose at the fastest pace in more than a decade
.
Income growth rose a solid 0.6 percent in June, following a 0.4 percent increase in May. A measure of inflation closely watched by the Federal Reserve rose by 0.2 percent in June and was up 2.4 percent over the past year. That was the biggest year-over-year increase since a 2.5 percent rise in April 1995..../
The Federal Reserve is hoping to slow the economy enough to keep inflation under control. However, the new report showed the opposing forces facing the central bank. While consumer spending and the overall economy are slowing, inflation is getting worse...../
An inflation gauge preferred by the Fed, which is tied to personal spending, showed an increase of 0.2 percent in June, excluding food and energy. Over the past year, that gauge is up by 2.4 percent, an increase matched by a similar rise for the 12 months ending in September 2002. That figure has not been exceeded since a 2.5 percent increase for the 12 months ending in April 1995.
The 2.4 percent rise is well above the Fed's comfort zone of 1 percent to 2 percent for core inflation
, which excludes volatile energy and food..../
The Fed meets again next Tuesday.../

The recent stock market rally has been fuelled in no small part by the expectation that Ben was done with the IRs. But with inflation accelerating? Could stagflation be the next phase for the Western economies?

Bad day shaping up on the DOW--FTSE looking a bit weaker now:

http://finance.yahoo.com/mo

9:00 am : S&P futures vs fair value:
-3.4. Nasdaq futures vs fair value: -11.0.
Futures indications completely reverse course and now signal a sharply lower open for stocks after further analysis of the core-PCE index questions the possibility of a pause at next Tuesday's FOMC meeting.
Edited by Realistbear

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http://biz.yahoo.com/ap/060801/economy.html?.v=8

P

Consumer Spending Is Sluggish in June

...

The Federal Reserve is hoping to slow the economy enough to keep inflation under control. However, the new report showed the opposing forces facing the central bank. [/indent]

The recent stock market rally has been fuelled in no small part by the expectation that Ben was done with the IRs. But with inflation accelerating? Could stagflation be the next phase for the Western economies?

For what it's worth, given the rather benign yahoo headline, and the recent market bullishness, I think you struck that one about right. Conundrum time for the fed...

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The 2.4 percent rise is well above the Fed's comfort zone of 1 percent to 2 percent for core inflation, which excludes volatile energy and food..../

This has been the fundamental problem with inflation measures here and in the US. They exclude 'volatile' energy costs.

The problem is that since 1996 oil has gone from $10 - $70 now.

There has been nothing volatile about energy costs - they've just been going up.

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So what? Fed has risen umpteen times lately and still sterling goes up against the dollar.

At 1.73 you were calling the collapse of sterling imminent. Now its 1.86.

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Fed has risen umpteen times lately and still sterling goes up against the dollar.

To a large extent that's because America has worse problems than we do. The dollar will only sink faster once rate increases stop, because the world is flooded with the damn things.

At 1.73 you were calling the collapse of sterling imminent.

And it would have done, if the expectation of the markets hadn't changed from hold/cut to raise. It will again if the BoE turn out to be all mouth and no trousers.

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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