USIRYY: Inflation has peaked. Fed Pivot incoming? I'm not a macroeconomics guru or T.A. guru, and these charts are weird considering the only timeframe we have access to is the monthly line chart +.
USIRYY has wicked into the golden pocket + 1.618 fib extension with Monthly RSI going into overbought territory + Monthly MACD cross.
I'd be a lot more confident about inflation topping with one more pump to the upside tagging the 1.618 fib at 9.5% with monthly bearish divergence on both MACD on RSI. Regardless, I believe inflation is topping around this area, 8-10%.
USIRYY trade ideas
US Inflation Rate, YoY, Double Top? - Long-term ViewPresently, the inflation rate in the US has started falling, which increases expectations for a pivot - end of interest rate hikes. And factually, we can actually expect it. The supply of M2 Money Stock (M2SL) and its annual growth rate are decreasing. The global economy is shifting, as leading economic index (LEI) indicate. This will undoubtedly put pressure on the Federal Reserve to cut interest rates. However, after the current crisis, the economic recovery will cause a recurrence of inflation. So, if that is the case, the next decade will be marked by tight monetary policy and high inflation. This situation will let the central banks introduce a new monetary system based on CBDCs using incentives such as cheaper credit.
Check also my related ideas. Enjoy
0% Inflation very soon?United States Inflation Rate, Year-over-Year, 1914-2022 chart
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Why do I think inflation will go down to 0%?
Inflation is currently at the main trendline (established in 1920). This is a very strong resistance, and as a general rule, do not short a support or long a resistance. In other words, you don't want to speculate on inflation increasing when inflation is at its critical point. FED cares about their charts, and they also want the charts to look great. That's why they will push inflation down.
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Why the Inflation Rate Matter?
The inflation rate demonstrates the health of a country's economy. It is a measurement tool used by a country's central bank, economists, and government officials to gauge whether action is needed to keep an economy healthy. That's when businesses are producing, consumers are spending, and supply and demand are as close to equilibrium as possible.
A healthy rate of inflation is good for both consumers and businesses. During deflation, consumers hold on to their cash because the goods will be cheaper tomorrow. Businesses lose money, cutting costs by reducing pay or employment. That happened during the subprime housing crisis.
In galloping inflation, consumers spend now before prices rise tomorrow. That artificially increases demand. Businesses raise prices because they can, as inflation spirals out of control.
When inflation is steady, at around 2%, the economy is more or less as stable as it can get. Consumers are buying what businesses are selling.
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How is inflation measured?
There are several ways to measure inflation, but the U.S. Bureau of Labor Statistics uses the consumer price index. The CPI aggregates price data from 23,000 businesses and 80,000 consumer goods to determine how much prices have changed in a given period of time. If the CPI rises by 3% year over year, for example, then the inflation rate is 3%. The Fed, on the other hand, relies on the price index for personal consumption expenditures (PCE). This index gives more weight to items such as healthcare costs.
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How do you hedge against inflation?
Because inflation causes money to lose value over time, hedging against it is an important part of any sound investing strategy. Investors use a diversified portfolio with a variety of asset types to offset inflation and ensure that the overall growth of their portfolio outpaces it.
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YEAR - INFLATION RATE YOY - FED FUNDS RATE - BUSINESS CYCLE (GDP GROWTH) - EVENTS AFFECTING INFLATION
1929 0.6% NA August peak Market crash
1930 -6.4% NA Contraction (-8.5%) Smoot-Hawley
1931 -9.3% NA Contraction (-6.4%) Dust Bowl
1932 -10.3% NA Contraction (-12.9%) Hoover tax hikes
