Oddbean new post about login | logout The market is reacting negatively this morning to extremely poor ISM manufacturing data. Here’s the TLDR: Demand fell, inventories rose (due to unsold stock), and prices *rose* (due to labor and shipping costs). In essence, this is stagflation (higher prices in a stagnant or slowing economy). The Fed’s worst nightmare. https://m.primal.net/KcSH.png
We have been raising prices non-stop since 2020. All 100% to battle increased input costs (gross margins have still dropped from 42% to 35% and net margins from 8% to 4%). Since Q3 2023 we have only increased pricing slightly, due to (finally) flattening labour costs and flattening net margins. Sentiment is ugly - business is less profitable, labour force feels financially "ok" (not "good"), and revenue forecasts are flat at best.
Any chance the fed backtracks on its proposed rate cuts? 😂
Not if unemployment keeps going up.
There is a case to be made where the job market is already bad and folks are tapping the savings to keep the boat afloat https://m.primal.net/KcVg.jpg
Soooo not raising rates I take it 😂
savings rate is down and may even be negative excluding govt transfer payments from income. also seeing credit card balances increase meaningfully. auto and cc delinquencies on the rise
Gold does well in stagflation right?
