Dow plunges 575 on Fed warning : Oh inflation has peaked has it?
Dow closes 570 points lower, turns negative for 2023 as Powell ignites higher rate fears:
Stocks sold off sharply Tuesday after comments from Federal Reserve Chair Jerome Powell suggested that rates may need to go higher for longer, fueling fears of a potentially larger hike at the central bank’s next policy meeting.
Since the 2008 Global Recession when central banks pumped 25Trillion into the system, the question was where did all the inflation go. Turns out China’s repressive Communist Dictatorship could provide global capital with the cheapest, best educated work force on the planet in huge numbers. this deunionised workforce allowed the cost of manufacturing to fall in real terms and smothered global western inflation.
With covid shut downs and geopolitical tensions, Western Corporations have moved to ‘just-in-case’ supply chains in western adjacent manufacturing countries rather than ‘just-in-time’ supply chains inside China.
Additionally base ingredient nations like Ukraine and Russia are out of operation for oil, wheat, gas, minerals and metals.
This means the base line cost of producing anything has jumped.
Include climate change disruptions to the agricultural calendar and you have scarcity of product AND additional costs.
To date the narrative for those who champion economic orthodoxy have proclaimed Inflation peaked in March of last year, but as Powell noted today, inflation is still stubbornly high and that he would push rates up higher than they have been forecast.
That sent the Dow down 575 points today.
The reality is that every time those cheerleading economic orthodoxy claim inflation has peaked so they can get back to the orgy of making profits, they are proven wrong.
There is a structural realignment coming that demands a different mindset.
Global free market late stage capitalism is threatened by debt it can’t afford and environmental events beyond its control. Hyper-regional is the new economics because you can’t stretch a supply chain from terrible Chinese work conditions into the high streets of the West any longer.
We have a new baked in inflation within our global manufacturing that can’t ease and no one wants to acknowledge that.
Orr and Powell and every other Reserve Bank Governor has no choice but to lift rates until the market crashes crashes…
Reserve Bank of Australia hikes interest rate again
The Reserve Bank of Australia (RBA) has increased the cash rate target by 25 basis points to 3.60 per cent.
It was the tenth consecutive rate hike by the RBA. Australia’s annual inflation rate currently sits at 7.8 per cent
RBA Governor Philip Lowe noted that global inflation remained very high.
…Stagflation is coming.
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Winter is coming too
It’s a stupid fucking world when sell offs are also caused, in part, because too many people have jobs. Yes folks there are not enough unemployed. The same statistic that is often seen as indicating how many people are lazy and bludging off a system….the same system that wants them unemployed.
Yes, we have a global stagflation economy. This will be the situation until global demand and supply chains are properly realigned, so probably another two to three years to go, at the very least. It does not help the global situation that freak weather events are occurring as well as this continuation of the Covid-19 pandemic.
The fact of the matter is that men like Jerome Powell are merely trying to do their jobs, and part of it at the moment is to hike interest rates at every turn. Without a crash, in the USA it is shares, in other Western countries it is the property sector, we cannot go back to any semblance of normal. Ever. The overheated asset market in the States is shares. In New Zealand, it is real estate. The heat needs to be cooled off. This is what these guys at Central banks and reserve banks are essentially doing by hiking interest rates.