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Grain Market and Bread Prices - Its Potential TrendIn today’s tutorial, we will track the potential prices of this important staple, wheat, which is used to make our bread. In these studies, we will use a combination of technical analysis and fundamental developments to support this view. Chicago SRW Wheat Futures & Options Ticker: ZW Minimum fluctuation: 1/4 of one cent (0.0025) per bushel = $12.50 Disclaimer: • What presented here is not a recommendation, please consult your licensed broker. • Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises. CME Real-time Market Data help identify trading set-ups in real-time and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
ECONOMICS:USIRYYLong
by konhow
2
Rolling 5-Year InflationInstead of using the monthly inflation print, a 5-year (60-month) SMA is used to chart US inflation. The SMA is used to cut back on noise from “transitory” inflation, giving a better view of the broader inflation environment realized over the past half-decade. Said differently, it illustrates the inflation environment which policymakers and central bankers are/were “dealing with.” For a more short-term-oriented view of regime change, an EMA might be used in place of an SMA. A shorter-term view is likely to be more useful in the context of near-term interest rate cuts. Historically, inflation tends to evolve from one “regime” to another. The implications of a regime change are enormous, and I am growing in my conviction that we are now in a new regime, as evidenced by the SMA breaking through a key level (explained below). Since inflation prints (or, any macro data, for that matter) are a fool’s game to predict with a high degree of precision, I used a pseudoscientific approach which yielded 3.25% as the key level for inflation to “break through” to a new regime. Using 3.25% also gives us a “round” number, making it easier to quickly put inflation prints in context (for me, at least). My commentary and some ideas to consider: Why 3.25% is important: it had not been “breached” since 1996. Put another way: the prevailing inflation environment has reached a level not seen in 28 years. Why is 1996 important? A look back over the past century provides hindsight of when prior inflation regimes began and ended. After the “1970’s” (colloquially), we entered a new era which realized a prolonged downtrend in inflation worldwide. 1996 became a clear demarcation point upon identifying waves of “lower highs and lower lows” in the years since. Further, 1996 roughly coincides with the end of a series of markedly higher “waves” of inflation. I feel it is relevant to also point out the dramatic changes in the world since we last saw 3.25% in 1996. 1. Internet In 1996, the internet as we know it today was in its infancy. This is obviously a change of biblical proportions in the way we live, and never before in human history has the entire world been connected in this manner (i.e., we are the guinea pigs of computing). Entire libraries could be filled with commentary on the internet’s impact on the economy, so I will defer to the experts for opinions. That said, it has generally been disinflationary. 2. Tech Giants Today, the 6 highest weighted S&P 500 stocks account for ~25% of the index. In 1996, of these six, only MSFT and AAPL were “established” companies, and even then, AAPL was in the midst of an identity crisis and was nowhere near the trillion dollar behemoth it is today. As for the remaining four: NVDA was founded three years prior in 1993, and in 1996 laid off ~1/2 of its then-100 employees. GOOG was still a research project of a pair of PhD’s and wouldn’t launch for another two years. AMZN was still in its first year of operations as an online bookstore, a far cry from its monstrous scale today. And, finally, the founder and brainchild of META, Mark Zuckerberg, was 11 years old, and the term social media was still about a decade away from entering even the fringes of society’s lexicon. This is all to say, nearly 1/4 of the proxy for the “equity market” - the S&P 500 - is driven by ENTIRELY NEW “inventions” (or products, services, goods, etc.). In the context of inflation, NONE of these “inventions” have EVER existed in an economy with inflation “above 3.25%.” There is a mammoth amount of capital that is put towards tracking the S&P 500, and in order to balance weights when tracking, it involves the buying and selling of all its constituents together. Having been untested in a transition to a “higher” inflation regime, it remains to be seen how the heavyweights of the S&P will hold up. Should they demonstrate an inability to “absorb” inflation, it would likely result in a broader sell off of the S&P, and would be exacerbated by a rotation to fixed income should interest rates remain elevated and offer yield which is more attractive than uncertainty