1933 0.8% NA Contraction ended in March (-1.2%) FDR's New Deal
1934 1.5% NA Expansion (10.8%) U.S. debt rose
1935 3.0% NA Expansion (8.9%) Social Security
1936 1.4% NA Expansion (12.9%) FDR tax hikes
1937 2.9% NA Expansion peaked in May (5.1%) Depression resumes
1938 -2.8% NA Contraction ended in June (-3.3%) Depression ended
1939 0.0% NA Expansion (8.0% Dust Bowl ended
1940 0.7% NA Expansion (8.8%) Defense increased
1941 9.9% NA Expansion (17.7%) Pearl Harbor
1942 9.0% NA Expansion (18.9%) Defense spending
1943 3.0% NA Expansion (17.0%) Defense spending
1944 2.3% NA Expansion (8.0%) Bretton Woods
1945 2.2% NA Feb. peak, Oct. trough (-1.0%) Truman ended WWII
1946 18.1% NA Expansion (-11.6%) Budget cuts
1947 8.8% NA Expansion (-1.1%) Cold War spending
1948 3.0% NA Nov. peak (4.1%)
1949 -2.1% NA Oct trough (-0.6%) Fair Deal, NATO
1950 5.9% NA Expansion (8.7%) Korean War
1951 6.0% NA Expansion (8.0%)
1952 0.8% NA Expansion (4.1%)
1953 0.7% NA July peak (4.7%) Eisenhower ended Korean War
1954 -0.7% 1.25% May trough (-0.6%) Dow returned to 1929 high
1955 0.4% 2.50% Expansion (7.1%)
1956 3.0% 3.00% Expansion (2.1%)
1957 2.9% 3.00% Aug. peak (2.1%) Recession
1958 1.8% 2.50% April trough (-0.7%) Recession ended
1959 1.7% 4.00% Expansion (6.9%) Fed raised rates
1960 1.4% 2.00% April peak (2.6%) Recession
1961 0.7% 2.25% Feb. trough (2.6%) JFK's deficit spending ended recession
1962 1.3% 3.00% Expansion (6.1%)
1963 1.6% 3.5% Expansion (4.4%)
1964 1.0% 3.75% Expansion (5.8%) LBJ Medicare, Medicaid
1965 1.9% 4.25% Expansion (6.5%)
1966 3.5% 5.50% Expansion (6.6%) Vietnam War
1967 3.0% 4.50% Expansion (2.7%)
1968 4.7% 6.00% Expansion (4.9%) Moon landing
1969 6.2% 9.00% Dec. peak (3.1%) Nixon took office
1970 5.6% 5.00% Nov. trough (0.2%) Recession
1971 3.3% 5.00% Expansion (3.3%) Wage-price controls
1972 3.4% 5.75% Expansion (5.3%) Stagflation
1973 8.7% 9.00% Nov. peak (5.6%) End of gold standard
1974 12.3% 8.00% Contraction (-0.5%) Watergate
1975 6.9% 4.75% March trough (-0.2%) Stop-gap monetary policy confused businesses and kept prices high
1976 4.9% 4.75% Expansion (5.4%)
1977 6.7% 6.50% Expansion (4.6%)
1978 9.0% 10.00% Expansion (5.5%)
1979 13.3% 12.00% Expansion (3.2%)
1980 12.5% 18.00% Jan. peak (-0.3%) Recession
1981 8.9% 12.00% July trough (2.5%) Reagan tax cut
1982 3.8% 8.50% November (-1.8%) Recession ended
1983 3.8% 9.25% Expansion (4.6%) Military spending
1984 3.9% 8.25% Expansion (7.2%)
1985 3.8% 7.75% Expansion (4.2%)
1986 1.1% 6.00% Expansion (3.5%) Tax cut
1987 4.4% 6.75% Expansion (3.5%) Black Monday crash
1988 4.4% 9.75% Expansion (4.2%) Fed raised rates
1989 4.6% 8.25% Expansion (3.7%) S&L Crisis
1990 6.1% 7.00% July peak (1.9%) Recession
1991 3.1% 4.00% Mar trough (-0.1%) Fed lowered rates
1992 2.9% 3.00% Expansion (3.5%) NAFTA drafted
1993 2.7% 3.00% Expansion (2.8%) Balanced Budget Act
1994 2.7% 5.50% Expansion (4.0%)
1995 2.5% 5.50% Expansion (2.7%)
1996 3.3% 5.25% Expansion (3.8%) Welfare reform
1997 1.7% 5.50% Expansion (4.4%) Fed raised rates
1998 1.6% 4.75% Expansion (4.5%) LTCM crisis
1999 2.7% 5.50% Expansion (4.8%) Glass-Steagall repealed
2000 3.4% 6.50% Expansion (4.1%) Tech bubble burst
2001 1.6% 1.75% March peak, Nov. trough (1.0%) Bush tax cut, 9/11 attacks
2002 2.4% 1.25% Expansion (1.7%) War on Terror
2003 1.9% 1.00% Expansion (2.9%) JGTRRA
2004 3.3% 2.25% Expansion (3.8%)
2005 3.4% 4.25% Expansion (3.5%) Katrina, Bankruptcy Act
2006 2.5% 5.25% Expansion (2.9%)
2007 4.1% 4.25% Dec peak (1.9%) Bank crisis
2008 0.1% 0.25% Contraction (-0.1%) Financial crisis
2009 2.7% 0.25% June trough (-2.5%) ARRA
2010 1.5% 0.25% Expansion (2.6%) ACA, Dodd-Frank Act
2011 3.0% 0.25% Expansion (1.6%) Debt ceiling crisis
2012 1.7% 0.25% Expansion (2.2%)
2013 1.5% 0.25% Expansion (1.8%) Government shutdown. Sequestration
2014 0.8% 0.25% Expansion (2.5%) QE ends
2015 0.7% 0.50% Expansion (3.1%) Deflation in oil and gas prices
2016 2.1% 0.75% Expansion (1.7%)
2017 2.1% 1.50% Expansion (2.3%)
2018 1.9% 2.50% Expansion (3.0%)
2019 2.3% 1.75% Expansion (2.2%)
2020 1.4% 0.25% Contraction (-3.4%) COVID-19
2021 7.0% 0.25% Expansion (5.9%) COVID-19
2022 8.3% 3.25% Contraction (-1.6%) As of Sept. 21. 2022
2023 2.7% (est.) 2.8% (est.) Expansion (2.2%) March 2022 projection
Inflation Rate against CPI IndexAs you can see - all crashes on SPX have been synced with the above chart dipping big time.
