Key Inflation Measure Just Rose More Than The Fed Wanted | The Economic Ninja

➡ The Economic Ninja talks about how the Federal Reserve can’t lower interest rates and will likely have to raise them, which could lead to more people blaming the Fed and the current president for economic issues. This could affect the real estate market as inflation continues to rise. The market wants lower rates, but this might not happen until unemployment is in double digits. The last time the Fed raised rates was in 2015, and they might have to do it again soon, which could lead to a downturn in the economy.

Hey, everybody. A year ago, and it was more than, more than expected. Look, no matter which way you slice it, the Federal Reserve knows it can’t lower rates. It’s going to have to keep them higher for longer. It’s probably going to have to raise rates if they actually want to get this under underway. But the truth of the matter is the general public is going to blame the Federal Reserve, and the Federal Reserve knows that on top of that, the next president comes in when everything falls apart, they’re going to blame the current seating president regardless of what happened during the last presidency.

So let’s look at this and remember, how is this affecting the real estate market? It says inflation showed little signs of letting up in March with a key barometer the Federal Reserve watches closely, showing the price pressures remain elevated. The personal consumption expenditures price index, excluding food, because in February, the Commerce Department reported Friday that it was above the 2. 7% estimate from the Dow Jones consensus, including food and energy.

The all items PCE price gauge increased 2. 7% compared with the 2. 6% estimate. Once again, economists are wrong. They should go and ask for a refund on their college money. But I guess technically Biden’s going to take care of that for them on a monthly basis. Both measures increased 0. 3% as expected and equaling the increase from February. Now it says that markets showed little reaction to the data.

With Wall street poised to open, higher treasury yields fell. Doesn’t make sense, does it? Because you think about it, the market, when they see inflation numbers coming out higher than expected, they know that the Fed’s not going to lower rates. And the market really wants and anticipates or expects the Fed to lower rates so that they can get more of that monetary heroin right here to the veins.

Give it to me in the jugular. That’s what they want. They want lower rates. Now, a great quote here. It says inflation reports released this morning were not as hot as feared. Remember this, been completely cured and the Fed will be cutting interest rates in the near term, said George Mateo, chief investment officer at Key wealth. He goes on to say the prospects of rate cuts remain, but they are not assured.

And the Fed will likely need weakness in the labor market before they have confidence to cut. Now what he is saying very nicely, very muted, is that the Fed can’t wait to see you lose your job. That is the truth. Nobody tells you how hot or how high the Federal Reserve wants unemployment. But I can tell you this, I personally believe that you will not see the Fed really cutting rates.

And I’m not talking about just a couple 25 basis point cuts to try and get you to vote for a certain way for the next president. I’m talking about a sustained drop, a panic drop, where they run rates right back to zero and possibly negative. That won’t happen until you see unemployment in the double digits. True unemployment. That’s what they want. But again, they want to do it so slowly, so mildly, that you don’t realize what they’re doing.

Every seven to ten years, the Federal Reserve hikes rates. The last time they did it was 2015. As a matter of fact, it was December 24, I believe. 2015. Go check my math, see if I’m right. My history. They didn’t stop raising rates until December of 2018 because they were crashing the economy. And the, at that point, president was railing against the Federal Reserve, saying they were going to crash the economy.

They did an abrupt face, but before that, the last time they did a rate hiking cycle was in 2004. So you think about this. You have these shmitah events every seven years. You have interest rate cycles every ten. Once you start to realize those interest rate cycles, you can actually move in and out of a real estate market. And again, it’s all based off of human emotions. Now, with this inflation number coming out and all of us knowing that the Fed can’t lower rates meaningfully, they can still fake us out.

Look at the numbers today as I’m reading this. We’re doing this live. The Nasdaq surges 2% on strong tech earnings heads for the best days since February. Let me remind you, the reason why strong tech earnings are here is because they fired hundreds of thousands of people last year. Please remember that. Don’t forget that. Remember when all these companies came out and announced all their layoffs last two januarys ago, all the way throughout the first part of the summer months.

And their stocks rallied because investors cheered that they wouldn’t have any of those pesky employees on their books. And so today, you’ve got strong tech numbers because they’ve got less employees. They won’t tell you that they have year over year less sales. Everyone knows that. But the profit margin is a little higher because, sure, you have less sales, but you don’t have to pay out as many employees, so it evens itself out.

You look at bonds right now, the tenure came off yesterday’s highs, right, because everyone’s excited. Oil is up, barely. Nominally. Gold and silver still pretty much flatlined. The market is not thinking about, oh, yeah, borrowing costs are, oh, yeah, 30 year fixed rate mortgages are higher. As a matter of fact, mortgages all across the board are higher. These are the things we need to be paying attention to.

You need to be able to become your own economist. And it’s very easy, quite frankly. You don’t need a degree, you just need logic. The markets are illogical. So this is the time to completely sit back, have your cup of coffee, relax and go. I get it. I’m pardon ninja nation. I see what’s happening here. I can tell what’s coming in the next six months or a year, and that’s going to be a lot of downturn because unemployment is going to skyrocket, because interest rates are eventually going to have to raise.

And if the Federal Reserve doesn’t do it, don’t worry, the bond market’s going to do it for them. Hope you got something out of this. The economic ninja is out. .

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