The Fed is driving backwards.
Is a soft-ish landing still possible?
Let's see what the charts are saying 🧵
By @bgilliam1982
Is a soft-ish landing still possible?
Let's see what the charts are saying 🧵
By @bgilliam1982
1/ Atlanta Fed GDP Estimates
The Cleveland Fed sees GDP growing at just 0.5% in Q3.
The Fed wants below-trend growth (to average out the above-trend growth we’ve had) and now they’re getting it.
The Cleveland Fed sees GDP growing at just 0.5% in Q3.
The Fed wants below-trend growth (to average out the above-trend growth we’ve had) and now they’re getting it.
2/ Inflation Estimates
The market was expecting -0.1% for August and was thus unprepared for a print of +0.1%.
This month is looking even higher.
If we’d paid attention to last month’s Cleveland nowcast of +0.06%, we might have saved ourselves a lot of trouble.
The market was expecting -0.1% for August and was thus unprepared for a print of +0.1%.
This month is looking even higher.
If we’d paid attention to last month’s Cleveland nowcast of +0.06%, we might have saved ourselves a lot of trouble.
3/ Owners' Equivalent Rent
24% of the CPI that we are all fixated on is “owner’s equivalent rent,” which is accelerating.
OER measures the cost of living according to what you’d have to pay yourself if you paid rent on your own house.
24% of the CPI that we are all fixated on is “owner’s equivalent rent,” which is accelerating.
OER measures the cost of living according to what you’d have to pay yourself if you paid rent on your own house.
4/ Mortage Rates
Mortgage rates are back above 6%, so houses are about to get cheaper.
This means owner-equivalent rent will get cheaper.
But not for a while — this is the danger of backwards driving.
Mortgage rates are back above 6%, so houses are about to get cheaper.
This means owner-equivalent rent will get cheaper.
But not for a while — this is the danger of backwards driving.
5/ Average Homes' Price (Last 4 weeks)
Home sellers are cutting their asking prices.
Home sellers are cutting their asking prices.
6/ Rolex Index
Rolex watches were in such short supply earlier this year that you had to buy them on the secondary market for more than double the retail price.
But now the biggest spenders are spending less.
Rolex watches were in such short supply earlier this year that you had to buy them on the secondary market for more than double the retail price.
But now the biggest spenders are spending less.
7/ NY Fed Inflation Expectations
The New York Fed’s survey shows that 3-year-ahead inflation expectations (red line) are back down to the long-term norm:
The New York Fed’s survey shows that 3-year-ahead inflation expectations (red line) are back down to the long-term norm:
8/ Market's Bottom
Historically, the market hasn’t bottomed until the Fed cuts interest rates.
That’s not so much of an issue when the Fed is hiking into an expansion.
But now, looking backwards, they’re hiking into a contraction.
Historically, the market hasn’t bottomed until the Fed cuts interest rates.
That’s not so much of an issue when the Fed is hiking into an expansion.
But now, looking backwards, they’re hiking into a contraction.
9/ Daily Macro And Crypto Breakdowns
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