The cost of cooking a classic Pizza Margherita in Italy continues to rise as olive oil prices soar.
Rise in cost of ingredients to make pizza outpaces inflation. Bloomberg custom index shows olive oil price up almost 27%. Source: Bloomberg, HolgerZ
U.K. inflation cooled significantly in June, coming in below consensus expectations at 7.9% annually
Economists polled by Reuters had projected an annual rise in the headline consumer price index of 8.2%, following May’s hotter-than-expected 8.7% reading, but annualized price rises continue to run well above the Bank of England’s 2% target. On a monthly basis, headline CPI increased by 0.1%, below a consensus forecast of 0.4%. Core inflation — which excludes volatile energy, food, alcohol and tobacco prices — remained sticky at an annualized 6.9%, but fell from a 31-year high of 7.1% in May. Source: CNBC
The Three Inflationary Waves of the 1970s
As highlighted by Tavi Costa / Crescat Capital, inflation tends to develop through waves. Just as base effects played a crucial role in reducing inflation rates so far this year, it does not mean that CPI might reach and stay at a low level. Indeed, while the macro environment today differs from that of the 1970s or 1940s, there are some underlying issues which could continue to drive inflation rates higher: ▪️ Irresponsible levels of government spending ▪️ Escalating deglobalization trends, which necessitate the revitalization of manufacturing capabilities in economies. ▪️ Wage-price spiral, particularly driven by low-income segments of the society ▪️ Ongoing supply constraints due to chronic
After adjusting for inflation, US Retail Sales fell 2.5% over the last year, the 8th consecutive YoY decline.
That's the longest down streak since 2009. Nominal retail sales increased 0.5% YoY vs. historical average of 4.7%. Source: Charlie Bilello
Is the yield curve a flawed recession indicator?
While the deeply inverted yield curve has stoked anxiety among investors about the prospect of a recession, Goldman Sachs has a different message: stop worrying about it. Indeed, the bank's Chief Economist Jan Hatzius just cut his assessment of the probability of a recession to 20% from 25%, following a lower-than-expected inflation report last week.
So far, in fiscal year 2023, the US government has a total deficit of $1.393 TRILLION.
In June 2023 alone, the deficit was $228 billion, up from just $88 billion in June 2022. On average, the US deficit has risen by ~$155 billon per MONTH in FY2023. At the current rate, total US debt would rise by $18.5 TRILLION in 10 years. Source: The Kobeissi Letter
Economists polled by German research institute Ifo expect global inflation to avg 7% in 2023, before slightly easing to 6% in 2024.
The avg expectation of 4.9% for the long term until 2026 is still high, Ifo said, though marginally below the 5% estimate in Q1. Lowest level of inflation expectation was recorded in Europe, yet economists do not expect the rate to return to ECB's 2% target by 2026. Source: HolgerZ, Bloomberg
In China, the unemployment rate among young people ages 16 to 24 was 21.3% in June
A new record.