as to when the “absorption” will occur, if it does at all. 3. China In 1996, China was still in its second stage of economic reforms, privatizing SOE’s, and would not enter the WTO for another five years. The consequences of China’s reforms have been enormous, and are potentially the most important influencer of inflation over the past thirty or so years. Again, this is another topic that could fill a library, and I will not elaborate more. That said, the effects of China’s reforms have been largely disinflationary. It is uncertain whether this trend will continue, as China is now facing a host of serious financial issues which could reach a boiling point. In particular, China is now the dominant player in commodity markets, virtually controlling the supply and/or demand for many of the world’s raw materials. How this interacts with China’s navigation of financial issues is uncertain, but has potential to be highly disruptive to global supply chains, which would push inflation higher. 4. Government Debt The US’ prolonged wars in Afghanistan and Iraq, on which the country spent several trillion dollars over nearly two decades, were still several years from occurring. Unlike other wars in the 20th Century and in recent history, these wars were largely financed through government debt. In the opinion of many, these wars were considered to be failures. Largely agreeing with this notion, the expansion of deficit spending to finance “lost” wars not only diverted monies from useful purposes such as infrastructure and education, but also hastened the government’s need to “inflate away” its debt. According to a paper by Brown University’s Watson Institute, the interest expense alone on the debt used to finance these wars will likely exceed $2 TN by 2030. To put this in perspective, when considering the 2022 federal outlay for highway spending amounted to $47 BN, these interest payments on war debt are roughly equal to FIFTY YEARS worth of federal highway spending. To make matters worse, the debt from the US’ wars pales in comparison to the bonanza in government spending in response to COVID. A whopping $5 TN in stimulus was doled out in a matter of months. It will take years to determine the ultimate effect the stimulus money will have had on the economy’s “intangibles”. For now, it is clear this spending spree has bloated the government’s debt, and input can be argued the US is running a dangerously high Debt/GDP ratio - a bellwether of inflation. How does the government plan to dig itself out of this hole? Logic points towards the path of least resistance, which in this case means “inflating away the debt.” We very well may have already begun to see this process set in motion. Inflation, by its nature, carries political implications, which has often led to charged discourse and sensationalized media headlines. This rings particularly true in election years (this year) and in times of collective struggle (the COVID era). Unfortunately, this can muddy the waters when trying to make sense of the data prints. My aim was to make a simple illustration which can uncover a regime change in inflation. It is up to the user to determine whether the regime change signal holds validity.
ECONOMICS:USIRYY
by ltstrudw
ISM GAUGES POINT TO HIGHER INFLATIONISM surveys show that prices are rising ; during April services and manufacturing prices advanced 10% on average. The problem? Look at the chart comparing these price indexes to the traditional CPI inflation reading, ISMs are usually forward looking. Inflation 2.0 is coming ----------------------------------------------------------------------------------------------------------------- Las encuestas ISM muestran que los precios están subiendo, durante abril los precios de servicios y manufactura avanzaron 10% en promedio. El problema? Mira el gráfico que compara estos índices de precios con la lectura tradicional de inflación CPI, los ISM suelen ser prospectivos. Inflación 2.0 está por llegar
ECONOMICS:USIRYY
by yamilbocanegra
1
⚡️ INFLATION IN THE US WILL GO TO THE SKY 🚀🚀🚀📣 Hello! I believe that inflation in the US will not go anywhere and the 2% target that the Fed has set for itself will not be achievable anymore. Here is a 100-year triangle on the CPI chart and I believe that already in this decade, that is, until 2030, it will be broken up and the Fed will have very big problems. After the triangle breaks up, inflation will soon exceed the peak of the 80th year and soar to 18-20%, then after the correction we will see a new ATH, it will be just inevitable. We can hope, of course, that everything will be fine – no one forbids this to you or me. But we have to be ready for the worst times right now, that's my opinion. ⚠️ Please analyze the information received from me and always think first of all with your own head. I wish you good luck in making your own trading decisions and profit ✊ Bye!
