CPI for all items rises 0.3% in April; shelter, food, airfare indexes rise
The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.3 percent in April on a seasonally adjusted basis after rising 1.2 percent in March, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 8.3 percent before seasonal adjustment.
Increases in the indexes for shelter, food, airline fares, and new vehicles were the largest contributors to the seasonally adjusted all items increase. The food index rose 0.9 percent over the month as the food at home index rose 1.0 percent. The energy index declined in April after rising in recent months. The index for gasoline fell 6.1 percent over the month, offsetting increases in the indexes for natural gas and electricity.
The index for all items less food and energy rose 0.6 percent in April following a 0.3-percent advance in March. Along with indexes for shelter, airline fares, and new vehicles, the indexes for medical care, recreation, and household furnishings and operations all increased in April. The indexes for apparel, communication, and used cars and trucks all declined over the month.
The all items index increased 8.3 percent for the 12 months ending April, a smaller increase than the 8.5-percent figure for the period ending in March. The all items less food and energy index rose 6.2 percent over the last 12 months. The energy index rose 30.3 percent over the last year, and the food index increased 9.4 percent, the largest 12-month increase since the period ending April 1981.
Western Economies Are Creaking Under High Oil and Gas Prices, With No Relief in Sight As a big energy importer, Europe is more exposed than the U.S.
(…) Economists at JPMorgan estimate that the 20% rise in gasoline prices in the U.S. that has followed the invasion of Ukraine could be lowering spending on other goods and services by $9.6 billion a month. (…)
Household energy prices in the eurozone were almost 40% higher in April than a year earlier, an increase that is larger than any in a single year during the 1970s, although that decade saw a series of large annual increases. (…)
European Central Bank economists estimate that in the final three months of last year, the transfer of spending power out of the eurozone through higher energy prices was equivalent to 1.3% of gross domestic product. Prices have risen since then, particularly since the invasion. (…)
FYI, $9.6B/month = 0.7% of total U.S. consumer expenditures.
Natural-Gas Prices Rise in Europe After Ukraine Cuts Flows Prices jumped after Ukraine said it would reduce natural-gas flows from Russia through its territory, blaming interference by Russian forces with pipelines in the east of the country.
China Inflation Accelerates Modestly Consumer prices were up 2.1% in April, the fastest pace in five months, as growth took a hit from widespread Covid-prevention measures
(…) accelerating from March’s 1.5% and topping the 2% median forecast of economists polled by the Journal.
The gain was led by increases in food and fuel prices due to the pandemic and a sustained run-up in global commodity prices, China’s National Bureau of Statistics said.
The producer-price index, a gauge of factory-gate inflation, was up 8% in April from a year earlier, down from March’s 8.3% but exceeding the economists’ 7.8% forecast. (…)
Gasoline and diesel prices in April were up 29% and 32%, respectively, from a year earlier, Wednesday’s data showed. (…)
(Note that
- Core CPI inflation slowed to +0.9% YoY in April (vs +1.1% in March), and inflation in services fell to +0.8% YoY in April (vs +1.1% in March).
- On a MoM basis the CPI rose at a 5.1% seasonally adjusted annualized rate in April. PPI MoM a.r.: +9.8%
Stock Market Turmoil Spreads to Junk Bonds, Hurts Deals Average prices of U.S. high-yield bonds tumbled this week to their lowest levels since 2020, and some companies canceled new sales.
Toyota warns profit to skid 20% as raw materials costs pile up
(Bespoke)
Cryptocurrency TerraUSD Plunges as Investors Bail The so-called algorithmic stablecoin nosedived to less than a quarter of its original $1 value.
- Coinbase Shares Slide Further on Deep Loss The biggest cryptocurrency exchange in the U.S. said it was bleeding users, reflecting continued destruction in the crypto market and investors’ unease about risky assets.
Coinbase Global Inc. COIN -12.60% said Tuesday that it lost hundreds of millions of dollars in the first quarter, sending the stock tumbling in after-hours trading. Following the after-market report, shares traded around $61—a far cry from the $381 where the stock opened trading when it went public a little over a year ago. (…)
Coinbase, under co-founder and chief executive Brian Armstrong, on Tuesday posted a first-quarter loss of $429.7 million, or $1.98 a share, on revenue of $1.2 billion. That compared with earnings of $387.7 million, or $3.05 a share, on $1.8 billion in revenue a year earlier. (…)
Trading volumes from retail, or individual, investors dropped by more than half from the prior quarter. (…)
Other crypto stocks have seen big drops. Silvergate Capital Corp. has fallen 42% so far this year, Marathon Digital Holdings Inc. has slid 64%, Riot Blockchain Inc. has slipped 66% and TeraWulf Inc., a bitcoin-mining company, is down 80%. (…)
Almost Daily Grant’s: “Whether the COIN c-suite manages to turn the ship around or not, they have been well compensated for their efforts. Insiders have conducted $212 million in open market stock sales over the past six months, at an average price of $330 per share”. These insiders likely knew how unstable COIN might get. Pre-op today: $62.
Bloomberg argues that
Unlike conventional stablecoins like Tether’s USDT or Circle’s USDC that are backed by real-world highly liquid cash equivalents or dollars, algorithmic tokens are designed to maintain their peg (and investor confidence) through a combination of mathematical equations and active trading.
But we still don’t know what exactly is backing Tether, to name one. NY State Attorney General Letitia James in 2021: “Tether’s claims that its virtual currency was fully backed by U.S. dollars at all times was a lie.”
In Monday’s Federal Reserve’s Financial Stability Report:
Stablecoins typically aim to be convertible, at par, to dollars, but they are backed by assets that may lose value or become illiquid during stress; hence, they face redemption risks similar to those of prime and tax-exempt money market funds. These vulnerabilities may be exacerbated by a lack of transparency regarding the riskiness and liquidity of assets backing stablecoins.
Additionally, the increasing use of stablecoins to meet margin requirements for levered trading in other cryptocurrencies may amplify volatility in demand for stablecoins and heighten redemption risks.
By who?
Never forget – bitcoin is NASDAQ Correlation perfection goes on…until it blows up. (The Market Ear)
Also from The Market Ear:
Risk Parity Pariah One of the largest drawdowns for a risk parity strategy. Based on 3-month volatility.
