Home Services Inflation, and a Flight to Safety

Services Inflation, and a Flight to Safety

Friday’s large gold rally suggests that confidence in the US is fading as quickly as faith in the Covid boosters. The ‘polycrisis’ is spreading, and this week’s collection of news and evidence on the subject is extensive.

user profile picture davefairtex Oct 15, 2023
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  • Fed Balance Sheet (WALCL): -3.8B (-0.05%) w/w.
  • Total Bank Credit (TOTBKCR): -5.6B (-0.32%) w/w.  New 15-month low.
  • 30 Year Mortgage Rate (MORTGAGE30US); 7.57% (+8 bp) w/w.
  • Consumer Price Index (CPIAUCSL): +0.39% m/m; +0.3% expected.
  • Services CPI, less Energy (CUSR0000SASLE): +0.57% m/m.  Declining, but still hot.
  • Producer Price Index (PPIACO): +0.53% m/m; rebounding past 2 months after 1+ year decline.
  • Strategic Petroleum Reserve (WCSSTUS1): -6k, slight drain.

Bank credit continues to contract – horribly deflationary – the 30-year mortgage rate is at 15-year highs, while services inflation remains stubbornly high too.  When do the banks start blowing up?  Perhaps the banks have sold their dreadfully low-yielding loan portfolios to some stupid bond fund manager?  We just don’t know.  I still think banks remain at risk, but that chicken has not yet returned home to roost.

It was an eventful week; most of the big market moves hit on Friday, when crude jumped +5.77%, gold +3.11%, silver +4.26%, miners +4.34%, while the buck just inched higher (+0.06%).   None of Friday’s moves were caused by any events I saw – for example, crude’s big rally started inching higher around 02:00 (2 a.m.) Eastern on Friday, while gold & silver started moving inexorably higher following Thursday’s close.  There was no “event”.  It feels to me as though market sentiment had some sort of change, and/or some “stealthy” accumulation started taking place – perhaps in advance of an “anticipated event?”  I don’t know – I wasn’t invited to the meeting.

The CPI report, released on Thursday, did cause a bit of a fuss.  CPI came in slightly hot (0.39% actual vs 0.3% expected); Wolf Richter has all the charts.

Acceleration of Inflation Continues, Core Services Inflation Spikes despite the Massive Health-Insurance Adjustment (Source – wolfstreet); “Year-over-year, the core services CPI rose by a still red-hot 5.7%, despite the 37.3% collapse of the health insurance CPI within it…”

In his “Section: Services CPI by category”, this stood out to me: Motor Vehicle Insurance: +1.3% m/m (18.9% annualized).  This was the sector with the highest y/y change.  

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Top Comment

Like David Icke
He sums up a suspicion that many of us here have been drifting towards.
That there is a satanic movement behind the wars seeking...
Anonymous Author by sand_puppy