Animal Spirits: Peak Inflation

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Posted December 14, 2022 by sean

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Inflation is still too high (7.1%), but there are lots of encouraging signs it’s trending down…

Monthly growth slowed to just 0.1%
Gas -2% in November
Utilities -1.1%
Used cars -2.9%
Airfare -3%
Food 0.5% –> slowest in months
**Services inflation without shelter was flat** pic.twitter.com/dmfYYU6QYY

— Heather Long (@byHeatherLong) December 13, 2022

Core CPI over the last three months, annualized: +4.2%.

That number peaked at +7.9% in the April to June quarter.

— Neil Irwin (@Neil_Irwin) December 13, 2022

This is the chart you need to watch from here on out.

Goods inflation is slowing.

Services inflation isn’t.

The Fed has more control over services inflation. pic.twitter.com/qnbH9PLXQr

— Callie Cox (@callieabost) December 13, 2022

The Atlanta Fed’s Wage Growth Tracker, updated today, shows pay growth for job switchers moved up last month

Hourly wage growth rose 6.4% from a year earlier (unchanged from October) for all workers, but ticked up for job switchers—8.1% from 7.6% https://t.co/PDcoMi2iaI pic.twitter.com/stuTaCXWZc

— Nick Timiraos (@NickTimiraos) December 8, 2022

“Pessimism reigned, inflation raged, Fed tightened + investors revalued downward. But resultant bear market was a mild one as bears go. If it ended on Oct 12, the S&P 500 actually was in bear-market territory—down more than 20%—for only 45 days of the 282-day span.”

–@yardeni

— Barry Ritholtz (@ritholtz) December 5, 2022

Buying risk assets at the point of the last rate hike has been profitable in environments with declining inflation.

Nice case for a tailwind after March or so. pic.twitter.com/JHdMypZExu

— Tom Dunleavy (@dunleavy89) December 9, 2022

Among US stock funds, there have been 11,517 funds that have had at least one five-year return since 1997. Those funds had 132,210 five-year measurements vs. their style-specific indexes over that span. They beat the index in 50,564 of those instances, lagged in the other 81,646.

— Jeffrey Ptak (@syouth1) December 10, 2022

People never seem to commend oil companies when gas prices decline.

— John Arnold (@JohnArnoldFndtn) December 8, 2022

Yesterday’s $RH earnings call with CEO & Chairman Gary Friedman was, mildly speaking, bearish. We have in this thread curated the 16 best quotes 🧵

1. The housing market is in a “free fall”: pic.twitter.com/js43PO9BR4

— Quartr (@Quartr_App) December 9, 2022

Housing starts fell off a cliff in November. Many home builders in our monthly survey hitting the pause button until costs drop.

— Rick Palacios Jr. (@RickPalaciosJr) December 7, 2022

John Burns: “In early December, 75% of nationally surveyed home builders confirmed they are buying down buyers’ mortgage rates to make payments more affordable.”

— Bill McBride (@calculatedrisk) December 9, 2022

Yesterday’s $RH earnings call with CEO & Chairman Gary Friedman was, mildly speaking, bearish. We have in this thread curated the 16 best quotes 🧵

1. The housing market is in a “free fall”: pic.twitter.com/js43PO9BR4

— Quartr (@Quartr_App) December 9, 2022

Here’s a chart that puts current credit card debt levels in proper context.

As a % of total salaries & wages, even at these higher nominal levels, credit card debt is lower than at any time in the last 20+ years (except for plunge during the pandemic). pic.twitter.com/gDUj3fGswV

— Bill (@wabuffo) December 7, 2022

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Animal Spirits: Peak Inflation

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