What do we have now ? The chart hasn't even gone down - yet SPX has dipped -27%.
The difference between SPX's TOP and the start of declining of Inflation Rate / CPI is of an average 15-18% decline on SPX.
The only problem is that we haven't even started properly declining (circled area).
Two assumptions based on this - Either we still have time in this market and this was just a correction...
or...
... the fall will be huge.
Personally expecting markets to recover a bit and soon inflation rate will spike down together with SPX falling.
Not investing big time before seeing a proper spike down.
Cheers!
Inflation in the USWhen it comes to inflation in the US, some will say that it has become entrenched, others that it has come to a halt.
The FED has over stimulated the economy and is late in the process of raising interest rates. It may be some time before you see the effect of an interest rate hike e.g. the bankers are supposed to warn interest rate hike etc., but now the FED is impatient to get price stability. It can end with a ketchup effect.
When the FED raises interest rates, it will strengthen the USD and it will have an inflationary effect on other economies. After all, they are going to pay more in their currency for goods traded in USD.
The interest rate curve is inverted, but unlike previously it is attributed to the fact that the economy has been over stimulated (artificially low interest rate and QE = money printing) (1). Putting the money press in motion produces empirical inflation.
Although GDP has been negative for two quarters, it does not resemble a recession in American society, see for example unemployment, PMI and consumer confidence (2).
The S&P 500 index is back in a declining trend in the medium term and will remain so until proven otherwise. On the 5 year chart there is a support around 3400.
Now Q3 will get some attention and it can go up or down a bit. Q3 may well surprise positively (3), but after that macroeconomics will take over. Markets are volatile and trying to find a bottom. The peaks of the VIX are steadily declining (4). It indicates that we are getting closer to the bottom.
Geopolitically, Ukraine in particular, but also Taiwan, is important.
Russia is using energy supplies to Europe as a means of pressure in connection with its assault on Ukraine. Energy prices will be high and this will have an inflationary effect.
One should diversify and not depend on totalitarian systems such as Russia and China.
I found it relatively easy to get out and in of the stock market in the big V-shaped correction in February-March 2020. Since the stock market then peaked and began to fall, the trend has been insidious. If you sell out, do you come out at the bottom?
I have mostly chosen to sit still, but I want to buy a little when I think the price is low and preferably not sell anything unless there is a good reason. The stock market is coming back up.
That's how I see it and not a call for specific dispositions.
(1)
www.nordnet.no
(2)
da.tradingeconomics.com
(3)
www.nordnet.dk
(4)
Inflation not going to slow down for the US until 2028In the short term - like today!
8:30 EST 13 Oct 2022
If the CPI (measures inflation) comes out at above 8.2% this could lead to a market crash as the Fed would likely raise interest rates by another 100 bps on 2 November to curb inflation.
If the CPI comes out below 8.2 this could spark a market rally as they will believe inflation is starting to cool down.
In the long term. Price broke out of the W Formation and is showing major upside to come for Inflation.
This could go on until 2028... If this happens, there is a potential Depression that could kick in world wide.
This depression would then last for another 10 - 20 years (if they can get it under control).
We need a government and quantitative reset...
Sorry for the doom and gloom but it's not looking good technically.
The Proper Perspective on InflationAs any true trader knows, the inflation rate DID NOT GO UP 8.3%. That is what some retail news outlets claimed "year-over-year," which is plain misinformation. The retail news was designed to trigger a panic dump among the less informed last week.
FACT: The rise in inflation started in late 2020, not this year.
FACT: The rise in 2021 went to 7%. But the news seldom mentioned it last year. Nope, it was all about vaccines and Covid, etc.
