The Mess That Greenspan Made - Part 32

The Labor Department reported that annual inflation in the U.S. rose above 2 percent for the first time since late-2012 as a surge in energy prices added to broad-based inflation in other categories of consumer goods and services. Overall prices jumped 0.4 percent in May, the biggest gain in almost two years, and are now 2.1 percent higher than a year ago.

Expectations were for an increase of just 0.2 percent and “core” consumer prices – excluding food and energy – came in higher as well, up 0.3 percent versus a consensus estimate of 0.2 percent. On a year-over-year basis, core inflation now stands at 2.0 percent.

Overall energy prices jumped 0.9 percent last month paced by a surge of 2.3 percent in electricity costs and an increase of 0.8 percent for motor fuel. Food prices rose 0.5 percent with a gain of 1.4 percent for meat, poultry, fish, and eggs leading the way, closely followed by a gain of 1.1 percent for fruits and vegetables.

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Tuesday Morning Links

MUST READS
Iraq oil refinery shuts as crisis deepens – CBS News
Who are the major players in the Iraq crisis? – USA Today
Oil Topping $116 Possible as Iraq Conflict Widens – Bloomberg
Collapse Of Iraq Would Open A New Front In The Sunni-Shi’a War – Mint Press
Islamists kill 50 in Kenya, some during World Cup screening – Reuters
Russian $8.2 Trillion Oil Trove Locked Without U.S. Tech – Bloomberg
IMF downgrades U.S. growth outlook, cautions investors on interest rates – LA Times
IMF Cuts U.S. Growth Outlook, Sees More Scope for Zero Rates – Bloomberg
Bonds’ Liquidity Threat Is Revealed in Derivatives Explosion – Bloomberg
Study asserts startling numbers of insider trading rogues – NY Times
David Brat Gets It Right About Subprime Crisis – Investors.com
Wall Street’s Secret Weapon: Congress – truthout
Fourth Turning Accelerating – Burning Platform

MARKETS/INVESTING
World stocks mixed as investors wait for Fed – AP
The Cloudy View of Stocks from 30,000 Feet – Barron’s
Emerging Stocks End Four-Day Decline as Turkey, India Advance – Bloomberg
David Rosenberg: Investor complacency and other things in a bubble – Financial Post
Survey: Fed Will Raise Rates Faster Than Investors Bet – Bloomberg
Treasury 2-Year Yields at 9-Month High as Fed Meeting Begins – Bloomberg
Gold slips before Fed; platinum flat on S.Africa wage offer – Reuters
Silver Chart And Sentiment Show Potentially Sharp Rally – GoldSilverWorld
Gold’s Three Week High is All About Iraq — as is Today’s Decline – Barron’s
Amid high inflation, the gold price rises in India – Mineweb
Gold Finally Bombed Out – GoldSeek

ECONOMY/WORLD/HOUSING/BANKING
The Big Freeze on hiring – Washington Post
They’re Lying To Us, Part 1: Unemployment – Dollar Collapse
UK inflation rate falls to 1.5% in May – BBC
German investor sentiment at lowest level in 18 months – CNA
Argentina: Won’t submit to ‘extortion’ on debt – SF Gate
China Bigger Than U.S. With $14 Trillion in Company Debt – Bloomberg
The Global Importance Of Paul Volcker’s Call For A ‘New Bretton Woods’ – Forbes
House prices in London reach pre-crisis highs – Telegraph
Canada Finance Minister Sees Soft Landing in Housing Market – Nasdaq
Homebuilder confidence rises, but most still see unhealthy housing market – AP
Federal Reserve Won’t Roil the Waters – WSJ
Fed may forecast slower growth – USA Today

 

Rosenberg on Inflation and the Fed

Gluskin Sheff chief economist David Rosenberg talks about such things as wage inflation where it matters and nascent rising prices with a ditzy Trish Regan who seems intent on extrapolating from a single month of data (last week’s negative PPI print for May).

Rosenberg has been warning about higher inflation for some time now and it’s worth pointing out that his track record on this sort of thing is pretty good.

I’ll never forget a few years back when he was predicting 10-year yields of 1.5 percent and everyone, including myself, thought he was kind of nuts.

Monday Morning Links

MUST READS
Iraq: We Broke It, but We Can’t Fix It – Fiscal Times
Iraq, oil markets, and the U.S. economy – Econbrowser
Iraq Army Tries to Roll Back Sunni Militants’ Advance – Bloomberg
Pope Francis Warns The Global Economy Is Near Collapse – Huffington Post
Russia cuts off natural gas supplies to Ukraine – CNN/Money
Europe faces gas shortage as Russia cuts Ukraine supply – Telegraph
We Are So Not Prepared For Another Oil Shock – Dollar Collapse
As Fed meeting nears, thoughts turn to rates – USA Today
Blast From the Past: Could Stocks Melt Up? – WSJ
Bailout Economics 2014: Predators Prosper, Prey Perish – TSF
Few-strings-attached loans at record levels – CNBC
A Bazillionaire’s Guide to Stress Relief – Lewis, Bloomberg
Formula for Market Extremes – Hussman Funds

MARKETS/INVESTING
Futures drop as Iraq turmoil continues – Reuters
Have Investors Grown Complacent? – WSJ
Don’t Worry, Be Bullish – Alhambra Partners
Stocks and Bonds Are Sending Mixed Economic Signals – RCM
How The Unemployment Rate Affects Stock Market Performance – AWOCS
Draghi Stock Rally Runs to Record Price-Earnings Ratio – Bloomberg
“Cluster Of Central Banks” Secretly Invested $29T In The Market – Zero Hedge
Treasuries Rise Before Fed as Iraq Drives Haven Demand – Bloomberg
Gold hits 3-week high on Iraq turmoil; platinum rebounds – Reuters
Technical Trading: Gold Bulls Seize Control Of Short Term Trend – Kitco
Weekly Chinese Gold Demand Down, Silver Premiums Down – In Gold We Trust

ECONOMY/WORLD/HOUSING/BANKING
Rich Bernstein: Here’s where the inflation is – Reformed Broker
Rosenberg: Accelerating US bank lending wlll drive up inflation – Arabian Money
Euro zone price inflation hits trough in May – Reuters
ECB Seen Buying Assets Within a Year as Draghi Rate Cuts End – Bloomberg
Is Carney about to surprise the markets with a 2014 rate hike? – Sober Look
Sex, Drugs and Dodgy Accounting: Spain’s Growth Strategy – Testosterone Pit
Housing market slowdown hits the regions – Telegraph
In search of house-price bubbles – voxeu
Property weakness overhangs recovery – China Daily
3 reasons not to buy a home now – USA Today
Federal Reserve and ECB Balance Sheets – Marc to Market
FOMC Preview – Economist’s View

 
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