Fed Signals Eventual Shift From Easy-Money Pandemic Policies Officials want to begin planning for tapering of bond-buying program, April meeting minutes show
Several Fed officials said this week that the central bank is closely watching economic developments and will be ready to adjust policy when necessary. Minutes from the central bank’s policy meeting in late April, released Wednesday, reported that some Fed officials want to begin discussing a plan for reducing the Fed’s massive bond-buying program at a future meeting.
“If we got to the point where we were comfortable on the public health side that the pandemic was largely behind us, and was not going to resurge in some way that was surprising, then I think we could talk about adjusting monetary policy,” St. Louis Fed President James Bullard told reporters after a speech Wednesday. “I don’t think we’re quite to that point yet, but it does seem like we’re getting close.” (…)
“We’re going to have to be very nimble in terms of our monitoring of the economy and our policy responses,” [Atlanta Fed President] BosticMr. Bostic said Wednesday. (…)
“A number of participants suggested that if the economy continued to make rapid progress toward the committee’s goals, it might be appropriate at some point in upcoming meetings to begin discussing a plan for adjusting the pace of asset purchases,” the minutes said. They noted that many officials echoed Chairman Jerome Powell’s view that the Fed should give markets plenty of advance warning before it begins reducing the purchases. (…)
“However, a couple of participants commented on the risks of inflation pressures building up to unwelcome levels before they become sufficiently evident to induce a policy reaction,” minutes from the April meeting said. (…)
The Fed said in a statement after the April meeting that its asset purchases will continue at the current pace until the economy makes “substantial further progress” toward its goals of maximum employment and 2% average inflation. Overnight interest rates won’t be raised until those objectives are fully reached, an even higher bar.
“In my judgment, through that April employment report we have not made substantial further progress,” Fed Vice Chairman Richard Clarida said on Monday. (…)
China’s industrial commodities slide after Beijing warns of market crackdown China’s main industrial commodities tumbled on Thursday after the government announced stepped-up measures to keep a lid on soaring raw material prices which threaten to undermine the country’s economic recovery.
More Republican States Cut $300 Benefits, as Jobless Claims Fall More than three-quarters of Republican-led states plan to end an extra $300-a-week in federal jobless benefits early, as unemployment claims reach pandemic lows.
This week Texas, Oklahoma and Indiana joined the list of at least 21 states that are cutting off access to federal benefits early after a much weaker-than-expected April jobs report sparked concerns of labor shortages. States are opting out of the $300 supplemental benefit, extended payments and benefits for gig-economy and other workers not typically eligible for unemployment benefits.
States have announced dates ranging from mid-June to mid-July for when they will stop processing pandemic-related benefits. That means nearly 3.5 million individuals could lose the $300 weekly benefits—which were set to expire in early September—beginning in mid-June, according to estimates by forecasting firm Oxford Economics.
Of those, about 1.4 million will also lose pandemic benefits for gig workers, and about 1.1 million will no longer have access to extended benefits that kick in after claimants exhaust their regular state benefits. (…)
A total of 16.9 million people were receiving benefits in the week ended April 24 through one of several programs, including regular state aid and federal emergency programs put in place in response to the pandemic. (…)
Oklahoma Gov. Kevin Stitt said the first 20,000 Oklahomans on unemployment benefits who return to the workforce will receive a $1,200 payment. (…)
29% of U.S. Sellers Plan to List for More Than They Think Their Homes Are Worth Buoyed by the current seller’s market, homeowners now expect bidding wars and offers over their asking price, according to realtor.com survey
There’s further proof that the U.S. is firmly in the middle of a seller’s market: 29% of homeowners who are considering selling plan to list their property for more than they think it’s worth, according to a survey released Wednesday by realtor.com. More than half, 53%, expect at least to get their asking price. About a quarter, 24%, predict they’ll fetch more than the list price, while 16% are anticipating an all-out bidding war.
While many sellers surveyed were planning to move for logistical reasons (such as downsizing or a change in family circumstances), 24% cited making a profit in the current market as a motivation, and 13% of those surveyed felt they should take advantage of high demand and rising prices. (…)
A bright spot to sky-high seller expectations is that more sellers are being drawn into the market, which could mean some long-awaited relief to a nationwide inventory shortage that continues to push up prices and competition.
Canadian Consumer Prices Climb at Fastest Pace in a Decade
Annual inflation accelerated to 3.4% in April, compared with 2.2% in March, Statistics Canada reported Wednesday in Ottawa. That exceeded economist predictions of a 3.2% annual pace. On a monthly basis, inflation rose 0.5% versus the 0.2% economists were expecting.
