BREAKING: The Fed's preferred measure of inflation (Core PCE) moved down to 2.6% in May, in-line with expectations and the lowest since March 2021.
Core PCE inflation fell to 2.6%, in-line with expectations of 2.6%. So Both headline and Core PCE inflation declined last month. Another welcomed sign by the Fed. Note that "Supercore" PCE rose by 0.1% in May, its smallest monthly increase since August 2023. Health Care (light blue) was the dominant contributor, and 5 of the main sub categories actually declined (if it wasn't for soaring health insurance costs, supercore would be negative). The Fed Funds Rate is now 2.7% above Core PCE, the most restrictive monetary policy we've seen since September 2007. Source: Charlie Bilello
According to BofA fund managers survey, the biggest tail risk is still higher inflation.
WHAT IF the true risk is UNDERESTIMATING the current disinflation trend? PCE numbers today will give us more clue about where inflation is going next? Source: Ryan Detrick
BREAKING: Walgreens stock, $WBA, crashes nearly 25% after drugstore chain cuts profit guidance due to "challenging" consumer environment.
"We assumed the consumer would get somewhat stronger” but “that is not the case,” Walgreens CEO said. Walgreens cut their earnings per share outlook by 12.5% yesterday. The stock is now down 88% from its all time high and 55% in 2024. Another sign that consumers are struggling? Source: The Kobeissi Letter
% Increase over the last 5 years...
US Money Supply (M2): +42% Average US New Home Price: +44% "Inflation is always and everywhere a monetary phenomenon." - Milton Friedman Source: Charlie Bilello
🚨CANADA INFLATION UNEXPECTEDLY RE-ACCELERATES.
May CPI +2.9% vs 2.6% expected. Did they cut rates too soon? Should the Fed worry about cutting too soon as well? Source: CTV News
CAUTION: In the US, Credit card interest rates have skyrocketed to a shocking 21.47%
Moreover, credit card debt has crossed the $1 trillion mark. And personal interest payments have risen to over $500 billion. To make things worse, excess savings have now run out Source: Game of Trades
BREAKING: The CBO has raised the US government's deficit forecast for Fiscal Year 2024 from $1.5 trillion to $1.9 trillion, or 6.7% of GDP.
This would be the highest deficit since 2021 when the deficit hit $2.8 trillion in response to pandemic lockdowns. By 2034, the deficit is expected to reach $2.9 trillion or 6.9% of GDP, totaling a whopping $22.1 trillion over the 2025-2034 period. The CBO projection also assumes that net interest will reflect over 50% of the budget deficit over the next decade. These numbers all assume no recessions and lower interest rates. What happens if rate cuts are delayed and a recession hits? Source: The Kobeissi Letter, CBO
The Citi US economic surprise index has fallen to about the most negative since 2022
h/t @daniburgz, Liz Abramowitz, Bloomberg
