Black Monday

[winner69]

" Despite today’s stronger than expected labour market figures, we do not expect it will be long before the RBNZ cuts the OCR. We continue to expect at least 50bps of OCR cuts by year end (we have pencilled in 25bp cuts in October and November), but we still view the August meeting to be very much ‘live’."

ASB Bank's view after today's labour data

Wonder what ASB's ulterior motive is in wishing for that

[alokdhir]

Wonder what ASB's ulterior motive is in wishing for that

They have reduced mortgage rates already ...so maybe looking for RBNZ support

[moka]

Federal Reserve Chair Jerome Powell has recently made several notable comments regarding the U.S. employment figures and the broader job market:

Overstated Payroll Numbers: Powell suggested that U.S. employment figures might be overstated, which is a rare critique from the Federal Reserve. He acknowledged discrepancies in employment data, stating, “There is an argument that payrolls may be a bit overstated.”

Cooling Job Market: During his testimony to Congress, Powell emphasized that the job market is cooling, which, along with persistently high prices, signals that the Fed might be nearing an interest rate cut. He highlighted that while inflation has eased from its peak, it still exceeds the Fed’s 2% target. Powell warned that delaying rate cuts could excessively dampen economic activity and employment.

1. Focus on Dual Mandate: Powell reiterated the Fed’s commitment to its dual mandate of maximum employment and price stability. He underscored the importance of sustained vigilance against inflation and indicated that any rate cuts would depend on clear, sustained progress toward the 2% inflation target.
2. Potential for Rate Cuts: Powell hinted at the possibility of rate cuts if the labor market weakens unexpectedly. He noted that the Fed monitors a wide array of labor market data and would respond to significant, unforeseen weakening, although he declined to specify the exact indicators that would trigger such a response.

These comments reflect the Fed's cautious approach in balancing its efforts to control inflation while also addressing potential weaknesses in the labor market.

[moka]

U.S. employment figures might be overstated

https://thedeepdive.ca/powells-remark-on-overstated-payroll-numbers-questions-accuracy-of-u-s-employment-figures/

Federal Reserve Chair Jerome Powell has raised eyebrows with his recent comments suggesting that U.S. employment figures might be overstated, a rare and striking critique that has drawn responses from various quarters, including whistleblower Edward Snowden and financial news outlet ZeroHedge.

During a post-meeting press conference, Powell acknowledged discrepancies in employment data, stating, “There is an argument that payrolls may be a bit overstated.” This remark was highlighted by Edward Snowden in a tweet: “Not sure I’ve ever seen the chairman of the Federal Reserve publicly accuse the White House of cooking the books on employment numbers, but here we are.”

[winner69]

Market still guessing there will be a rate cut next Wednesday ….but not convinced as much as they were yesterday. In the media -

Before the data was released, markets had priced in a 92% chance of a 25-basis point cut to a 5.25% cut next Wednesday. Market pricing is now at 55%.

[moka]

https://www.latimes.com/business/sto...may-be-nearing

WASHINGTON — July 9, 2024
The Federal Reserve faces a cooling job market as well as persistently high prices, Chair Jerome H. Powell said in testimony Tuesday to Congress, a shift in emphasis away from the Fed’s single-minded fight against inflation of the last two years that suggests it is moving closer to cutting interest rates.

The Fed has made “considerable progress” toward its goal of defeating the worst inflation spike in four decades, Powell told the Senate Banking Committee.
“Inflation has eased notably” in the last two years, he added, though it still remains above the central bank’s 2% target.

In the past, Powell and other Fed policymakers have repeatedly stressed that the economy’s strength and low unemployment rate meant they could be patient about cutting rates and wait to ensure that inflation was truly in check.

But on Tuesday, Powell said the job market has “cooled considerably.” And he added that the economy’s growth has moderated after a strong expansion in the second half of last year. Last week, the government reported that hiring remained solid in June, though the unemployment rate rose for a third straight month to 4.1%.

The job market “is not a source of broad inflationary pressures for the economy,” the Fed chair said under questioning.

[moka]

The job market “is not a source of broad inflationary pressures for the economy,” the Fed chair said under questioning.

The term "cost of greed crisis" is being used to describe the current economic situation where rising prices and inflation are attributed not just to external factors, but also to corporate profiteering. This perspective argues that businesses are taking advantage of the economic climate to increase their profits at the expense of consumers, exacerbating the cost of living crisis.