Core inflation — often seen as a better measure of underlying price pressures — rose to 2.1% from 1.9% in March. That’s the highest since 2012. (…)
The shelter component on the index rose 3.2% YoY, owing to a 9.1% jump in the homeowners’ replacement cost index, which tracks the price of new houses, including lumber costs. The U.S. CPI shelter component was up 2.2% in April.
From housing economist Tom Lawler via CalculatedRisk:
While single-family home prices have recently soared and single-family rents appear to have accelerated, the “Owners’ equivalent rent of primary residence” index (OERPR) of the Consumer Price Index has shown no meaningful acceleration. The YOY gain in the OERPR in April was just 2.04%, about the same as in the previous three months.
The OERPR index attempts to measure what property owners would receive if they were to rent their home. While the “Rent of primary residence” index mainly (though not solely) reflects rents on multifamily properties, the OERPR index mainly (though not solely) reflects “imputed” rents on single-family homes. There are many issues with how the OERPR in calculated (there is an extensive literature on the subject), and many feel that it is a lagging indicator of trends. However, it would appear as if (1) the OERPR is understating this measure of housing costs; and (2) the measure is likely to accelerate, probably significantly, during the remainder of the year.
The OERPR represents a little over 23% of the overall CPI and a little underx. 14% of the PCE price index.
There seems to be a 6-9-month lag between house prices and CPI-shelter:
Hmmm…
IPO, SPACs, cryptos, ARKK, TSLA… bad sequence!
- Clearly not a friendly trend.
Data: Coindesk. Chart: Sara Wise/Axios
Bitcoin ETF sees outflows (has not happened in >18 months)
Flow pace into publicly-listed Bitcoin funds including Bitcoin ETFs. $mm per week, 4-week rolling average flow
(The Market Ear)
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Clearly not a friendly trend.
- Clearly not a friendly trend.
- QQQ is testing its trend:
- So is the Russell 2000:
- The S&P 500?
- The 13/34–Week EMA Trend is still ok:
- AAPL is intriguing. Its 50 and 100 dmas look broken and the stock is on both its trend line and its still rising 200dma.
More broken stuff:
- The SPAC craze got even crazier. Drugmaker Roivant wants to merge with a blank-check company and then take over another blank-check company that acquired Immunovant from Roivant less than two years ago. A deal like that would be such an oddity that people who follow shell companies can’t remember it happening before. And it gets better: Roivant says it knows something that everyone else doesn’t about its former unit, and it’s willing to pay a premium for the shares. (Bloomberg)
- China’s Mutual-Fund Stars Go From Boom to Backlash The country’s $3 trillion mutual-fund industry drew throngs of individual investors in thrall to market-beating managers. But the market has slumped, dragging the funds down with it.
(…) Millions of young people, cooped up at home and anxious about their financial future, were drawn to funds by market-beating returns, social-media hype and apps that made it easy to invest, sometimes as little as a few cents at a time. Many funds were distributed via popular mobile apps operated by the likes of Jack Ma’s Ant Group Co. and Tencent Holdings Ltd.
Some investors set up fan clubs and created memes about their favorite fund managers, while others spread the word to friends and family. Asset managers launched more than 1,400 new funds in 2020, raising a record $487 billion. (…)
“I take it that I’ve spent money to buy some experience,” the 32-year-old said. “Perhaps it’s better to know more about investing before dabbling in mutual funds.” (…)
- Embattled Chinese Property Tycoon Turns to Electric Cars. Cue $87 Billion Valuation. Evergrande founder Xu Jiayin hasn’t sold any cars yet and his real-estate empire is groaning with debt. But his electric vehicle startup recently notched an $87 billion market cap.
- The world’s biggest iceberg has broken off the coast of Antarctica. Iceberg A-76 measures around 105 miles long and 15 miles wide, larger than Long Island. The Antarctica ice sheet is warming faster than the rest of the planet, causing melting and the retreat of glaciers, especially around the Weddell Sea. As glaciers retreat, chunks of ice break off and float adrift until they break apart or crash into land. (Bloomberg)
- Why Have There Been So Many No-Hitters in 2021?Why Have There Been So Many No-Hitters in 2021? Pitchers are better than ever. Hitters seem worse than ever. With six no-hitters by May 19, baseball is two away from tying the full-season record, which was set in 1884. (New York Times) With six no-hitters by May 19, baseball is two away from tying the full-season record, which was set in 1884. (New York Times)
“Pitchers are better than ever. Hitters seem worse than ever:” IPO, SPACs, cryptos, ARKK, TSLA… Alas, there is, indeed, a sucker born every minute! And today, they’re all on margin!