4 Burst results for "Charlie Biello"

"charlie biello" Discussed on CoinDesk Podcast Network

CoinDesk Podcast Network

05:03 min | 3 months ago

"charlie biello" Discussed on CoinDesk Podcast Network

"Now, in the days leading to last month's print, the market started to get a signal that inflation would be coming in hot. The White House started spitting a full 48 hours before the inflation numbers actually came out. Talking about lagging data and how gasoline was already coming down. This time we didn't get any such spin. Jared dillian writes, a reminder that last time The White House got the CPI print ahead of time and warned us it was going to be high. No warning yet. Does that mean it's going to be low? Well, that is indeed sort of what we got. At 8 30 a.m. on the dot in all caps Joe wiesenthal from Bloomberg tweets, breaking its cool, 0% headline inflation, core rises just 0.3% S&P futures shoot higher. Headline had been expected to rise 0.2% month over month, economists have been looking for a 0.5% core gain. So let's break this down. The headline year over year inflation was 8.5% versus the 8.7% that was expected and 9.1% last month. Core CPI was 5.9% year over year. However, the month over month numbers were even more encouraging. Month over month, headline data was actually flat. In fact, if you don't round, it was actually a little under zero. This is after a 1.3% increase in June. Core was up 0.3%, which was down from a 0.7 percent gain in June. This is the first downside surprise relative to Bloomberg consensus since August of last year. The decrease was driven as expected by gasoline. Gas was down 7.7% in July, but other areas were surprisingly down as well. Utilities were down 3.6 from the prior month, airfare down 7.8% from the prior month, which is its biggest decrease in almost a year, hotels and used cars were also down. Now on the flip side food is still really expensive up 10.9% over a year, and shelter costs continue to rise up 0.5% on the month and 5.7% from last year. In spite of that, however, markets were pumped. S and P futures were up two plus percent. Bitcoin also followed and was up about 2% instantly. Joe wiesenthal again pointed out that this was actually the fourth month in a row of a decline in the year over year core inflation rate. So, as you might expect, there was a lot of peak inflation confirmed type of conversations. Now, one common theme that I did want to point out is that there are a lot of people tweeting some version of, we're stupid to celebrate 8.5% inflation. My feeling on this is sort of, come on, man. People are smart enough to get that markets reacting positively to this isn't because they think 8.5% inflation is good. But because of the direction it seems to be headed. Put differently, there's no path to whatever we think a healthy, normal inflation level is, without going through all the other numbers in between. It's just Triton doesn't really add much to the conversation to be like, yeah, but 8%, 7%, 6% inflation is still bad. We know, but that's not the point. The point at least for the moment is the trendline. That said, there are better concerns than that sort of concern trolling about 8.5% still being bad. First we had the rational still have a long way to go type takes. Claudia Sam wrote about time we got a downside surprise on inflation. Take a deep breath and know we still have a wild ride ahead, sadly. That said I'm thrilled to have the first CPI day in a long time where I don't feel like puking all day. Second, there are many arguments that shelter isn't really well reflected. Charlie biello points to average monthly rent data from apartment list that suggests rent is up 12.4% year over year, and the case shiller U.S. national home price index, which suggests that home prices are up 19.7 percent year over year. Third, there remain big concerns about stagflation. Clinton era treasury secretary Larry summers has been all over TV, talking about why he worries that a slowdown in headline inflation will lead the fed to believe that their policies are working and that their job is done. Speaking with Bloomberg last week, somers said quote, I'm afraid if we have some good news on noncore inflation, that combined with signs of an economic slowdown will lead the fed to think things are under control. We're going to have a situation like we had in the 70s, where we've perpetuated inflation by not doing enough to contain it. We have by any reasonable measure core inflation somewhere and plus or -5%. It's more than when Richard Nixon implemented price controls. This is not acceptable by any dimension. I don't think the fed has the wire right now. Without significantly raising real interest rates, which are adjusted for some measure of inflation, then we are just setting the stage for stagflation. Paul krugman sort of agreed, saying the good news we are about to get on near term inflation is not proof that the strategy has ever worked and alas. It offers no justification for an easier pivot to money. Now part of this stagflation argument is about productivity. The Labor Department figures released on Tuesday showed that productivity, which is a measure of non farm business employee output per hour, had fallen at 4.6% annualized in the last quarter after falling at a 7.4% pace in the first quarter of the year. These are the weakest back to back results since 1947, and the largest year on year drop in output on record.

