😨 Well, that’s not good…
Maybe "Too late Powell" is that that late... • PPI: 3.3% YoY vs. 2.5% est. • PPI: 0.9% MoM vs. 0.2% est. • Core PPI: 3.7% YoY vs. 3.0% est. • Core PPI: 0.9% MoM vs. 0.2% est. ‼️This is PPI MoM hottest since March 2022 as services PPI explode higher Over half of the increase is attributable to margins for final demand trade services, which jumped 2.0% 🤢 Our take 👇 ▶️ The higher than expected producer prices seems to confirm the underlying price pressures in the service sector already exhibited in the consumer price indices ▶️ This is bad news for the hashtag Fed in his fight against inflation. Market expectations for several key rate cuts in the next months will likely get partially priced out now. ▶️ We stick to our view that the current trade and overall economic environment in the USA will not let the US-Fed to lower its rate by more than 1 cut for the remainder of the year.
Nuclear reactors under construction around the world.
Source: zerohedge
😨 China’s economy slowed across the board in July with factory activity and retail sales disappointing, suggesting the world’s No. 2 economy is losing traction
‼️ China Retail Sales rose 3.7% Y/Y in July, well below consensus of 4.6%. This is the weakest reading since November 2024. On a month-over-month basis, retail sales declined for a second consecutive month, by -0.1%. ‼️China Industrial Production rose 5.7% Y/Y in July, missing consensus of 5.9% and slowing from June's 6.8%. This marks the weakest pace of growth since January. The sequential M/M growth rate also slowed to 0.4%. 🔴 China Economic data👇 ▶️ July retail sales 3.7% y/y [Est.4.6%] ▶️July industrial growth 5.7% y/y [Est.5.9%] ▶️Jan-Jul fixed asset investment 1.6% y/y [Est.2.7%] ▶️ July Unemployment 5.2% [Prev. 5.1%] Note that while China's industrial production continues to run well above the pre-COVID trend, real retail sales have diverged further away from the pre-COVID trend. Source: Augur Infinity
An important remainder by Otavio Costa
Inflation data came in hotter than expected, but it is not just about tariffs. Inflation is fundamentally a monetary phenomenon. You don’t solve it with a 7% fiscal deficit and a money supply hitting record highs. Source: Tavi Costa, Bloomberg
The majority of managers (via the BoA survey) see a return to QE or YCC to deal with the super-sized fiscal deficit.
This will be CPI inflationary, but with 10y bond yields pinned to (say) 4% maybe stocks might like that outcome for a while, before reality hits home. Source: Albert Edwards, H/T @johnauthers, BofA
The us budget deficit disaster continues with renewed momentum.
Source: zerohedge through Peter Mallouk on X
‼️Mixed US inflation numbers.
Headline number steady. Core picked up. Services is strong. Supercore accelerated further. US CPI inflation accelerated slightly less than expected in July on an annual basis as President Donald Trump’s tariffs showed mostly modest impacts. ▶️ The consumer price index increased a seasonally adjusted 0.2% for the month and 2.7% on a 12-month basis, the Bureau of Labor Statistics reported Tuesday. That compared to the respective Dow Jones estimates for 0.2% and 2.8%. ▶️Excluding food and energy, core CPI increased 0.3% for the month and 3.1% from a year ago, compared to the forecasts for 0.3% and 3%. Federal Reserve officials generally consider core inflation to be a better reading for longer-term trends. ▶️A 0.2% increase in shelter costs drove much of the rise in the index, while food prices were flat and energy fell 1.1%, the BLS said. Tariff-sensitive New vehicle prices also were unchanged though used cars and trucks saw a 0.5% jump. Transportation and medical care services both posted 0.8% moves higher. ▶️Tariffs did appear to show up in several categories. 👉 For instance, household furnishings and supplies showed a 0.7% increase after rising 1% in June. 👉 However, apparel prices were up just 0.1% and core commodity prices increased just 0.2%. 👉 Canned fruits and vegetables, which generally are imported and also sensitive to tariffs, were flat. Note that both overall CPI and core CPI hit the highest level since February Source: CNBC, Charlie Bilello
‼️ An important item of today's CPI
The super-core measure, which is probably the Fed's most closely watch component, did increase further in July: +0.48% MoM (prior +0.21%) and +3.21% YoY (prior +3.02%). This is the largest annual increase since February. ▶️ As highlighted by Lawrence McDonald on X, the Supercore has been higher than 3% for four years vs. below 3% for the previous 8 years pre-2020. Source: Lawrence McDonald, Bloomberg
