“This is the day the Lord has made;
We will rejoice and be glad in it.”
~ Psalm 118:24
Written by Bryan Lutz, Editor at Dollarcollapse.com:
Today, Powell will make his most anticipated announcement of the year.
Like the light of dawn, Powell will slowly rise up to the stage, step by step to his podium.
Reporters sitting with their coffees, “dear diaries,” and cameras to capture the market’s hope in one small sound bite:
“Federal Fund Rates will be lowered by 25bps…”
If he does cut rates…
It would appear to inaugurate a celebration of the long-suffering “soft-landing” narrative.
Because after Central Banks start cutting interest rates, the historical data tells us, they keep cutting…
Which would give confidence to money managers and investors to start investing in certain assets.
For example, gold.
But, like the weather, the market can change so quickly. We see clouds coming to cover our beloved rate cut sunrise.
Wolf Richter reports:
Beneath the Skin of CPI Inflation: “Core CPI” Again Accelerates Month-to-Month Fueled by Hot “Core Services” CPI. Durable Goods Prices Drop Further
“On a month-to-month basis in a most unwelcome development, “core services” re-accelerated for the second month in a row in August, to 5.0% annualized, which fueled the re-acceleration of the overall Consumer Price Index (CPI) and Core CPI. Core Services make up about 65% of the Consumer Price Index and include housing, healthcare, and insurance…
...Core services CPI (red in the chart below) rose by 4.93% year-over-year in August, a slight acceleration from July (4.90%). It has been near the 5% line since December 2023. It includes all services except energy services.”
Core Services CPI excludes monitoring energy services like gas for your car, or electricity to heat your home, which are also costly month-to-month expenses.
When it comes to housing, healthcare, and insurance these necessary expenses have even more influence on the Fed’s decision to cut, maintain, or raise rates.
Rising inflation in these areas would mean inflation is yet to stay down.
Along with more evidence of doubt, there’s the money supply.
Money supply is also accelerating, which I think points to a second wave of inflation, coming soon.
On July 3, I wrote about just that.
The short article was called:
How Money Dies, In 3 Charts (Plus One More on What’s Coming Next)
I show the relationship between the expansion of the money supply, and inflation.
An expanding money supply, means more inflation.
These small hints of accelerating Core CPI, along with an expanding money supply, could be enough for the Fed to rain on the rate cut sunrise.
Will there be cuts, or not?
Today is the day!