Joe wiesenthal Jared dillian White House
"charlie biello" Discussed on CoinDesk Podcast Network

CoinDesk Podcast Network

04:55 min | 4 months ago

"charlie biello" Discussed on CoinDesk Podcast Network

"February 20 20 peak in economic activity, the committee concluded that the subsequent drop in activity had been so great and so widely diffused throughout the economy that, even if it proved to be quite deep, the downturn should be classified as a recession. So basically what they're saying here is that it's not just about two consecutive quarters of economic decline in growth, for example. But it can be about a number of indicators and in fact, those indicators going down very aggressively could mean that even if they only were down for a little while, the NBER might ultimately categorize that as a recession. The definition goes on. Because a recession must influence the economy broadly and not be confined to one sector. The committee emphasizes economy wide measures of economic activity. The determination of the months of peaks and troughs is based on a range of monthly measures of aggregate real economic activity published by the federal statistical agencies. These include real personal income less transfers, non farm payroll employment, employment is measured by the household survey, real personal consumption expenditures, wholesale retail sales adjusted for price changes and industrial production. There is no fixed rule about what measures contribute information to the process or how they are weighed in our decisions. In recent decades, the two measures we have put the most weight on are real personal income, less transfers, and non farm payroll employment. So this will obviously be significant as we talk about whether there can be a recession in the context of what seems like a strong labor market. The NBER is basically saying that non farm payroll employment has been a key factor in how they determine recessions, which means that they might be on the side of there isn't a procession right now. But here's the real key. Quote, the committee's approach to determining the dates of turning points is retrospective. In making its peak and trough announcements, it waits until sufficient data are available to avoid the need for major revisions to the business cycle chronology. In determining the date of a peak in activity it waits until it is confident that a recession has occurred. In other words, the NBER is never going to call a recession as it's happening. It views its job as entirely retrospective. It's basically like the time keepers in Loki and effectively useless for the day to today discussion, which might be why people are so much more focused on the traditional two quarters of declining GDP definition. But really, the question is, why does this all matter? I can't tell right now if the obsession about whether we're in a recession or not is strictly a media obsession. In other words, it's something that is important to different media outlets from a narrative and framing and attention gathering perspective. Or whether there is an element of a skeptical populace trying to catch the media or authorities in what they perceive as a lie or intentional obfuscation. In other words, is this discussion being driven just by media who are looking for the next narrative, or is it also being driven by people whose worldview revolves around the assumption of authorities lying to them, and that when politicians or the mainstream media say we're not in a recession, or worse, use this sort of tortured language like The Wall Street Journal did when it said a common definition of recession, they're sure then that whatever the mainstream media or politicians are saying, the opposite must be true. I think this forms a sort of interesting Rorschach test for the state of economic and political discourse. According to a June 16th economist in YouGov poll, 56% of respondents believe that we are going through a recession. Only 22% disagreed in 22% said they weren't sure. Now among those respondents 70 percent of Republicans said the U.S. is in a recession, 56% of independence said we're in a recession and 45% of Democrats said we're in a recession. Crypto trader chubby Korn says kind of feels like they're trying to convince us the car isn't broken down while they're pushing it. I don't know if they're going to be able to hold the facade together until 2024. And I think that tweet gets to the point that recession at this point is sort of just shorthand for economic pain, which it could be argued is more relevant from people's lived perspectives than those technical definitions. There is definitely, however, an undercurrent of animosity and a sense of being lied to or manipulated that has spread all over this discourse on Twitter. David sacks with 9000 likes and counting on this one writes, a lot of people are wondering about the definition of recession. A recession is defined as two consecutive quarters of negative GDP growth if a Republican is president, the definition is far more complicated and unknowable if a Democrat is president. Conan O'Brien tweets The White House now says it's only a recession if you see a salamander wearing a top hat. Zero hedge writes all of the economists who one year ago promised inflation was transitory agree. This is not a recession. Sven Henrik writes weird how two consecutive quarter declines in GDP was a recession each time except this time, and Charlie biello builds on that and says the last ten times the U.S. had two or more consecutive quarters of negative real GDP growth, the economy was in a recession. You have to go back to 1947 to find an exception. WSB chairman writes our government told us inflation was transitory and under control. Now they are changing the definition of a recession so they can tell us we aren't in one. The American people are being gaslighted. Liquidity writes a fake quote from The White House. Well, if you look at the GDP growth on a pro forma adjusted last two week annualized rate run basis, the economy is certainly not in a recession.