ECONOMICS:USIRYY
by AnonymousTraderAcademy
4
INFLATION REBOUND ?Consumer Confidence vs INFLATION The Red Phase was the fall of the CC which lead the Inflation data fall. -> Of course, when consumers doesn't trust the market, spending fall. The Yellow Phase describes the effect of the CC falling: IF FALL. As leading indicator, the rebound of CC show the expansion which is represented by the Green Phase. -> As we can see, as soon as CC take points, the Inflation rebound too. Not like 2008, this time, CC took 30pts. ⚠️I envisaged a continuation of the fall of the Inflation data but a big chance of rebound in the Inflation. Moreover, the last seen consolidation of the inflation and the rebound of the CC at the pic of the Inflation is worrying. We see Strong Economic datas even showing signs of expansion. This delay between inflation and CC has not been that big during 2008. At the first rate cut there is a big chance of explosion of the Inflation as seen in 2006/2008 or pre-covid. ⚠️
ECONOMICS:USIRYYLong
by ThinkAboutIt75
Improved CPI, but Market Collapse – What is Happening?Just about 1.5 years ago, inflation reached the highest point in recent decades. The January inflation number for 2024 was released on February 13th. Its CPI has improved from 3.4% for December to 3.1%. However, the major US stock indices collapsed more than 1% on the same day. Why is there such nervousness surrounding improved inflation, and what are its implications? Mirco E-minin Dow Jones Futures & Options Outright: 1.0 index points = $0.50 Symbol code: MYM Disclaimer: • What presented here is not a recommendation, please consult your licensed broker. • Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises. CME Real-time Market Data help identify trading set-ups in real-time and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
ECONOMICS:USIRYYShort
by konhow
Exploit the inflation response?In the United State's history of inflation, we can observe a specific pattern anytime the inflation rate spikes. First in 1935, and again in 1969. Each time this happened we saw two additional spikes each about 4.5-5 years apart. Given the recent spike in inflation in 2022, we may again see another two additional spikes in inflation. One around 2027, and another around 2032. Thanks to the recent spike, we were able to observe first hand how the market reacts to the policy response on inflation which is to increase rates. Further - it is likely that when the market reacts unfavorably to the increase in rates, it will bottom out in approximately 10 months like it did in October of 2022 meaning we will be able to have an idea of when to go stop shorting and enter long positions. TLDR: market should pump til' like 2027 all things held constant xD.
ECONOMICS:USIRYY
by The_Gains
1
Core and Headline CPI RELEASED (Dec 2023 figures)Core and Headline CPI (Dec 2023 figures) U.S. Headline CPI Prev: 3.1% Exp: 3.2% Rep: 3.4% 🚨 HIGHER THAN EXPECTED 🚨 U.S. Core CPI Prev: 4.0% Exp: 3.8% Rep: 3.9% 🚨 HIGHER THAN EXPECTED - but still fell from 4% to 3.9%✅ CORE CPI FALLS BELOW 4% FOR THE FIRST TIME SINCE MAY 2021 We have a long way to go before we reach the Fed Target of 2%. Additional info previously shared: Core vs Headline (the difference) You can clearly see how Core CPI is less volatile than Headline CPI on the chart. Core CPI removes the volatile food and energy expenditures to provide the underlying inflation trend. Food and Energy is included in the Headline inflation which as you can see from the chart is much more volatile and changes direction quicker than core inflation. Its almost like an oscillator around the core inflation line. The Feds 2% Target It is clear that we are not at the Federal Reserve’s target inflation rate of 2% on both fronts (purple line). It is critical to understand that we are still not at or below the target 2% level regardless of the FOMC’s determination of a likely hold on interest rates and reductions to interest rates in 2024. Lets see can the target be met first. You can see that since 2002 Core CPI has fluctuated one standard deviation above and below the 2% inflation level between 1% and 3%. It is clear that we are not back into this standardised zone between 1 – 3%.
