Couldn't agree more that the market reaction is all that matters... but a print of 0.4 would almost certainly be devestating for the market, as mcurto seems to hint... The risk reward here slanted bearish, with a consensus 0.2 fully priced in, and little chance of a suprise downward. On the other hand, a 0.3 print would definitely put it above Fed's comfort level...
I read somewhere that wage growth was revise up to ~+9%/annum. That is the decisive number for core inflation 'cause once the wages start rising it hits everything and is a direct reflection of 'inflation expectation.' Someone want to correct/back me up on that?
It did not seem to get much follow through because most of the revision was due to financial services wages. All of the Wall St. bankers/traders and hedgies cashing their 7-8 figure bonus checks. Not really a big surprise given that the Manhattan property market is still very robust at the high end.
Seems like the liquidity kick from the anticipated rate pause/easing is over. Oil down, $xau down over 6% today and 13.33% the last 4 days. Inflation fear seems to have disappeared. I donât think bonds will rally more until, the economy gets real slow, or short term rates are actually lowered.
Wage inflation makes up a huge chunk of the CPI number, and for good reason... You're in trouble when you're able to start negotiating higher raises... speaking of which, I need to sit down with the boss and talk compensation soon...
I just received a copy of John Mauldin's Outside the Box newsletter. This issue he focused on an article by John P. Hussman, Ph.D., President of Hussman Investment Trust. The part that struck me and matches what others have posted recently is the following snippet: "The recent inflation data is another area in which investors are magnifying the trivial. For the most part, the excitement about "moderating inflation" in recent weeks has been based on the thinnest "positive" surprises, generally on the order of rounding error. Last week's upward revision in 2 nd quarter unit labor costs threw a bit of cold water on that excitement, as year-over-year figures exceeded 5%. Given that initial disappointment in the "inflation is going away" thesis, Friday's CPI data will be interesting. Yield curve inversions, as we have at present, have historically been associated with much higher short-term inflation pressures than normal yield curves. The consensus estimate is for a 0.2% increase in the August CPI. My guess (which we don't invest on and neither should you) is that the actual figure will come in well above that. In any case, despite the fact that monthly CPI data is fairly noisy, a favorable surprise may be harder to come by this time around." Thoughts or comments? (On Friday 07 Sep, I went short 2 ZB's at 110 23 and I'm still holding.)