You Gotta Be Kidding Me....
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2023-05-10 08:44 by Karl Denninger
in Macro Factors , 679 references Ignore this thread
You Gotta Be Kidding Me....
[Comments enabled]

Inflation, first....

The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.4 percent in April on a seasonally adjusted basis, after increasing 0.1 percent in March, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 4.9 percent before seasonal adjustment.

Remember me pointing out that gasoline was wildly down right in front of the last CPI but had been trending back up, and as a result that would come back out?  It did.

The index for shelter was the largest contributor to the monthly all items increase, followed by increases in the index for used cars and trucks and the index for gasoline.

Gee, all those are optional purchases, right?  Oh, wait......

All items less food and energy was up 5.5% annualized, which is wildly above Fed "target" of course.  Yet the instant reaction in the futures was to spike higher.  Not a lot, but spike it did and the all items less food and energy trendline is basically flat since December.  At this sort of rate of change The Fed will be hiking rates for about two more years and they'll be around 8% or so with quarter-point hikes every time until that happens.  Of course that's not what the market thinks.

Worse is this:

Real average weekly earnings decreased 0.3 percent over the month due to no change in real average hourly earnings being combined with a decrease of 0.3 percent in the average workweek.

Yep, there's no hourly earnings change in real terms (they're going up as fast as inflation) but the workweek is being cut which I've pointed out has been in the BLS data for quite some time.  The last jobs report suggested this might be leveling off.

This report says no, that was a blip and is not fact.

Employers are cutting hours and what you're paid an hour is immaterial.

What matters is the size of your weekly check and it is going down in real terms to the tune of about 4% a year.

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Comments on You Gotta Be Kidding Me....
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Invisiblesun 743 posts, incept 2020-04-08
2023-05-10 09:06:40

Higher prices, lower earnings .... The economic ship is taking on water and will soon hit the rocks. Of course that means buy more stocks!

Don't forget all economic numbers are fiction when first reported. True numbers get reported 3 months later.

Also don't forget the entire government game is to blame the other party. Biden is itching for the opportunity to blame the GOP for the financial collapse that will hit when the bill for all the reckless spending of the 2020s comes due. His refusal to negotiate on the debt ceiling makes perfect political sense. Bidens BATNA is a depression and he is willing to go there.
Iou 1k posts, incept 2009-03-16
2023-05-10 09:06:47

Time is running out for the party goers. Let the hangover begin...

"When plunder becomes a way of life for a group of men living together in society, they create for themselves, in the course of time, a legal system that authorizes it and a moral code that glorifies
Mikivoja 25 posts, incept 2021-09-20
2023-05-10 09:39:18

In Europe there is also the theory that this inflation is just due to the monopolistic businesses basically over-expanding margins:

Cmoledor 2k posts, incept 2021-04-13
2023-05-10 09:39:24

Always grateful Karl. You break it down so I can grasp it. Fuck I owe you some drinks. Cheers man!!

The whole world is one big fucking scam
Full throttle till the end. Ocdawg
Take the stick you tried to beat me with and go fuck your own face. Ishmael
Msbeaty 24 posts, incept 2022-10-01
2023-05-10 09:39:29

I listen to a varried source of news and information. One of the sources in the car is NPR, which is sometimes intolerable due to the extreme gaslighting. Just like how it is explained in the "Guard your mind" series of posts, I have picked up on some recently recurring themes in the news. One of them is the insistence that the debt ceiling fight could lead to a recession and the other is that there is risk of recession, shortly followed by stating how good unemployment is.

It is obvious that we are headed to a recession or worse, and the people in charge know it even when they deny it. They are merely setting the stage to use the debt cowling fight as the scapegoat since they can pin it on the other team.

What matters is the size of your weekly check and it is going down in real terms to the tune of about 4% a year.

The part about the unemployment is laughable as well. What good does employment do if you are falling further behind even with a job as Karl explained. This will no doubt be used to the democrats advantage. See the recession must be the fault of the Republicans, we had record low unemployment before they started the debt ceiling fight. The media lapdogs will eat this story up meanwhile the masses will just get further behind. Prepare yourself for the narrative being set. It will only get stronger at each successive sign of trouble in the system.
Ronniemcghee 416 posts, incept 2012-07-28
2023-05-10 10:45:06

Bloomberg analyst, Liz Young SOFI Head of Investment Strategy, sayin' gonna be a Fed pause.
Of course, this is the same channel that is giving face time to AlGore about the climate change crisis ~ and we all gonna die.

Media_guy 63 posts, incept 2021-10-15
2023-05-10 10:45:10

JPOW to the markets
Twainfan2 1k posts, incept 2018-12-04
2023-05-10 10:45:15

Well that should quell the talk about a pivot. I just dont see Powell being able to stop even if he wanted to. Given where I work, inflation is crushing a lot of people. The applications for snap, cash assistance et al are through the roof.
Synopsis 96 posts, incept 2010-02-05
2023-05-10 10:45:25

The cost to borrow money is going up, which means the ROI needs to go up to justify the borrowing. This will weed out businesses.

