The Core

Mortgage demand from homebuyers drops to a 28-year low

https://www.cnbc.com/2023/03/01/mortgage-demand-falls-interest-rates-rise.html

2 links say higher rates coming...

Baltic Dry Index Gains for Third Straight Week
https://gcaptain.com/baltic-dry-index-gains-for-third-straight-week/

U.S. Adds A Robust 311,000 Jobs Despite Fed's Rate Hikes
https://www.huffpost.com/entry/us-adds-a-robust-311000-jobs-despite-feds-rate-hikes_n_640b34cde4b09c5c6d6e741e

Which creates a strange self-contradicting prophecy. If WS strongly believes rates won't go up and acts accordingly, the Fed will be forced to move rates up, no?

I know Krugman is controversial, but he says that people have taken bad lessons from inflation. The inflation of the 1970s and 1980s was so intractable, that it called for draconian solutions, so everyone takes Voelker as the model of how a Fed chairman should act. But he picked some person I did not know, former head of the ECB I think, who he picks as the best central banker ever because he managed to navigate the problem without "blood" (Voelker's word).

He think Powell wants to be Voelker, but that Voelker was a one-off who was successful in one particular situation that is very different from the current one.

"Now that this house of cards is collapsing, the credit crunch caused by today’s banking stress will create a harder landing for the real economy, owing to the key role that regional banks play in financing small and medium-size enterprises and households. Central banks therefore face not just a dilemma but a trilemma. Owing to recent negative aggregate supply shocks – such as the pandemic and the war in Ukraine – achieving price stability through interest-rate hikes was bound to raise the risk of a hard landing (a recession and higher unemployment). But, as I have been arguing for over a year, this vexing tradeoff also features the additional risk of severe financial instability."


The Coming Doom Loop by Nouriel Roubini - Project Syndicate

https://www.project-syndicate.org/commentary/federal-reserve-facing-trilemma-inflation-recession-insolvent-banks-by-nouriel-roubini-2023-03

Please put your head between your knees and brace yourselves.


[Business] - Consumer Price Index rose 5.5% in April as Fed mulls more rate hikes

That's a long way from the targeted 2%.

+

Used cars are the largest inflation culprit, btw.

>>Consumer Price Index rose 5.5% in April

Saw this headline. In the NY Post they wrote the who article without specifying that...

1. This is the annualized rate
2. This is the core CPI, not the CPI

Then went somewhere else to find out the real story. Dallas Morning News specified that the 5.5% was core and that overall inflation was 4.9%. But they also said that this was the amount of inflation since last March (i.e. April 1, 2022 to March 30, 2023). That's not the same as the annualized rate in April.

Anyway, I know, that's pedantic. Inflation is higher than the target 2%. But I have trouble trusting anything when the journalists or, more likely with this sort of "data" article, the bot writing the article is fundamentally innumerate.

According to the DMN, the March number was 5.6% since the previous year, while April was 5.5%, that would indicate a significant drop in order to affect the overall rate like that, but I'm not sure they are reporting the numbers correctly.

And in any case, there are many reasons to suggest that an inflation rate closer to 4% would be a better target. And there's even more to suggest that there should be no target. The whole target thing was a mistake that went public and now the Fed is wedded to it for no strong economic reason.

The housing slowdown is a top signal that the US is headed into a moderate recession, Fannie Mae says

https://markets.businessinsider.com/news/commodities/us-housing-slowdown-recession-economy-mortgage-rates-inflation-fannie-mae-2023-5