Fed Stays on Track for Rate Hikes Despite Inflation Gains
(…) Fed officials acknowledged the recent firming of inflation, which they had forecast for many months, but signaled no plans to pick up the pace of rate increases in response. (…)
The Fed repeated that the risks to the outlook “appear roughly balanced”. During the last 6 weeks, we have had very weak data on consumer spending and income and stronger inflation.
Surprise Fall in Eurozone Inflation Poses Challenge for Central Bankers
The European Union’s statistics agency said Thursday that consumer prices were 1.2% higher than in April 2017, a fall from the 1.3% rate of inflation recorded in March. It said the core rate of inflation—which excludes more volatile items such as energy, food, alcohol and tobacco—fell to 0.7% from 1% in March, hitting its lowest level since March 2017. (…)
The drop in inflation was driven by a sharp deceleration in prices paid for services. They were up just 1% on the year in April, having been 1.5% higher in March. Some of that pullback had been expected, since March prices were boosted by the Easter holiday. (…)
Eurozone inflation has been mysteriously volatile in recent months. All-items inflation rose 0.4% MoM in December 2017 then fell 0.9% in January followed by +0.2%, +1.0% and +0.3%. January to April: +1.8% annualized. February to April: +6.1% a.r..
Same trend on core inflation which rose 0.5% MoM in December 2017 then fell 1.7% in January followed by +0.4%, +1.4% and +0.2%. January to April: +0.9% annualized. February to April: +8.2% a.r..
Services inflation is another mystery. They were unchanged in the Euro area in April but only because Germany saw a 1.0% drop in Services in April when everywhere else Services inflation rose or was unchanged (France).
Go figure! But this is Europe…
BENVENUTO NEL MIO MONDO
Yet, the dollar continues to grind higher as the Fed’s policy diverges from much of the world. (The Daily Shot)
Related:
EARNINGS WATCH
303 companies in: beat rate: 80% with a +7.4% surprise factor (+2.1% on revenues!). Q1 earnings now seen +25.0% (+23.1% ex-Energy) vs +18.5% on April 1.
Trailing EPS are now $139.69. I calculate that trailing EPS are $146.00 pro forma the tax reform.
FYI:
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U.S. Weighs New Curbs on Chinese Telecom Companies The Trump administration is considering restricting some Chinese companies’ ability to sell telecom equipment in the U.S., which would escalate a growing feud.
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Tesla Model 3 Tracker Bloomberg created its own model to estimate weekly output of the car that could make or break Elon Musk’s master plan
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Musk Rejects ‘Boring’ Analysts After Tesla Burns $1 Billion More
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WeWork Bonds Fall as Debt Investors Question Startup Stories WeWork’s first bonds have dropped sharply in price since they were issued last week, raising questions about the willingness of debt investors to support cash-burning startups.
Yet, there was reportedly bids for $2.5B!