ECONOMICS:USIRYY
by PukaCharts
Core and Headline CPI (Release Tomorrow Thurs 11th Jan 2024)Core and Headline CPI NEW CPI Figures released tomorrow Thursday 11th Jan 2024 @ 7:30am Central (for the December 2023 month) U.S. Headline CPI Prev: 3.1% Exp: 3.2% Rep: TBC Tomorrow U.S. Core CPI Prev: 4.0% Exp: 3.8% Rep: TBC Tomorrow Will the US Core CPI finally fall below 4% for the first time since May 2021? Core vs Headline (the difference) You can clearly see how Core CPI is less volatile than Headline CPI on the chart. Core CPI removes the volatile food and energy expenditures to provide the underlying inflation trend. Food and Energy is included in the Headline inflation which as you can see from the chart is much more volatile and changes direction quicker than core inflation. Its almost like an oscillator around the core inflation line. The Feds 2% Target It is clear that we are not at the Federal Reserve’s target inflation rate of 2% on both fronts (purple line). It is critical to understand that we are still not at or below the target 2% level regardless of the FOMC’s determination of a likely hold on interest rates and reductions to interest rates in 2024. Lets see can the target be met first. You can see that since 2002 Core CPI has fluctuated one standard deviation above and below the 2% inflation level between 1% and 3%. It is clear that we are not back into this standardised zone between 1 – 3%. I’ll update you tomorrow with the released figures PUKA
ECONOMICS:USIRYY
by PukaCharts
Fed's Hope in 2024 - Their Projection & PlanDuring the December FOMC conference, the fed said the appropriate level for interest rate or the fed funds rate will be 4.6% at the end of 2024 from current 5.5%, 3.6% at the end of 2025, and 2.9% at the end of 2026. Many reporters take that as Fed’s hint to cut rate in 2024, but the Fed added saying these projections are not the committee decision or plan. So what is the difference between a projection and a plan? And how will the market performance in 2024? Dow Jones Futures & Options E-mini Dow Jones Ticker: YM 1.00 index point = $5.00 Micro E-mini Dow Jones Ticker: MYM 1.0 index points = $0.50 Disclaimer: • What presented here is not a recommendation, please consult your licensed broker. • Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises. CME Real-time Market Data help identify trading set-ups in real-time and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
ECONOMICS:USIRYY
by konhow
4
Core and headline CPI - Update from 12 Dec 2023 The Core and Headline CPI Chart This CPI chart illustrates the following: - You can clearly see how Core CPI is less volatile than Headline CPI. Core CPI removes the volatile food and energy expenditures to provide a more general view of underlying inflation (based on a fixed basket of goods) - It is clear that we are not at the Federal Reserves target of 2% which is also outlined on the chart (purple line). It is critical to understand that we are still not at or below the target 2% level regardless of the FOMC’s determination of a likely hold on interest rates and reductions to interest rates in 2024. Lets see can the target be met first. - You can see that since 2002 Core CPI has fluctuated one standard deviation above and below the 2% inflation level between 1% and 3%. It is clear that we are not back into this standardised zone between 1 – 3%. Im sharing this chart now to lock it in as it will feature in tomorrows Macro Monday See you there PUKA
ECONOMICS:USIRYY
by PukaCharts
1
The Great Inflation AGAIN? US Inflation Rate YoY Comparison - ECONOMICS:USIRYY Stark similarities to the beginning of the Great Inflationary Period (GIP) which ranged from 1965 - 1982. The GIP fractal is not a prediction, it only offers us perspective and context. As an example, US Inflation YoY could potentially bounce around between 3 - 4% for another 32 months as it did between 1975 - 1978 before making any major move. This is a scenario I had not considered, an almost 3 year sideways boring consolidation. We will continue to track this chart to see how it compares moving forward into the future. PUKA
ECONOMICS:USIRYY
by PukaCharts
US CPI UpdateUS CPI US Headline and Core CPI for October both came in lower than expected (decrease). US Headline CPI: YoY – Actual 3.24% / Exp. 3.3% / Prev. 3.7% (Green on cha rt) US Core CPI: YoY – Actual 4.02% / Exp. 4.2% / Prev. 4.13% (Blue on chart) The chart below illustrates the direction of the current YoY down trend for both Headline and Core CPI however we are still not at the historical moderate levels of inflation desired. You can see these moderate levels of inflation between 1 – 3% from 2002 – 2020 below. Nice to see the Core CPI come down, almost down, into the moderate historical averages PUKA
ECONOMICS:USIRYY
by PukaCharts