Within large multi national corporations there are many business units.

These business units have some offerings or projects that were tolerable when money is cheap. It is almost like a business startup incubator with hopes that they would turn profitable over time. That luxury is going away and it is starting to sink in with the accountants. You will begin seeing layoffs from the large fortune 100 type of companies within these unprofitable business units. The companies will become more defensive and take capital away from these pet projects and give the capital to units that can make a return on it.
Clay3482 2k posts, incept 2008-11-13
2023-05-10 10:45:40

Anyone who thinks the Fed will stop raising has shit for brains. 4.9 with .4 m over m is unsustainable. They have to raise until capitulation. KD is right.

Remember we were up 7% y over y 12 months ago. We are still at 5 over that print. That is 12% in 24 months. Riots coming soon if they don't get it under control.
Ee4fire 1k posts, incept 2011-03-24
2023-05-10 12:13:56

Just think, there are tens of thousands of illegals ready to flood over our border tomorrow. This will help wages increase - NOT. But, Mayorkissmyass is saying the border is secure. That man needs to be gibbetted. It is what they did to pirates when they were caught.

The USA is being ground down and the pace is picking up. Heads should be rolling.

(Politicians), 536 commoditized temple monkeys pawing through the ruins of America in search of bribes. (The District of Corruption) works like a vending machine. You put coins in the slot, select yo
Dingleberry 721 posts, incept 2011-11-06
2023-05-10 12:14:06

So this makes what.....2 years plus with neg real wages? And that is even using the fake CPI numbers!

Bailouts, stimis, all and sundry woke & "green" bullshit and all adds up kids.

I have learned that you cannot outrun inflation for the most part. It is like the wind or the tide. It eventually gets to you too. Even if you "make" money on your house....the roof job will cost triple over time, same with AC, water heater, etc. etc. etc.

And as a bonus.....apparently we will soon will have another million (or ten) illegal guests (and future dem voters) coming over and/or through the river and fence to join us....who's gonna pay? Wonder what that will do to wages and hours? Hmm....maybe ask the construction or trucking industry.

Prices are going to remind high, so rates have to rise. What will this do to banks? I am told they are seriously upside down with near-ZIRP long-dated paper. Mark to market anyone?

I for one would LOVE to see bona fide deflation...for once in my fucking life. Instead of the constant inflationary theft that we deal with 24/7/365.

Maybe this time will be different?

Long popcorn.

Tickerguy 195k posts, incept 2007-06-26
2023-05-10 12:16:28

Yep @Dingleberry -- its roughly -10% right now for the average prole in real terms. Somewhere between here and -20% is where the bottom half of the nation in terms of income-earning capacity choose between hunting people for food and their property to burn for heat and privation to the point of being at literal risk of life.

The decision as to which course of action you pursue in that instance is logical and, if the politicians allow it, they deserve the outcome. It is trivially foreseen and deliberately caused and/or ignored, and thus there is no accident about it, nor any excuse for it.

The difference between "kill" and "murder" is that murder, as a subset of kill, is undeserved by the deceased.
Shadowmask 5k posts, incept 2021-05-24
2023-05-10 12:35:43

But we were just reliably informed yesterday by an idiot who can't do basic math or perform logic that part-timers just need to pull themselves up by their bootstraps harder.

The learning curve for being dead is steep, but everyone gets it down pat on the first go usually.--Thystra, March 28, 2023 527 posts, incept 2021-12-17
2023-05-10 13:01:41

Shadowmask wrote..
But we were just reliably informed yesterday by an idiot who can't do basic math or perform logic that part-timers just need to pull themselves up by their bootstraps harder.

@Shadowmask -- Honestly, it's so tiresome, and has become extraordinarily grating to me: Blame the worker! Nobody wants to work! How dare they steal from the company by not volunteering unpaid labor! Well, if they wanted livable wages, they'd get a degree! Oh? How's that queer dance theory degree working for you? (Never mind it's a STEM degree...) WHAT!? Student loan forgiveness!? ARE YOU INSANE? WE MADE IT NON-DISCHARGABLE VIA BANKRUPTCY FORA REASON! -- And, to top it all off, the rubbing-salt-in-the-wound of the rhetorical questions: Why aren't the youngsters buying houses? Why aren't the youngsters getting married? Why aren't youngsters getting well-paying jobs? (i.e. all variations of "Pull yourself up by your bootstraps!")

I seriously doubt that anyone making such claims has been in the general job-market in decades... and they certainly aren't considering the impact of inflation on anybody who is "trying to stay afloat" or how it's going to ravage the middle class, throwing huge swathes into "trying to stay afloat" or destitute.

