Are us financial conditions becoming too easy to tame inflation ?
Source: Bloomberg, Steno Research, Macrobond
As highlighted by Tavi Costa, today’s US infrastructure spending is likely to dwarf what we experienced during the rebuild period post-WWII by the US and the rest of the world.
Escalating geopolitical tensions and growing disagreements among nations are incentivizing countries to bolster their self-reliance in domestic operations. These circumstances are poised to catalyze what could evolve into one of the most ambitious infrastructure initiatives in history, with the potential to be highly inflationary. The last major infrastructure push in the United States occurred in 1956 with the National Interstate and Defense Highway Act under President Dwight D. Eisenhower. Initially budgeted at $25 billion, equivalent to approximately $207 billion in today's currency. This initiative pales in comparison to the recent Infrastructure Investment and Jobs Act, which authorizes government spending nearly six times that amount, totaling $1.2 trillion. The chart below also considered the Inflation Reduction Act passed in 2022, expecting a significant portion of those funds to be directed towards new infrastructure projects, including those associated with the green revolution and other initiatives. Sources: Tavi Costa, Crescat Capital, Bloomberg
us households equity allocation is at record high
Source: Goldman Sachs
US Rate-cut expectations were revised downward last week.
For the first time this year, markets now only see 3 interest rate cuts in 2024. This also happens to be the first time that markets align with the latest Fed guidance. Odds of a rate cut in this week are down to 2% and odds of a rate cut in May are down to ~7%. Just 3 months ago, markets saw SEVEN rate cuts in 2024 with rate cuts beginning this month. Source: The Kobeissi Letter
us bank deposits have stabilized and risen since the 2023 banking panic, showing that confidence is slowly returning.
Source: BofA, Markets & Mayhem
The US is now producing more oil than any country has in history
Source: Michel A.Arouet, Chartr
Where Inflation Is... and Isn't ...
source : yahoofinance, acemaxx
The US Producer Price Index surged by 0.6% MoM in February 2024, marking the largest increase since August and surpassing expectations.
Goods prices rose notably, led by a 4.4% surge in energy costs. Meanwhile, services edged up by 0.3%. Despite a slowdown in core rate growth, yearly inflation accelerated to 1.6%, surpassing forecasts. YoY: 1.6% vs 1.1% est. MoM: 0.6% vs 0.3% est. Core YoY: 2% vs 1.9% est. Core MoM: 0.3% vs 0.2% est. Bottom-line >>> PPI came in stronger than expected driven by a surge in energy costs and higher insurance costs among other categories. Not a breakout to the upside, but declining trend is leveling off.
