There’s a “New Upside Risk” in Town: “Pent-up Exuberance” – Fed’s Bostic

[aja8888]

There’s a “New Upside Risk” in Town: “Pent-up Exuberance” – Fed’s Bostic

https://wolfstreet.com/2024/03/05/theres-a-new-upside-risk-in-town-pent-up-exuberance-feds-bostic/

Interesting take on the FED governors who are trying to downplay rate cut mania this year.

Atlanta Fed President Raphael Bostic came up with a new risk to the inflation scenario, or not really a new risk – because it’s been there and it’s already happening – but a new phrase to describe that risk, a phrase that will resonate here: “pent-up exuberance.”

“Pent-up exuberance” is that businesses, “ready to pounce,” would unleash a torrent of new hiring and investment at the “first hint of an interest rate cut,” which would unleash inflation all over again.

And..
Here’s that un-pent exuberance at work:

The core services PCE price index spiked to 7.15% annualized in January from December, the worst month-to-month jump in 22 years (blue line). Drivers of the spike were non-housing measures as well as housing inflation. The six-month moving average, which irons out the month-to-month volatility but is slower to react, accelerated to 3.95% annualized, the worst since July, after having gotten stuck at the 3.5% level for three months in a row.

(The graph is in the article)

 

[Al18]

I read an article the other day that said (in summary) the Fed ignores the PCE price index and only takes into account the Consumer Price Index CPI

 

[aja8888]

I read an article the other day that said (in summary) the Fed ignores the PCE price index and only takes into account the Consumer Price Index CPI

I have that feeling too.

 

[MichaelB]

I read an article the other day that said (in summary) the Fed ignores the PCE price index and only takes into account the Consumer Price Index CPI

Do you have a link to that article? It would be very interesting reading.

 

[Midpack]

^^ Here’s a link that says the exact opposite of post #2 Why The Fed Follows The PCE, Not The CPI Or PPI

https://seekingalpha.com/article/4663488-why-fed-follows-pce-not-cpi-or-ppi

[You can find a (credible) article saying anything you want these days, welcome to the internet.]

 

[Al18]

Sorry, must have had a senior moment!

 

[TickTock]

Nothing new. Fear and greed.

"Try to be greedy when others are fearful, and fearful when others are greedy."

Not mine, and I don't recall where and from whom I read it.

 

[latexman]

"Try to be greedy when others are fearful, and fearful when others are greedy."

That's from the Oracle of Omaha, Warren Buffet. He actually said, "it's wise for investors to be fearful when others are greedy and to be greedy only when others are fearful”.

 

[Montecfo]

Just what we need, Fed governors coining new phrases to describe risks that are not new.

 

[Route246]

Nothing new. Fear and greed.

"Try to be greedy when others are fearful, and fearful when others are greedy."

Not mine, and I don't recall where and from whom I read it.

I try to live by this, buy low, sell high. Works every time for me.

 

[audreyh1]

Sounds like Powell was very clear yesterday in his testimony that they aren’t cutting rates any time soon.

 

[Montecfo]

Sounds like Powell was very clear yesterday in his testimony that they aren’t cutting rates any time soon.

They means they won't cut this month. The Fed is famous for making far reaching statements that prove false.

And being "data driven" they really do not know when they will cut and how much. They would need to know the data in advance.