General Discussion
Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region Forums(EDIT)Stock Market tanks, DOW -1300... Inflation report comes in hot...
Last edited Tue Sep 13, 2022, 03:40 PM - Edit history (1)
https://finance.yahoo.com/news/stock-market-news-live-updates-september-13-2022-090235060.htmlU.S. stocks nosedived Tuesday after a surprising inflation report showed prices rose more than expected last month.
Technology stocks led the way down, with the Nasdaq Composite plunging 4%. The S&P 500 sank 3%, and the Dow Jones Industrial Average erased 870 points, or 2.7%.
The Bureau of Labor Statistics released the Consumer Price Index (CPI) for August early Tuesday, which showed prices rose 8.3% over the prior year and 0.1% over the prior month. Economists had expected an 8.1% increase in inflation over last year and a decline of 0.1% over the prior month.
WarGamer
(12,436 posts)ouch.
Amishman
(5,555 posts)The Fed's balance sheet peaked at 8.962 trillion.
Feb 2020 it was 4.166 trillion.
They have started unloading their mountain of securities, but the balance is still 8.822 trillion.
Until the money supply is reduced by unwinding that excess liquidity, inflation will keep erasing Americans finances. Simply too much money in circulation.
You can't grow the money supply that rapidly without steady inflation.
M2 money supply was 15.458 trillion in Feb 2020. It is now 21.709 trillion. We increased our money supply by a third without growing our actual GDP by anything like that much. Prices will continue to rise to rebalance vs the money supply. Worse, inflation changes spending habits (increasing the velocity of money), acting as a multiplier for that money supply growth.
WarGamer
(12,436 posts)Amishman
(5,555 posts)Real wages are down as paychecks are badly lagging inflation.
That's gutting discretionary spending, which is particularly bad in our retail and services driven economy. Worse food and entertainment is still recovering from the pandemic hit.
Calculating
(2,955 posts)This will kill us in the midterms if this doesn't turn around. Like 80% of my stocks are red for the year in my portfolio, people can't be happy. I keep buying more stocks every paycheck thinking I'm getting a deal, and then everything just drops again.
WarGamer
(12,436 posts)Bad policy... don't forget, Powell was appointed by Trump. My tinfoil hat corner of my brain suspects he's trashing the economy for November.
sprinkleeninow
(20,237 posts)When will we learn.
He needs to be exchanged by one more (Dem) qualified. He's a left-over.
former9thward
(31,981 posts)He was originally appointed by Obama. Appointed to Chairman by Trump. Appointed at the end of his term for another term by Biden. He is now a Biden appointee.
sprinkleeninow
(20,237 posts)Downthread it's said he's a repuglycon.
former9thward
(31,981 posts)But both Obama and Biden appointed him.
MichMan
(11,910 posts)Powell, a Republican, was originally appointed to the Fed's governing board by former President Barack Obama and was elevated to the chairman's post by then-President Donald Trump.
https://www.npr.org/2021/11/22/1052741845/biden-reappoints-jerome-powell-as-federal-reserve
Bettie
(16,089 posts)and he'll keep trashing it, pulling us into a full depression for 2024.
My tin foil hat is also on, because I believe that corporations (CEO's/Billionaires) are keeping prices going up and up (and padding their profits) because they don't like it when government does things for people instead of just giving them huge piles of cash.
moonshinegnomie
(2,440 posts)low inflation and low unemployment.
they need to curb inflation dramatically and that requires the economy to slow down
ITAL
(631 posts)But a few months ago my wife said we're holding off on buying anything else unless the Dow goes below 27K or something, because right now throwing more money in the market just doesn't seem smart.
andym
(5,443 posts)and the Fed's current behavior becomes predictable. Rents are still high because housing market is still overpriced for example. That bubble has to burst.
WarGamer
(12,436 posts)And re: the real estate bubble... history will repeat.
As interest rates rise, as mortgages hit 6% then 7%... home sales will slow to a trickle. Then prices start to drop. Then drop some more.
Eventually you have people who bought a house for 850k and then it's worth 650k... they buy a second house around the corner for 650k and drop their keys in the mail slot at the mortgage company.
They trade a 7 year ding on their credit for potential equity in the future.
This has happened before.
Rstrstx
(1,399 posts)WarGamer
(12,436 posts)To summarize... August was "somewhat less bad at 8.3% compared to 8.5% in July.
But core CPI actually went UP in August.
All numbers were worse than predicted by pundits. Thus the market crash today.
year over year was down. Prices were lower in August compared to last year than July numbers.
But core CPI was a hit.
I think today is they thought Powell might only do 0.5 and now he might do 1.0.
Good thing the market is a casino and not the Economy.
moonshinegnomie
(2,440 posts)edhopper
(33,570 posts)But the Street is obviously nervous. Or is worried there are more hikes to come.
They are realizing the era of free money is over.
FSogol
(45,476 posts)honest.abe
(8,677 posts)Fuel and gas prices are the key to this whole mess and those prices are way down. I predict a major decrease in inflation numbers next month. Its a shame the Fed is about to ramp up interest rates unnecessarily.. imo.
WarGamer
(12,436 posts)Ace Rothstein
(3,160 posts)In fact it still seems to be on the rise.
honest.abe
(8,677 posts)My point is that it will take awhile for the lower fuel costs to affect the costs of things like food. Next month I think we will see price declines across the board.
Celerity
(43,316 posts)MichMan
(11,910 posts)A year ago they claimed it was only transitory and would go away quickly. Now everything is up another 8% over what it was back then.
roamer65
(36,745 posts)More money chasing less goods due to supply chain problems. That equals eventual double digit inflation.
Its called devaluation, folks.
WarGamer
(12,436 posts)Bucky
(53,997 posts)If the problem in the market is that there's too many dollars chasing too few products, that actually should be good for the stock market, where people with too much money on hand can always buy more stocks.
In fact, that's the main reason why the market is overvalued. There aren't enough quality new investments because of a dull and uninspired tech sector, so the same old Blue Chip and staple stocks are just getting more and more buyers.
There could be an adjustment coming, but I don't think this is it.
It's probably helpful to take a look at the 5-year djia trend. It's basically a big hump that started with Trump and is wobbling under Biden. But as long as the economy is cranking along, which it is, I wouldn't expect to see a big downward ploop.
https://www.google.com/search?q=dow+Jones