What About This Inflation Thing?

I have heard much ‘good’ news about the economy lately….but unfortunately the real facts say different….

Investors were fully expecting good news from the new monthly inflation report out Tuesday. But instead of declining, prices actually rose in August. Which means the Federal Reserve is all but certain to forge ahead with an aggressive rate hike at its Sept. 20-21 meeting. Details:

  • Monthly rise: Prices rose 0.1% in August from July, according to the Consumer Price Index, reports CNBC. Most analysts had forecast a decline of 0.1%. Investors were hoping for a sign that inflation had peaked.
  • Yearly increase: Compared to a year earlier, prices in August were up 8.3%, which is extremely high by historical standards, though below the annual figures of 8.5% in July and 9.1% in June, per the Wall Street Journal.
  • Market flips: Dow futures were up about 200 points before the report came out, with investors hoping an inflation cool-down would convince the Fed to temper its interest-rate hikes. But as soon as the report came out, Dow futures were down by 300 points, per CNBC.
  • The Fed: The new report is all but certain to keep the Fed “firmly in inflation-fighting mode,” per the New York Times. Most observers expect another hike of three-quarters of a percentage point. “Inflation is far too high, and it is too soon to say whether inflation is moving meaningfully and persistently downward,” Christopher Waller, one of the Fed’s governors, said last week. “This is a fight we cannot, and will not, walk away from.”

So the news is not so good and Wall Street reacting as could be predicted…..

The stock market fell the most since June 2020 following Wall Street’s humbling realization Tuesday that inflation is not slowing as much as hoped. The S&P 500 fell 177.72 points, or 4.3%, to 3,932.69. The Dow Jones Industrial Average fell 1,276.37 points, or 3.9%, to 31,104.97. The Nasdaq fell 632.84 points, or 5.2%, to 11,633,57. A hotter-than-expected report on inflation has traders bracing for the Federal Reserve to ultimately raise interest rates even higher than expected, with all the risks for the economy that entails. Bond prices also tumbled, sending yields sharply higher, after the government reported inflation decelerated last month by less than economists forecast.

Investments seen as the most expensive or the riskiest are the ones hardest hit by higher rates. Bitcoin tumbled 7.1%. In the stock market, all but four of the stocks in the S&P 500 fell. Technology and other high-growth companies fell more than the rest of the market because they’re seen as most at risk from higher rates, the AP reports. Apple, Microsoft, and Amazon all fell more than 4% and were the heaviest weights on the market. The communication services sector, which includes Google’s parent company and other internet and media companies, sank 4.8% for the largest loss out of the 11 sectors that make up the S&P 500 index.

Most of Wall Street came into the day thinking the Fed would hike its key short-term rate by a hefty three-quarters of a percentage point at its meeting next week. But the hope was that inflation was in the midst of quickly falling back to more normal levels after peaking in June at 9.1%. The thinking was that such a slowdown would let the Fed downshift the size of its rate hikes through the end of this year and then potentially hold steady through early 2023. Tuesday’s report dashed some of those hopes. “Right now, it’s not the journey that’s a worry so much as the destination,” says Brian Jacobsen at Allspring Global Investments. “If the Fed wants to hike and hold, the big question is at what level.”

Not to worry they will manipulate the economy to make everything look okay for us mere peasants…..but if you have to earn a living you know it is not ‘healthy’ by any stretch of the imagination.

But go ahead bury your head and plug along barely making it….or do something about it.

I Read, I Write, You Know

“lego ergo scribo”

What Is US Goal For Ukraine?

But first let’s ask the question….is the world weary of the Ukraine situation?

According to data collected by the Kiel Institute for the World Economy, shipments of military aid to Ukraine from European countries have been trending down since April. In July, Europe’s six largest countries made no new military commitments for the first time since the war started. The data includes arms shipments from the U.K., France, Germany, Spain, Italy, and Poland. The Kiel Institute’s Ukraine Support Tracker reported that “the flow of new international support for Ukraine has dried up in July. No large EU country like Germany, France or Italy, has made significant new pledges.”

But while Europe’s arms shipments to Ukraine are down, its trade with Russia is up. It has been no secret that Russia’s oil exports have lost little to the U.S.-led sanctions. China’s and India’s increases in Russian oil imports alone have balanced losses to Western sanctions. China has increased imports of Russian oil by 55 percent, and Russia is now the second largest exporter of oil to India. Even Saudi Arabia has more than doubled its imports of Russian oil, while Russian oil now accounts for almost half of Turkey’s energy requirements.

Trade with Russia by Europe is up?  What happened to all those sanctions?

So it appears that the war is a bit trying on the world…..

Yes I know I have not been one of the cheerleaders of US support for Ukraine….of course I have my detractors who always deflect from the question I continuously ask…..what is the US goals for Ukraine?

Are we protecting democracy?

Not if oppositions parties have been banned, leaders jailed and media under government control…..

Is it that we just hate Russia?

Or maybe it is the sell of weapons and the greed that goes with that.

I have yet to hear one concrete answer to what our goals are for Ukraine…..

To date, none of America’s top leaders have said how our support for Kyiv is expected to achieve the outcomes sought. No one has articulated what a “weakened” Russia looks like or how we’ll know when that standard has been reached – or even why weakening Russia is a vital interest to the U.S. that is worth taking huge risks. These are not just academic or hair-splitting questions. They are foundational. Here’s why:

Since even before the war began, the United States has had no vision for the end state it wishes to produce. For example, if Biden’s objective prior to 24 February genuinely was to deter Russia from launching a war, it should have been clear beyond a reasonable doubt that a threat of sanctions alone would not have been sufficient to convince Putin not to invade.

Washington would have had to be aggressively engaged diplomatically with both Kyiv and Moscow to use the full heft of U.S. power to find a route to prevent war. There is no evidence the U.S. put any serious diplomatic effort towards averting war. Without a clearly articulated objective, there was nothing to guide the various departments of the Administration on how to achieve the desired outcome. The result was predictable: policy failure.

Virtually the only objective voiced by any member of Biden’s national security team since the war began has been Austin’s aforementioned desire to see Russia “weakened.” Yet if the White House doesn’t know what a weakened Russia looks like, how will it ever know if its actions are contributing towards a successful outcome beneficial to America? That’s where we are right now.

What Is America’s Goal for the Ukraine War? Answer: We Don’t Have One

Bill LaPlante, the Pentagon’s top weapons-buyer, said this week that the US trained the Ukrainian missileers on how to use the Harpoon missiles that sank two Russian warships. This is how it always goes: first sell a besieged ally weapons, then train the foreign troops how to use them, then send military advisors for how to deploy the weapons, then send the CIA to pick targets, then send US troops when all of the above fails, kill tens of thousands of people (mostly civilians), then cut and run before you’re chased out of the country by the very people you claimed you wanted to protect…

So after all that the question remains….what is the goals for Ukraine?

Thoughts?

I Read, I Write, You Know

“lego ergo scribo”