Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
Support MFO
Donate through PayPal
The PCE(personal consumption expenditures) price index + Atlanta's Fed Q2 estimated GDP
For one thing, significant limitations on advanced microchips to the Middle East have been eased. The ME has AI and bitcoin aspirations.
My take on the oil situation was that OPEC had increased production to head off our domestic industry from increasing production, by holding down prices. Basically beating Trump to the punch, after he broadcast his desire for a U.S. production increase.
On the topic of inflation, we just got a new PCE number:
"Core inflation rate rose to 2.7% in May, more than expected, Fed’s preferred gauge shows"
"Along with the inflation numbers, consumer spending and income showed further signs of weakening. Spending fell 0.1% for the month, compared with the estimate for an increase of 0.1%. Personal income declined 0.4%, against the forecast for a gain of 0.3%."
-The latest inflation data came in hotter than expected, and Nike warned in its earnings on Thursday that prices will be going higher due to tariffs. -Across the U.S. retail and manufacturing distribution chains, inventory has started to be re-ticketed with higher prices, by between 8%-15%, according to ITS Logistics, including for apparel and consumer product goods. -The footwear industry says it expects prices to rise by between 6% and 10%.
Does not appear to be the time to fan the flames of inflation with lower rates. Imagine what happens when Donald gets his wish for full control of the FED.
The following video explains why Trump's tariffs haven't sparked inflation yet. The "Fed Whisperer" even shares his insights! Perhaps you will find it enlightening.
As I said already many times before. I care about the numbers now. I never listened to useless economists because they have been wrong many times. Projections, scary stories and hypotheticals are fine—but the Fed said it would follow the data. Well, the data is here:
"Goldman Sachs wrote in a note earlier this month that the Consumer Price Index and Producer Price Index reports suggest tariffs had “modest” effects on prices in May. The analysts expect the bulk of tariff-induced inflation to show up between June and August."
"Kelly thinks it will take a bit longer, with the full effects of tariffs showing up in inflation data around September or October. 'The tariffs are being paid on the inventory coming in,' he says. 'That inventory is going to make its way into and out of the warehouses onto a truck, off to a wholesaler, and eventually to retail shelves.' On top of the time this takes, he says retailers also need to work through inventory imported pre-tariffs, which may not be marked up."
"The effect, whenever it manifests, is likely to be significant. Bill Adams, chief economist at Comerica Bank, says he expects tariffs to add 0.75-1.00 percentage points to year-over-year inflation, with the PCE inflation rate peaking roughly by the end of 2025. Kelly puts the figure even higher at 0.9-1.5 points."
“Bank of America, which expects core PCE inflation to have risen roughly in line with consensus estimates, wrote in a report: 'Overall, this would be a good number for the Fed, but it’s hard to take too much signal, given the uncertainty tariffs pose around the inflation path.'”
Comments
My take on the oil situation was that OPEC had increased production to head off our domestic industry from increasing production, by holding down prices. Basically beating Trump to the punch, after he broadcast his desire for a U.S. production increase.
On the topic of inflation, we just got a new PCE number:
https://www.cnbc.com/2025/06/27/pce-inflation-report-may-2025-.html
"Core inflation rate rose to 2.7% in May, more than expected, Fed’s preferred gauge shows"
"Along with the inflation numbers, consumer spending and income showed further signs of weakening. Spending fell 0.1% for the month, compared with the estimate for an increase of 0.1%. Personal income declined 0.4%, against the forecast for a gain of 0.3%."
This seems most appropriate posted right here.
-The latest inflation data came in hotter than expected, and Nike warned in its earnings on Thursday that prices will be going higher due to tariffs.
-Across the U.S. retail and manufacturing distribution chains, inventory has started to be re-ticketed with higher prices, by between 8%-15%, according to ITS Logistics, including for apparel and consumer product goods.
-The footwear industry says it expects prices to rise by between 6% and 10%.
Does not appear to be the time to fan the flames of inflation with lower rates. Imagine what happens when Donald gets his wish for full control of the FED.
Well. Methinks he's going to have to replace more than one voter to get there.
The following video explains why Trump's tariffs haven't sparked inflation yet.
The "Fed Whisperer" even shares his insights!
Perhaps you will find it enlightening.
https://www.wsj.com/video/series/on-the-news/economists-explain-why-trumps-tariffs-havent-sparked-inflation-yet/44B0A1D9-97B8-456B-8A12-489DE4EB5D46
Projections, scary stories and hypotheticals are fine—but the Fed said it would follow the data. Well, the data is here:
The PCE + CPI numbers are pretty good NOW.
"Kelly thinks it will take a bit longer, with the full effects of tariffs showing up in inflation data around September or October. 'The tariffs are being paid on the inventory coming in,' he says. 'That inventory is going to make its way into and out of the warehouses onto a truck, off to a wholesaler, and eventually to retail shelves.' On top of the time this takes, he says retailers also need to work through inventory imported pre-tariffs, which may not be marked up."
"The effect, whenever it manifests, is likely to be significant. Bill Adams, chief economist at Comerica Bank, says he expects tariffs to add 0.75-1.00 percentage points to year-over-year inflation, with the PCE inflation rate peaking roughly by the end of 2025. Kelly puts the figure even higher at 0.9-1.5 points."
“Bank of America, which expects core PCE inflation to have risen roughly in line with consensus estimates, wrote in a report: 'Overall, this would be a good number for the Fed, but it’s hard to take too much signal, given the uncertainty tariffs pose around the inflation path.'”
https://www.morningstar.com/economy/may-pce-report-forecast-still-just-tip-tariff-iceberg