The inflation rate went down. It has been trending downward at a sustainable rate. Anyone who thought it would be lower was not paying attention. There is a 3-month decline, and it is due to falling oil prices which were constantly boosted upward during August by the big banks trying to move more investors into buying oil stocks. So, with fluctuating prices of oil between 80 - 92, there was NO WAY inflation would tick down to 8.1%.
In August of 2021, inflation had already risen to 5.3%. Now in 2022, it has dropped to 8.3% from the peak of 9.1% in June. So it's 3 points higher than a year ago, obviously not 8.3 points higher.
During the pandemic of 2020, the news about the Federal Reserve Board was all lathered up about deflation, that deflation was about to happen, and the world was coming to an end!!!! Sigh. Some people just have to have bad news to feel good, I guess.
Oil and the war in Ukraine, which appears to be settling down with the Ukrainians taking back what is rightly their country, has lowered oil prices from $125 to 80-90, fluctuating regularly. Oil needs to drop to 70-80 for inflation to move down more.
Slow improvement is how it is going to be. To assume inflation would just drop back to 2% is irrational and illogical.
What is an ideal rate? For an expanding economy: around 4-5%.
See that red arrow? That should be the goal. It probably is not, but it should be. Inflation lower than that indicates a sluggish economy with a lack of raises for the workforce. When inflation is not in the economy, corporations use buybacks to boost their stock prices, which creates fake rallies.
Has inflation really peaked? Not so sureWe have been inside this green triangle since 1915.
The downtrend line has been tested a few times and this is the first year it actually went past it and recently came down for a retest.
Hard to feel like inflation has peaked also considering oil is still in an uptrend and the Fed couldn't have been more hawkish in the last Powell's speech, so we may be up for a rough surprise in tomorrow's CPI report. The Fib retracement points at a possible 12.50-13.00% inflation read, let's see what we get.
INFLATION HAS TOPPED OUT!Good day
We have all heard the news regarding the FED increasing interest rates in order to solve the inflation "crisis" we are currently enduring. Some say this is great, some say this is horrible, however, overall this move was inevitable as markets such as this are cyclical and manipulatable by those who control monetary policy. For those who are in the market for a quick buck that follows the advice of so-called pro traders, this may not be the greatest time for you. On the other hand those with diamond hands, the smart money understand the benefits of this very rare occurrence in time. Not only will you be handed a highly decreased asset to invest in, in the next few days/weeks but, your spending power will increase due to the FED's attempt to bring inflation to 2% on top of a substantial increase in wealth once we are out of the thick of it. (2024)
It is not possible to know when inflation will reach 2%, only those who control the market fluctuation know these dates but for now, we need to understand that we are going to be in a recession most likely for the better part of 2 years, which coincidentally will line up with the cyclical bull market structure of BTC. Could this be a coincidence or are we heading for a bull market never seen before? it could be argued that the crypto space specifically has been held back in the recent bull market and like a spring will eventually jump to levels only one could dream of.
This statement will be strengthened dramatically as the world moves into a space where digital currency becomes the framework of the exchange of value internationally and in all aspects of the current macroeconomic structure. This narrative will only be pushed on an institutional level once the ever-desired and increasing space achieves regulatory clearance of some sort in order to enable governments to sustain some sort of market dominance. This idea is widely unexcepted by the retail investor as most feel governments must be done away with in order to open up for a fully decentralized network to govern our financial sector globally... as great as this sounds it just sounds more and more like a pipe dream.
We as people need to have some sort of governance and a system that regulates our decision-making on a financial level or else chaos will break out leading to potentially societal collapse. But on the bright side, the crypto space will eventually allow for a stable deflationary environment where our wealth will have a safe haven to grow.
All we need to do is sacrifice complete decentralization in order to achieve a potential innovation of the financial system that will revolutionize finance forever... In this case, we all win...
@TradingView
Unemployment is inevitable according to market history.Graph of the inflation rate with unemployment rate laid over top.
EVERY TIME that inflation has peaked and rolled over, unemployment has spiked shortly after.
If you wonder why Powell says things like "The labor market is unsustainable." it's because he and every central banker in the world (more or less) are trying to kill inflation.
Inflation dies, it takes out employment.
So the next time someone points to labor statistics as a sign of economic health, you can tell them that employment is transitory.
US Inflation Rate relative to Gold Price ( Bull Run preface?)As this chart shows since the onset of the Covid- Era, the inflation rate to gold price ratio has increased
over 60x in the intervening 30 month. Pricipally this is due to the inflation rate escalating while
spot gold has been stable or decreased. This would seem to suggest that gold is undervalued
and may be overdue for the price adjustment of a bull run. Time will tell as they say