Thanks again Vlad!
Not Vlad, JPow. Or at least whoever deemed this the acceptable time to crush this so called "Great Resignation"
Inflation is never transitory. You are correct there. But, inflation rates can be transitory. No one was predicting that prices will go back down. They were predicting (incorrectly) that the inflation rate won't stay high for long periods of time.The worse part? Inflation is never "transitory" because prices never go back down permanently, they just stay up permanently. Powell knows this.
What if it is started by a temporary shortage/price hike of energy? What happens when energy prices goes down again?Inflation is never transitory. You are correct there. But, inflation rates can be transitory. No one was predicting that prices will go back down. They were predicting (incorrectly) that the inflation rate won't stay high for long periods of time.
Like in the 1970s oil crisis that ended in 1980 and overall inflation kept going up? The inflation rate declined, but overall inflation went up. Only if you zoom in on a few exceptions for a few items for a short period of time do you see prices drop.If inflation
What if it is started by a temporary shortage/price hike of energy? What happens when energy prices goes down again?
If inflation
What if it is started by a temporary shortage/price hike of energy? What happens when energy prices goes down again?
The fed may ease their tightening based on the GDP data. The real driver of today's rally are all of the positive earnings reports.
It sounds contradictory, but once you look into details, it is not. The current-dollar GDP grew by 6.5% in the first quarter 2022. Thus, companies have a big increase in revenue that can be reflected in increased profits. But inflation grew by more; inflation grew by 7.8% in that quarter. Thus, real GDP (inflation adjusted) shrunk. It is quite possible to have increased profits at the same time real GDP has lowered. Also, remember things like housing price increases lower real GDP but don't impact profits for most companies.Isn't that kind of contradictory?
There is also a common contradiction about bad news increases the stock market in times like this. Any news that might slow down the increases in the interest rate will be taken as positive news for stocks. So a bad GDP number will have a chance of slowing the interest rate hikes and thus will make the market move higher.
Sell. Now.
Still got a long ways to go if the Fed is serious. QQQ is still 40% higher than before the start of the pandemic.
Nah... this is the time to buy!