NBER chubby Korn The Wall Street Journal Republicans Sven Henrik U.S. Charlie biello Brien Conan White House Twitter David WSB
"charlie biello" Discussed on CoinDesk Podcast Network

CoinDesk Podcast Network

06:31 min | 4 months ago

"charlie biello" Discussed on CoinDesk Podcast Network

"So this week instead of just a deep dive on some topic I haven't had a chance to do yet, we are doing a true weekly recap, looking at the most important stories from the days before and we're going to start with the biggest macro event shaping while everything in markets right now, which was the June inflation numbers which we got on Wednesday. Now if you go back to last month when in the beginning of June we got maze numbers, they kind of took people by surprise. Economists had by and large expected inflation to go down slightly to still be high at 8%, 7.9%, but instead we surprised the other direction, hitting 8.6 in the CPI. In the wake of this surprise markets but especially crypto were absolutely hammered. We're talking Ethan Bitcoin being both down 30 to 40% and other assets going down even more. Remember June ended up being the worst month in Bitcoin's history when it comes to price. Now, when those numbers came in, the fed was widely anticipated to be heading towards a 50 basis point rate hike in June and a 50 basis point rake hike in July. However, at the last minute, the fed started signaling through their preferred channels that they might go up to 75 basis .0 .75% increase in the federal funds rate, and that was indeed what they did. The 0.75% increase was the biggest increase since 1994, and all of that together meant that this month's CPI reports was extremely highly watched. Starting from Monday, The White House was prepping and damage controlling and narrative shifting. Effectively, they were saying expect a really high number, but also just so you know, it doesn't reflect that gas had already been coming down continuously. The argument which they've continued with throughout this week is that the extremes of the number that actually came through was largely backward looking and didn't anymore reflect the reality, particularly when it comes to the price of gasoline. The number that came in Wednesday for the year over year CPI growth was 9.1%. This is the biggest jump since 1981. In addition, the CPI had grown 1.3% month over month. Gasoline, food, and shelter were all big drivers of this increase. Now this certainly reinforced the consensus view that the fed was going to at least stick with their 75 basis point plan. But over the next 36 hours or so, it also increased how much of the market thinks that we're headed to something even more dramatic. By Thursday, the bond market was pricing in more than an 80% probability of a 100 basis point AKA 1% rate hike at the FOMC meeting at the end of July. Keep in mind a week ago there was effectively 0% probability of that showing up in markets and only a 7.6% probability by Tuesday night ahead of the CPI print. Charlie biello pointed out that the last time the fed hiked rates by 100 basis points in a single meeting was 1981. The same time inflation was last above 9% in the U.S.. When a fed governor was asked about the possibility of a 100 basis point rate hike in July, he responded everything is in play. To which Alex Krueger tweeted, guess 100 basis points in July then. Now on top of just this most immediate meeting coming up, expectations of what we're likely to see at the September and November meetings are starting to change as well. Whereas previously, the market had thought that the fall would see smaller hikes of back