Richebel4481 16 posts, incept 2023-03-23
2023-05-10 13:40:51

I have read that the FED believes that wages/employment is too high and is using rate increases to change that. I guess it's working. Except that inflation hasn't subsided.
Bustedbuck69 524 posts, incept 2009-11-10
2023-05-10 15:02:00

KD wrote..
...The decision as to which course of action you pursue in that instance is logical and, if the politicians allow it, they deserve the outcome....

Yup. Hot numbers in things that are not optional, but lies as REAL NUMBERS are quark-gluon plasma hot.


When is the OR ELSE ?


Up vote if this is possible.

Downvote if this is improbable/impossible.

<Author unknown. Short 1:18>

"---the politicians---they think the laws of mathematics are suggestions." K. Denninger

Never comply. Never forget. Never forgive.
Jw. 669 posts, incept 2019-10-10
2023-05-10 15:02:14

We're getting the double whammy, inflation added to lost income.

Noticed something phenomenal recently, in a bad way. Not only is the discussion about the 'economy' out of politics, to not over spend and borrow is now "dangerous". Pretty freaking amazing just how turned around the financial rhetoric is these days.

Happened to watch parts of a reparations hearing (for a state that never had slaves) and apparently more than a million is insufficient, they want hundreds of millions. Not sure why I was so shocked. Seems this is a pretty decent way to get a bunch of income tax for the state while virtue signaling, however giving everything will never be enough. As a great prophet once said "Once you open that can of worms you'll never get the monkeys back in the barrel..."

We are approaching the second dark age at the speed of light.

The spending must continue, until it can't. 527 posts, incept 2021-12-17
2023-05-10 15:02:30

Richebel4481 wrote..
I have read that the FED believes that wages/employment is too high and is using rate increases to change that.

@Richebel4481 -- This is patently absurd.

There are some people who are trying to frame inflation as a result-of/driven-by wages, but this is observably false: the inflation comes BEFORE a general rise in wages. -- Moreover, we've seen massive fraud and non-enforcement of law to facilitate lower wages: H1B, OPT, illegals, and offshoring all are are forces depressing wages.

We've just hit the point where employers cannot get any return on "Take one for the team!" and "We're considering a promotion/raise for you!" -- They killed off all employee loyalty precisely because they refused to be loyal to their employees. -- They forgot the Bible's saying that "hope deferred drieth the bones" (Proverbs 13:12) & "the laborer is worth his hire" (1 Timothy 5:18), instead opting to use fraud to keep wages from the worker (James 5:4).
Drifter 1k posts, incept 2016-02-11
2023-05-10 15:02:38

@Ed.F-- on the other side of the coin, lazy shitlibs of my acquaintance are REEEEEEEEEEEEEing over 'profiteers'. They loved watching tv during covid, and won't go back to work, and are unhappy their free money is drying up.

I remember the days when dad worked as a teacher, mom stayed home, and we were solidly middle class. Then Jimmah! became prez, and mom had to get a job to keep us middle class. Then dad would need to build a house every summer, to keep us middle class.

I get hard-working people in the office that can barely stay afloat. They aren't lazy or irresponsible; the price of living has far outstripped their wages. My brother door dashes evenings now. He wants to know where these people door dashing a single Dr. Pepper ($12) are getting their money.

I won't be satisfied and invest in the economy until: the over-leveraged have gone chapter 7/11; where shitty banks failed; where people can raise a family on a solo income; and people will bend over to pick up a penny.

3-market-thinker 80 posts, incept 2022-02-06
2023-05-10 15:02:45

Let's hope we can get to positive real rates and destroy all the degenerate parasites skimming off the backs of hard working people.

Fucking sick of these degenerate policies destroying the West.

It's infuriating seeing every Tom, Dick and Harry making ignorant comments about how the young don't work hard enough and if that they just stop paying $5 for coffees then they can buy a house etc.

Just stop with that bullshit.

Let's see governments stop deficit spending and let's reduce the amount credit that can be created into existence both by banks and the shadow banking sector.

Then we will see who will be crying to government for help and handouts and see who the real lazy parasites are.

It won't be the part-time workers and generation Z folk that's for sure.

A few more rate hikes and this starts to get interesting.

2024 should be a blast!!!

Short cockroaches and long labour.

Raven 13k posts, incept 2017-06-27
2023-05-10 15:02:55

The cure for inflation is inflation.

Seems that it is working.

"This guy is fantastically annoying to listen to, but he has some interesting info..." -- Rangeisshot April 26, 2023
Zanker 41 posts, incept 2022-12-06
2023-05-10 16:04:50

So annualized the CPI (manipulated I know) outpaces the fed funds rate by 25 basis points. Does this mean we're close to having positive real rates, or am I being an idiot with this 1 dimensional analysis?
Tickerguy 195k posts, incept 2007-06-26
2023-05-10 16:04:55

Its getting there @Zanker.

The difference between "kill" and "murder" is that murder, as a subset of kill, is undeserved by the deceased.
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