Key points about the "cost of greed crisis" include:

1. Corporate profits: Some argue that a significant portion of price increases can be attributed to businesses raising their profit margins rather than just passing on increased costs.
2. Wage disparities: There are instances of companies offering minimal wage increases to workers while executives receive substantial pay raises, fueling accusations of corporate greed.
3. Energy sector: The energy industry, in particular, has faced criticism for making record profits while consumers struggle with high energy bills.
4. Government response: Critics argue that governments have been reluctant to address corporate profiteering, instead focusing on other factors contributing to inflation.
5. International perspective: This phenomenon is not limited to one country; similar concerns have been raised in the UK, Europe, and other regions.
6. Data analysis: Some economists have attempted to quantify the impact of profits on inflation. For example, the European Central Bank found that profits accounted for a considerable chunk of recent price increases in the Eurozone.
7. Counterarguments: Some argue that profit-seeking is a normal market function and that businesses are responding to increased demand rather than engaging in profiteering.

It's important to note that while corporate greed is seen as a factor in the current economic situation, it's not the only cause. Other elements contributing to the cost of living crisis include:

• Global events like the COVID-19 pandemic and the war in Ukraine
• Supply chain disruptions
• Rising energy prices
• Government policies and taxation

The term "cost of greed crisis" reflects a growing public sentiment that corporate behavior is exacerbating economic hardships for many people. However, the extent to which corporate profits are driving inflation varies by region and sector, and economists continue to debate the relative impact of different factors on the overall economic situation

[moka]

The study on "greedflation" in the United States, conducted by think tanks IPPR and Common Wealth, revealed several key findings about corporate behavior during periods of high inflation:

1. Profit growth outpaced expenses: The study found that corporate profits grew at a much faster rate than expenses during the period of high inflation in 2022.
2. Significant profit increase: Across the 1,350 firms analyzed, including those in the U.S., profits increased by 30% from 2019 to 2022, surpassing the inflation rate significantly.
3. Concentration of profit growth: In the U.S., a third of listed companies were responsible for driving most of the profit surge.
4. Key beneficiaries: Energy giants like Exxon Mobil and Chevron, as well as food producers such as Kraft Heinz, were among the primary beneficiaries of the profit windfall during a time of global turmoil in the energy and food sectors.
5. Inflation justification: The study indicated that many companies used inflation as a justification to raise prices beyond what was necessary to offset increased costs, effectively boosting their profit margins.
6. Broader trend confirmation: These findings align with other research, including a report by the International Monetary Fund (IMF), which found that nearly half of eurozone inflation in 2022 could be linked to corporate profits.
7. CEO rhetoric vs. reality: While CEOs often cited inflation as a hindrance to growth and justified price hikes as necessary to offset rising input costs, the study suggests that many companies were actually exploiting the inflationary environment to bolster their financial positions.

This comprehensive study provides evidence that many large corporations in the U.S. and other countries took advantage of the inflationary period to increase their profits significantly, contributing to what has been termed "greedflation" or a "cost of greed crisis."

https://fortune.com/europe/2023/12/0...flation-study/
The biggest study of ‘greedflation’ yet looked at 1,300 corporations to find many of them were lying to you about inflation

https://www.theguardian.com/artandde...ol-photo-essay
It’s greed, that’s what it’s about’: documenting the UK’s cost of living crisis – photo essay

[ValueNZ]

In reference to inflation
"It is always and everywhere a result of too much money, of a more rapid increase of money, than of output. Moreover, in the modern era, the important next step is to recognize that today the governments control the quantity of money so that, as a result, inflation in the United States is made in Washington and nowhere else. Of course, no government any more than any of us, likes to responsibility for bad things.

All of us are humans. If something bad happens, it wasn’t our fault. And the government is the same way, so it doesn’t accept responsibility for inflation. If you listen to people in Washington talk, they will tell you that inflation is produced by greedy businessmen, or it’s produced by grasping unions, or it’s produced by spendthrift consumers, or maybe its those terrible Arab sheiks who are producing it."

"But none of them produce inflation, for the very simple reason that neither the businessmen, not the trade union, nor the housewife have a printing press in their basement on which they can turn out those green pieces of paper we call money. Only Washington has the printing press, and therefore, only Washington can produce inflation"

- Milton Friedman

If corporate greed is to blame for inflation, and are able to set prices however they please this begs the question, why didn't they jack up prices prior to covid times? Are they somehow more greedy now than before?

I think those who claim corporate greed is the cause of inflation have a deep misunderstanding of how competitive markets operate.