to 25 basis points or something like that. Those expectations have been revised up significantly. The market is now betting on a 75 basis point hike in September and a 50 basis point hike in November. And good lord the politics around inflation is just brutal for Biden and the Dems. Bloomberg on Thursday wrote Biden calls inflation numbers out of date. Americans disagree. And goes on to say, quote, fed officials took it differently. Federal Reserve bank of Cleveland president Loretta mester said that she had quote not seen any convincing evidence that inflation had turned the corner and fed board member Christopher Waller called the consumer price index report quote a major league disappointment. So will the fed back off. Frankly, it seems unlikely. They are fully on the Jerome Powell is Paul Volcker, not Arthur burns tip. Outspoken investor Bill ackman wrote a long threat about this as well. Quote, implicitly the markets expect a more aggressive fed will push us into recession by year end and then cut rates in response. Fed dot plots from a few weeks ago suggests that the federal funds rate will rise to slightly higher levels remain flat in 2023 with a gradual reduction beginning in 24. After today's move, the disparity between the forward federal funds curve and the fed has widened further. The market appears to assume that the fed will act as it did in the last three recessions by immediately easing when the economy goes into recession. While this seems intuitive, the lessons of the stagflationary periods of the 70s and 80s suggest that different policy response. Today's economic backdrop with high nominal demand limited supply and high inflation is much more comparable to the 70s and 80s experience than that of the last three recessions that are top of mind for investors. Arthur burns legacy is tarnished by his decision to lower rates as real GDP slowed during a period of high inflation. This catalyzed years of massive inflation which was not quelled until Volcker took the federal funds rate to 20%. Burns policy error is well understood by Powell and the fed governors and likely explains their dot plot curves. We believe the fed will keep the federal funds rate at higher levels for longer, even if we enter a recession in 2023 or sooner, and we believe demand will remain elevated, supply will remain constrained, and high levels of inflation will persist. The fed has two blunt tools the federal funds rate and managing expectations. Yearend federal funds projections are beginning to approach where they need to be. Market expectations for federal funds needs to be managed upward beginning at year end, and for the next 18 to 24 months. Markets remain dismissive of dot plots in recent statements by fed governors on the risk of allowing inflation expectations to become unanchored. I expect the market will adjust federal funds expectations upward as the fed provides more clarity and emphasis on the need for higher rates for longer, and when market participants carefully review the 70s and early 80s precedents and their comparability to current economic conditions. The reason it's worth reading this whole thing is one, it actually gets at the nut of what I think the fed is thinking about, which is this comparison to the 70s. And two, because in many ways, people like Bill ackman saying this out loud gives them effective cloud cover from Wall Street to continue on this path. In times like these, security of your assets should be your number one priority. If you want to offset risk as much as possible and still stay in crypto, you need a trusted partner by your side. Nexo is

