WASHINGTON (MaceNews) – This current month and in May is when the inflation rate is finally going to hit the Fed’s target of 2% and we begin riding the “transitory” express, waiting for the ride back down.
At least that’s what Federal Reserve Gov. Lael Brainard told us late last month about negative comps. “The well-anticipated base effects from price declines in March and April of last year will cause inflation to move above 2 percent in April and May,” she said March 23.
And it was just Thursday when Fed Chair Jay Powell told an IMF session, “We’ve had roughly 25 years of inflation dynamics where inflation has been low … and “now we have a situation where economies are reopening; there will be a surge in demand perhaps, bottlenecks perhaps, (but) that’s unlikely to change inflation psychology.” He’ll doubtless repeat that on “60 Minutes” Sunday evening and next Wednesday, before the Economic Club of Washington.
In the world of delayed government data, the Consumer Price Index Tuesday will still be back in March, too soon perhaps for any consumer inflation spike. That wasn’t the case for business inflation which through March hit a super-hot annual increase of 4.2%, mostly because of gasoline prices and profit margins.
Accelerating inflation, when and if it arrives, won’t be particularly unwelcome especially if it indeed is “transitory.” The March retail sales report on Thursday is unlikely to disappoint. Housing starts on Friday could lack some energy, but at a production level that’s among the best in years.
The Dow and the S&P ended the week at record levels. Massive amounts of government “Rescue Plan” money are landing in bank accounts. JP Morgan’s Jamie Dimon told us this past week he sees boom times possibly lasting until 2023. The U.S. 10-year yield has stayed below 1.7%. The VIX “fear index” has dipped below 17 three times during the week, and stayed there.
Pessimistic prognosticators have nowhere to go except to warn of that fearsome threat: complacency. Whoever bought all those VIX calls for July, hedging against some Armageddon scenario, probably just had an upset stomach.
So the tendency to ignore the clouds that are still wispy and ill defined on the horizon is hard to resist.. Those 100,000 Russian troops on Ukraine’s border. China’s fly-bys along Taiwan’s coast. The fact we’re entering the three to five weeks in which we’ll learn if another virus surge is indeed upon us, going national. The escalating deficit to be reflected in Monday’s March Treasury budget statement.
Let’s just look out the window and realize spring is really here. The many data points in the week ahead are listed below, including Friday’s visit to Washington by Japan Prime Minister Suga, fortified by a Consumer Confidence index for his country that in the past week reached a 13-month high.
Upcoming Economic Data and Federal Reserve Events
Sunday, April 11 – 7p ET Fed’s Powell on CBS’ “60 Minutes”
Monday, April 12 – 2p ET March Monthly Treasury Budget
Tuesday, April 13 – 6a NFIB small business optimism index
Tuesday, April 13 – 8:30a March Consumer Price Index
Wednesday, April 14 – 8:30 US March import-export prices
Wednesday, April 14 – Noon ET Fed’s Powell at Economic Club of Washington
Wednesday, April 14 – 2p Fed’s Beige Book survey
Wednesday, April 14 – 3:45p Fed Vice Chair Clarida at Shadow Open Mkt Comte
Thursday, April 15 – 8:30a Wkly Initial Claims
Thursday, April 15 – 8:30a US March retail sales
Thursday, April 15 – 8:30a Philly Fed manufacturing index
Thursday, April 15 – 8:30a NYFed’s Empire State mfg index
Thursday, April 15 – 9:15a Fed’s March industrial production
Thursday, April 15 – 10a US business inventories
Thursday, April 15 – 10a US NAHB Home Builders Index
Friday, April 16 – 8:30a US March housing starts
Friday, April 16 – 10a UMich consumer sentiment
Friday, April 16 – Japan PM Suga visits White House
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Contact this reporter: denny@macenews.com.
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