(EDIT)Stock Market tanks, DOW -1300... Inflation report comes in hot...

[WarGamer]

Last edited Tue Sep 13, 2022, 03:40 PM - Edit history (1)

https://finance.yahoo.com/news/stock-market-news-live-updates-september-13-2022-090235060.html




U.S. stocks nosedived Tuesday after a surprising inflation report showed prices rose more than expected last month.

Technology stocks led the way down, with the Nasdaq Composite plunging 4%. The S&P 500 sank 3%, and the Dow Jones Industrial Average erased 870 points, or 2.7%.

The Bureau of Labor Statistics released the Consumer Price Index (CPI) for August early Tuesday, which showed prices rose 8.3% over the prior year and 0.1% over the prior month. Economists had expected an 8.1% increase in inflation over last year and a decline of 0.1% over the prior month.

[WarGamer]

1. Rumor has it that JPow may push for a full 100BP rate increase this month...

ouch.

[Amishman]

18. Won't help much, wrong Fed tool

The Fed's balance sheet peaked at 8.962 trillion.

Feb 2020 it was 4.166 trillion.

They have started unloading their mountain of securities, but the balance is still 8.822 trillion.

Until the money supply is reduced by unwinding that excess liquidity, inflation will keep erasing Americans finances. Simply too much money in circulation.

You can't grow the money supply that rapidly without steady inflation.

M2 money supply was 15.458 trillion in Feb 2020. It is now 21.709 trillion. We increased our money supply by a third without growing our actual GDP by anything like that much. Prices will continue to rise to rebalance vs the money supply. Worse, inflation changes spending habits (increasing the velocity of money), acting as a multiplier for that money supply growth.

[WarGamer]

23. and QT is likely to bring stress also...

[Amishman]

29. Yup, the financial picture isn't pretty.

Real wages are down as paychecks are badly lagging inflation.

That's gutting discretionary spending, which is particularly bad in our retail and services driven economy. Worse food and entertainment is still recovering from the pandemic hit.

[Calculating]

2. Not good

This will kill us in the midterms if this doesn't turn around. Like 80% of my stocks are red for the year in my portfolio, people can't be happy. I keep buying more stocks every paycheck thinking I'm getting a deal, and then everything just drops again.

[WarGamer]

3. The Fed is choosing RECESSION over INFLATION.

Bad policy... don't forget, Powell was appointed by Trump. My tinfoil hat corner of my brain suspects he's trashing the economy for November.

[sprinkleeninow]

7. Noone else significantly more qualified could have been appointed?🤔

When will we learn.

He needs to be exchanged by one more (Dem) qualified. He's a left-over.

[former9thward]

25. He is not left over.

He was originally appointed by Obama. Appointed to Chairman by Trump. Appointed at the end of his term for another term by Biden. He is now a Biden appointee.

[sprinkleeninow]

31. My misunderstanding then. Heard the name 'dump' and just figured.

Downthread it's said he's a repuglycon.

[former9thward]

32. He is.

But both Obama and Biden appointed him.

[MichMan]

8. Wasn't he reappointed by President Biden ?

[TheProle]

21. Yes

Biden's pick to stick with Powell will likely reassure financial markets, despite opposition from some progressive members of the president's own party.

Powell, a Republican, was originally appointed to the Fed's governing board by former President Barack Obama and was elevated to the chairman's post by then-President Donald Trump.

https://www.npr.org/2021/11/22/1052741845/biden-reappoints-jerome-powell-as-federal-reserve

[Bettie]

14. That is my thought too

and he'll keep trashing it, pulling us into a full depression for 2024.

My tin foil hat is also on, because I believe that corporations (CEO's/Billionaires) are keeping prices going up and up (and padding their profits) because they don't like it when government does things for people instead of just giving them huge piles of cash.

[moonshinegnomie]

26. thats because the fed has 2 mandates

low inflation and low unemployment.
they need to curb inflation dramatically and that requires the economy to slow down

[ITAL]

4. That was our plan too

But a few months ago my wife said we're holding off on buying anything else unless the Dow goes below 27K or something, because right now throwing more money in the market just doesn't seem smart.

[andym]

5. Look to what Paul Volcker's Fed did to stop stagflation

and the Fed's current behavior becomes predictable. Rents are still high because housing market is still overpriced for example. That bubble has to burst.

[WarGamer]

6. perfect comparison.

And re: the real estate bubble... history will repeat.


As interest rates rise, as mortgages hit 6% then 7%... home sales will slow to a trickle. Then prices start to drop. Then drop some more.

Eventually you have people who bought a house for 850k and then it's worth 650k... they buy a second house around the corner for 650k and drop their keys in the mail slot at the mortgage company.

They trade a 7 year ding on their credit for potential equity in the future.

This has happened before.

[Rstrstx]

9. Mmm, Politico is reporting inflation is down from the prior month

https://www.politico.com/news/2022/09/13/inflation-falls-2nd-straight-month-gas-costs-00056314

[WarGamer]

11. I tend to get my financial news from Financial Sources.

To summarize... August was "somewhat less bad at 8.3% compared to 8.5% in July.

But core CPI actually went UP in August.

All numbers were worse than predicted by pundits. Thus the market crash today.

[edhopper]

16. So

year over year was down. Prices were lower in August compared to last year than July numbers.
But core CPI was a hit.
I think today is they thought Powell might only do 0.5 and now he might do 1.0.
Good thing the market is a casino and not the Economy.

[moonshinegnomie]

27. before today 75 basis poins was pretty much baked in. i still think it is.

[edhopper]

28. Yeah

But the Street is obviously nervous. Or is worried there are more hikes to come.
They are realizing the era of free money is over.

[FSogol]

9. Oh FUD!

[honest.abe]

12. I think these are residual inflation numbers and don't reflect the true picture.

Fuel and gas prices are the key to this whole mess and those prices are way down. I predict a major decrease in inflation numbers next month. Its a shame the Fed is about to ramp up interest rates unnecessarily.. imo.

[WarGamer]

13. I sure hope so...

[Ace Rothstein]

15. Food definitely isn't way down where I shop.

In fact it still seems to be on the rise.

[honest.abe]

17. Yeah, I know. Same here.

My point is that it will take awhile for the lower fuel costs to affect the costs of things like food. Next month I think we will see price declines across the board.

[Celerity]

19. pretty bad inflation here in Sweden, food costs go up weekly, sometimes daily on certain things

[MichMan]

20. I dont believe any of the "experts" anymore

A year ago they claimed it was only transitory and would go away quickly. Now everything is up another 8% over what it was back then.

[roamer65]

22. This is what happens when a money supply is inflated by about 50 percent.

More money chasing less goods due to supply chain problems. That equals eventual double digit inflation.

It’s called devaluation, folks.

[WarGamer]

24. true...

[Bucky]

30. The market may be overvalued, but I think this is an overreaction

If the problem in the market is that there's too many dollars chasing too few products, that actually should be good for the stock market, where people with too much money on hand can always buy more stocks.

In fact, that's the main reason why the market is overvalued. There aren't enough quality new investments because of a dull and uninspired tech sector, so the same old Blue Chip and staple stocks are just getting more and more buyers.

There could be an adjustment coming, but I don't think this is it.

It's probably helpful to take a look at the 5-year djia trend. It's basically a big hump that started with Trump and is wobbling under Biden. But as long as the economy is cranking along, which it is, I wouldn't expect to see a big downward ploop.

https://www.google.com/search?q=dow+Jones