US consumers prices rose sharply at the start of the year, a sign of persistent inflationary pressures that could cause the Fed to raise interest rates even higher than previously expected. The overall consumer price index climbed 0.5% in January, the most in three months, supported by rising energy and shelter.…
Forecasting a recession for a bank is key in determining the loan loss provision (predicting loan loss over the life of the loan) under CELA. As an example, JP Morgan Chase & Co, the biggest bank in the US, is setting aside more than $1 billion in preparation for potential…
Milton Friedman famously said: “Inflation is always and everywhere a monetary phenomenon, in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.” Chart I M2 Money Supply Growth Vs Inflation History 1943 – 2022 Chart I Source: Longtermtrends M2…
Chart I For a strong stock market in early 2023, VIX must decline below 20, toward 15. VIX is currently at 18.73. Since fixed income volatility controls the VIX, volatility on the 20-year Treasury ETF (VXTLT) must also decline below 21, which occurred on January 26. VXTLT is currently 19.87 (See…
Table I Percent Changes in CPI for All Urban ConsumersSeasonally adjusted changes from preceding month December CPI has 59% of components in deflation.Wage inflation remains at 3.5%, which is consistent with 2% core CPI (annualized over the last 3 months).December core PPI was reported at +0.1 versus +0.4% last month, and…
