Fed Chairman Powell: Next six months critical for inflation
Jerome Powell was questioned about the state of inflation and admitted that inflation is running scorching “Right now of course inflation is not moderately above 2%, it is well above 2%. It’s nothing like ‘moderately,’” That is an understatement to say the least with every metric coming out surpassing the already raised expectations. However, Powell remained committed to letting inflation surpass the Fed’s 2% goal, and doubled down on the idea that inflation is temporary.
Powel pointed specifically to the used car market whose prices rose by over 10% year over year and accounting for 1/3 of the seasonally adjusted inflation. In June as a case of low supply meeting high demand, where lack of supply of used cars from rental companies, which were shut down from the pandemic and lack of supply from a shortage of chips is happening at the same time as the reopening economy is bringing people back into the car market.
Bottom line, this should not be surprising. Powel remains consistent on saying he will let inflation run hot. He remains consistent on saying he wants to get back to pre-pandemic levels of unemployment. And the fed has been consistent in measuring inflation in wages. But lets be real, if inflation is rising everywhere but wages, it will have a negative economic impact. Its a cost of living tax and people will stop spending as soon as the money runs out.
China’s GDP grew 7.9% in the second quarter; retail sales beat expectations
The growth juggernaut continues to run. This was a miss of the 8.1 expectation but a very solid number none the less for a country who was slowing down prior to the pandemic. The number was boosted by strong retail and industrial growth. On a whole, this number does support the narrative of a global rebound.
Oil majors drag European shares lower, Siemens Energy tumbles
In the pandemic, oil was the go to metric in terms of real time info on how closed or open the economy was. So this what I’m watching for clues as to whether or not the Delta variant is having any major impacts on the global economy.
Mid cap stocks are starting to show signs of pain
I’ll be watching the Russell today and the rest of the week to see if there are any early warning signs for the rest of the market. The Russell Index does have AMC and GME making a larger than normal weighting on the index so keep that in mind should they have any issues.