| Amir Kahanovitz, Chief Economist of Phoenix-Excellence
For 19 consecutive months, the United States has been rising and accelerating, now to an annual change of 7.0%.
The three main inflation engines are energy (which continues to rise in January as well), car prices (which, according to indications, also continue to rise in January), and the services segment of rents, which accelerated to an annual increase of 4.1%. Apparently the clauses were less hot than expected, as the inflation expectations inherent in the market fell slightly (for 10 years from 2.58% to 2.49%).
According to reports from the Federal Reserve branches, there has been a decline in recent weeks in terms of leisure consumption, including hotels, probably due to the spread of the omicron, but in all non-leisure expansion continues, with the main threat, reportedly, being supply disruptions and shortages.
The Fed does not seem to be able to cool anything yet. The Fed wants to cool inflation without hurting the economy, but in the meantime the indications are that they are in the opposite direction.
“Elected Fed Vice President Liel Bernard said Wednesday in the testimony to the U.S. Senate that their goal is to cool inflation back to 2%, while supporting sustainable growth, which includes the KWWWOLM …”.
What is it all? Also the technology industry, which has already shown cracks in the current level of returns? Or the leisure industry, which is still struggling with Omicron?
In any case, do not respond to the Fed, and rightly so, because neither do the traffic jams in the ports. According to the Southern California Maritime Exchange, over the past Thursday and Friday, the number of container vessels waiting to dock at the ports of Los Angeles and Long Beach reached a new high of 105 ships!
They have not heard of and March? According to the market, inflation is racing without brakes. Meanwhile, the flattening of the yield curve has also resumed, mainly from the rise in short-term yields.
Sometimes there is a sense that the discourse around interest rate hikes is primarily intended to serve a semblance of Fed relevance. The question is how far will they go there with this show, until they still manage to kill the technology sector? Until they succeed in destroying the ability of the US administration to service the debt ($ 29 trillion)? Until enough mortgage takers fall? Or maybe until they attract enough capital from emerging marketers to cause them a crisis (which will return to the US like a boomerang)?
In general, perhaps it will be the US administration that will try to cool the economy, after the collapse of public support for it, and would prefer to completely abolish the warming infrastructure program or divert the issue of mid-term elections approaching the conflict with Russia over Ukraine.
By the way, where is Europe in this story? It mainly cares about its gas prices. And that the Russians will take Ukraine with love and peace.
On Friday it will be published in Israel. In our estimation, the December index rose by 0.1%, similar to the average of forecasts, and the whole of 2021 amounted to an increase of 2.6%. The pull down, among other things, is a drop in the price of fuel, moderate effects of the strengthening of the shekel, and perhaps already the omicron in hotels. On the other hand, it will be supported by the purchase tax increase, which is not clear why it is in the index at all, car prices, which have been rising at a very fast rate of 1.3% a month, food and housing, which paradoxically may surprise in moderation compared to November Inflation year ahead – we forecast 2.3%.
The writer is the Chief Economist of Phoenix-Excellence. This review is provided as a service to readers only, and should not be construed as an offer, recommendation, substitute for the reader’s professional judgment or investment advice or investment marketing, purchase and / or sale and / or holding of the securities and / or financial assets mentioned or of securities and / Or any other financial assets