fed Ethan Bitcoin Arthur burns Charlie biello Alex Krueger Bitcoin Loretta mester Bill ackman
"charlie biello" Discussed on CoinDesk Podcast Network

CoinDesk Podcast Network

05:54 min | 5 months ago

"charlie biello" Discussed on CoinDesk Podcast Network

"Minimum thieves, no ACH transaction fees, and no withdrawal of these. One of the largest exchanges in the U.S., FTX U.S. is also the only leading exchange that supports both Ethereum and Solana NFTs. When you trade NFTs on FTX, you pay no gas fees. Download the FTX app today and use referral code breakdown to support the show. So let's try to bring this back to a discussion of what is happening right now. Where we started that Dixie was up to its highest point in 20 years. However, the big question and topic of discussion really for the last few months is whether this represents U.S. strength or just weakness in the other currencies, namely the Euro and the Japanese yen. Put differently, are people fleeing risk markets for dollars, or are they fleeing other currencies for dollars? Or is it some combination of both? So with that question in mind, let's look at the Euro. The Euro fell to its lowest level in two decades on Tuesday. For a while it looked like it was heading to €1 to $1 parity, but it ended up stopping just short. In total the Euro is down 9% against the dollar so far this year. Now the background of this is pretty clear. Eurozone inflation hit a record 8.6% in June across the entire economic zone. Some areas were hit harder such as Spain at 10.2%. The big story here is, of course, energy inflation, which hit 41.9% for June compared to 39.1% in May. Unsurprisingly, this is related to Russia's war in Ukraine. That said, there's also a policy dimension to this as well. Despite all of this inflation, the ECB still hasn't raised interest rates at all. With the Central Bank's key interest rate still slightly negative and nominal terms and deeply negative and inflation adjusted real terms, the ECB faces in some ways an even more difficult problem than the fed. It has to hold together the monetary union as well as managing monetary policy. Spreads between interest on German and Italian debt have blown out to 2%. Now the ECB appears to believe that they should enforce a 0% spread between Eurozone sovereign debt. To that end, they announced last month they would create a program to purchase weaker sovereign debt. Many commentators point out that this looks suspiciously like doing more QE. And whatever it actually is, the market is super skeptical. Charlie biello writes, Eurozone inflation has moved up to 8.6%. Its highest level ever. Meanwhile, the ECB is still holding interest rates at negative levels. This is perhaps the greatest disconnect between easy monetary policy and unabated rising prices that the world has ever seen. But what about Japan? Japan has been attempting to peg rates at 0.25% all the way out to the ten year bond. This is part of the policy of yield curve control that they've had since 2016. Now a quick note on this term yield curve control. QE quantitative easing, which has been the fed's strategy over the last ten years. It's about injecting liquidity by purchasing bonds on the open market. This brings the prices of those bonds up by creating a new source of demand and in so doing reduces longer term interest rates and borrowing costs. Importantly though, when the fed does this, they aren't pursuing a specific long-term rate. Yield curve control, on the other hand, is when a Central Bank sets a specific long-term interest rate target, and buys as much as it takes to actually get there. During the last month, the yen has dropped to a 24 year low against the dollar. Down 4% in June and overall, 16% for the year. The Financial Times wrote following a week of setting fresh 20 year lows, the yen continued its descent as traders bet that the bank of Japan will remain the only major Central Bank to maintain ultra loose monetary policy despite its counterparts in the U.S. and Europe, entering an interest rate raising cycle. Also from FT quote on Friday the bank of Japan, ministry of finance and financial services agency issued a rare joint statement expressing concern over the yen's steep slide against the dollar. The yen has fallen more than 20% against the dollar over the past 12 months. And this brings us back to the original debt servicing concern. Jim Bianco in April of this year wrote the biggest story that no one is talking about is the incredible pressure building in the Japanese government bond and currency markets. What happens if it blows up? The bag of Japan has been operating with yield curve control since September 2016. This Japanese government bond intervention is coming with a high cost. The Japanese yen has been collapsing. Awakening yen is very bearish for the U.S. ten year treasury. Japan owns more U.S. treasuries than any other country even China. To continue buying U.S. treasuries takes more and more yen because their currency is weakening against the dollar. So the BOJ can prevent the ten year Japanese government bond from rising or the yen from collapsing, but they can not do both. For now, the BOJ picked preventing the ten year Japanese government bond yield from rising. But if the yen keeps weakening, will the markets force them to abandon yield curve control? A couple more economic spotlights before we head out. Much of the focus during this Eurozone weakness has been on Germany. They are under pressure from increases in natural gas prices that are leading to limits on industrial production. In May, Germany printed its first trade deficit in 30 years. Indeed, it's consistently high level of export surplus had led it to be referred to as the engine of Europe. It now appears that that engine is grinding to a halt. In May they saw a trade deficit of €1 billion compared to a surplus of over €15 billion a year ago. Yasmin fahimi, the head of the German federation of trade unions, said over the weekend, entire industries are in danger of collapsing permanently because of the gas bottlenecks, aluminum, glass, the chemical industry, such a collapse would have massive consequences for the entire economy and jobs in Germany. In the UK now inflation is also at record levels. Inflation hit 9.1% in May, which was the highest level in 40 years. Energy and fuel inflation are already excessively strong and food inflation is forecast to rise to 15% over the summer. Unlike the ECB, the Bank of England has already aggressively hiked rates.

ECB U.S. Solana NFTs Japanese government BOJ Central Bank fed Charlie biello Japan