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.
According to new US government data, annualized interest payments on US debt just crossed $900 BILLION for the first time in history
Government spending jumped 15% in June, the same month we had the debt ceiling “crisis.” Ironically, in the same month we had a debt ceiling crisis, US Federal spending hit a near record and annualized interest expense crossed $900 billion. Source: The Kobeissi Letter
