Inflation Hits 40-Year High, Dow Falls Over 700 Points, Worse is Yet to Come
Inflation Hits 40-Year High, Dow Falls Over 700 Points, Worse is Yet to Come
With inflation at 8.6 percent and the Fed rate between .75 and 1 percent, a 50 basis point hike will do nothing to stop inflation.
Note to readers: The new Trends Journal will be released tomorrow and will be packed with the latest trends in the Ukraine War, economy, and other topics that impact your life. Be prepared, not afraid.
The consumer price index showed a year-over-year increase of 8.6 percent in May, prompting the Dow Jones Industrial Average to shed over 700 points on concerns that the Federal Reserve will act more aggressively to tame inflation through rate hikes.
The Bureau of Labor Statistics, which releases the CPI data, said the “increase was broad-based, with the indexes for shelter, gasoline, and food being the largest contributors. After declining in April, the energy index rose 3.9 percent over the month with the gasoline index rising 4.1 percent and the other major component indexes also increasing. The food index rose 1.2 percent in May as the food at home index increased 1.4 percent.”
Gerald Celente on Friday warned that the worst is yet to come.
“With inflation at 8.6 percent and the Fed rate between .75 and 1 percent, a 50 basis point hike will do nothing to stop inflation,” he said. “And yet the equity markets are already freaking out with just tiny rate hikes compared to inflation. Housing crisis? Commercial real estate crisis? It’s all in your Trends Journal we write history before it happens.”
In May, the Federal Reserve announced it will raise its benchmark short-term interest rate by half a percent to combat inflation. The Fed is also expected to raise the rate another half a percent in the next meetings in June and July. The CPI number loomed large because economists say the Fed will use that data to decide on how hawkish to approach inflation.
James Knightley, chief international economist at ING, said, “The breadth of inflation pressures in the economy should alarm the Fed.”
JAMIE DIMON: PREPARE FOR ECONOMIC HURRICANE
“Given everything from the implications of the Russian invasion of Ukraine, the Chinese lockdowns and just the sheer appetite for travel…what we’ve seen is the perfect storm of those factors hitting, along with some major refinery closures,” Sarah House, senior economist at Wells Fargo Securities, told The Wall Street Journal. “Inflationary pressures were seen nearly everywhere.”
The preliminary June reading for the University of Michigan consumer sentiment index came in well below expectations, hitting a record low, CNBC reported.
“It just reinforces the impact the CPI number had on consumer psyche. We can guess this is going to have a negative future impact on consumer spending. It’s a shocking number but this is what inflation does when it’s running as hot as it is,” Peter Boockvar of Bleakley Advisory Group told the outlet.
The yield on the benchmark 10-year U.S. Treasury note rose after the release of the inflation figures.
Gregory Mannarino wrote in The Trend Journal that the Fed is still maintaining the false narrative that by raising the Federal Funds Rate/FFR, it will slow the pace of rising inflation.
“Here is another secret for you… in no way will raising the FFR at its current rate slow the pace of inflation,” he wrote. “The Federal Reserve is still maintaining a FFR well below the current inflation rate, and what does this do? By design this creates more inflation. Moreover, the Federal Reserve is now supposedly engaging in some kind of quantitative tightening program, which in theory is slowing the pace of its asset purchases and even possibly reducing the size of its balance sheet.”
TRENDPOST: Subscribers to the Trends Journal are not surprised by the inflation explosion. The magazine warned that inflation was a serious threat to the economy when Jay Powell, the Fed chairman, spent months referring to inflation as “transitory.”
He changed his tune in April when he said it was time to be “moving a little more quickly” to tighten monetary policy.
Celente says the same Federal Reserve officials and business media reporters who got inflation wrong a year ago, saying it was “temporary” and “transitory,” are wrong yet again.
“It’s dragflation. The economies won't be stagnant, they will drag down as inflation rises,” Celente said. “We’ve been writing about it for a year. Are they too ill-informed to see the facts, or are they lying to hide the truth of how bad it will be?”
TREND FORECAST: Despite the obvious insider’s games of market rigging, the higher interest rates rise, the deeper economies will fall. And according to a Financial Times survey, over the past three months, there have been 60 increases of interest rates... which is the most aggressive round of rate hikes since 2000, The Year of the Dot-com Bust. As we continue to note, while the average person feels the economic pain as inflation rises and it costs them more to buy less, the true levels of economic devastation will not be realized by the general population until Wall Street crashes. Therefore, the Bankster Bandits and The Wall Street White Shoe Boys will do all they can behind the scenes to delay the market crash.