A Moment Of Truth From JPM: "It's Hard To See The Recent Growth-Inflation Mix As Anything Other Than Discouraging"

Tyler Durden's picture

No comment necessary.

Highlights in the latest comment from JPM's Michael Feroli ours:

Both the headline and core Consumer Price Index (CPI) came in firmer than expected in May. The CPI increased 0.35% (2.1% over year-ago), and the ex-food and energy core CPI rose 0.26% (2.0% over year-ago), the largest one-month increase for this measure since October 2009. Over the past three months the core CPI is now up 2.8% annualized. By our estimate this implies a 0.16% increase for May in the Fed's preferred core PCE measure of inflation, which would take the year-ago increase up to 1.5%.


The recent move higher in inflation makes the Fed outlook more interesting. As for tomorrow, the current statement language on inflation is so generic that it doesn't have to be modified, though the recent news could increase the odds that an amendment could me made to mention inflation moving back towards the Committee's longer-run objective.


The dots are submitted at the beginning of the two-day meeting, which starts at 10am today, so today's print shouldn't have a material impact on the dot plot (recall that the midpoint of the core PCE projection for 4Q14 at the March meeting was 1.5% -- which should be achieved in May -- we have already been expecting a modest move higher in tomorrow's projection). At the margin, today's inflation print further tilts the odds toward an earlier first rate hike relative to our current 4Q15 call....The higher-than-anticipated headline PCE inflation implication (our reading is +0.22%), implies lower real consumption spending growth in May, we think only up 0.1% now. Through the first five months of the year the headline CPI is up at a 2.6% annual rate, even though first half GDP growth may come in around 0.5% annualized....


While some may cheer an earlier Fed rate hike, its hard to see the recent growth-inflation mix as anything other than discouraging.

Fear not: we are confident many will try because, clearly, it's the blamy(sic) spring's fault.

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Squid Viscous's picture

Stagflation, bitches!

Temporalist's picture

In newspeak that is "Disincouraging"

doctor10's picture

Its taken him 6 years-but Obama is sinking right down to the Jimmy Carter level at this point.

Soul Glow's picture

Jimmy Carter approval rating - the Maginot Line of POTUS polls.

CPL's picture

Oddly Carter is the only one in Potus that did something useful after his term.  He's a hell of a carpenter and home builder.

onewayticket2's picture

but Jimmy Carter wasnt trying to "fundamentally transform" [aka break down] the USA

valley chick's picture

Either you forgot a sarc tag or you haven't learned anything since you have been here in 1 year and 20 some odd weeks.

CPL's picture

It was going to break down anyways, between piss poor resource management, horrible money management, expansion policies driving it over the cliff and the fact it's starting to look like a shit hole by optics.  The difference was whether it was going to be a train wreck killing everyone or the train stops then everyone walks. 

There's a better chance people make it walking than being on that train.  Can always build another train, it's just stuff.

NoWayJose's picture

Waitin' on the Obama 'malaise' speech to inspire us...

Squid Viscous's picture

Welcome to the 70's - I hope chicks will "risk ride" again and wear really tight jeans...at least the music will be good 

SheepDog-One's picture

JPM, U mad, bro? What's wrong, not enough free money and above-the-lawishness to suit you pirates?

Soul Glow's picture

When JPM pulls out of the markets they'll jizz all over the Fed's face.

LawsofPhysics's picture

Translation;  "interest rates must remain zero-bound, buy bonds sheep, back to the other side of the pen, now!"

PlusTic's picture

rate hikes, sure...it's never gunna happen, we're in a depression

Da Yooper's picture

you know it & I know it - most of ZH knows it


BUT the GDP dont have a friggen clue


it is still bread & circus time for them


the tribal media have the wool pulled over the sheeples eyes bigtime

Space Animatoltipap's picture

Big confusion dead ahead.

starman's picture

Any rise in any economic Indicator is inflation driven!

If 2nd quarter GDP prints negative again that means recession is back!

And it looks  negative so far. 

Relentless101's picture

Government owns the bond market and owns the stock market both directly and indirectly. What are we talking about? It's all bullshit.

Confundido's picture

There is no inflation! End of the story! Who holds such heresy, such error of faith as true? 

101 years and counting's picture

brought to you by the mother fuckers that abolished glass steagall, forced oil from $15-20 to $100, destroyed global finance, actively rigs gold prices, has stolen over $1 Trillion from the US Treasury/Fed and has paid minimal fines as a result of being the largest criminal organization in the history of the world.

SDRII's picture

DF on CNBC interviewing a Silicon Valley insider says model has "moats"

ejmoosa's picture

Rate hike or rate drop makes no difference UNTIL it is the markets that determine the rates.  

As long as the Fed forces a rate, we will have major distortions in our economy.

SDRII's picture

IMF says 4% is optimal: CTRL PRNT

Soul Glow's picture

Funny how policy makers can sit in ivory towers, drive fancy cars, but don't use compound interest when assesing proper inflation metrics.

Inthemix96's picture

Laws of Physics says it best.

Roll the mother fucking guillotines, nothing changes otherwise.

And dont think you capital cunts at the morgue are just walking away from this carnage, that you caused, and is just about to ensue.  To many people are aware now, so many upset, ruined, bankrupt, destroyed lives, are well fucking aware of what you financial criminal swines have done to ever let it go.

Tell your friends, tell your work collegues, tell your families, the 'Reckoning', 'Tis nearly here.

Its going to be, shall we say, 'Brutal'.

What what.


timmeh's picture

that's OK, negative interest rates would probably fix it

khakuda's picture

Time for Yellen to demand BLS change the inflation benchmark again to decrease weightings of housing, education, healthcare, food and energy and increase weightings of asbestos, digital cameras and pagers, buggy whips, world book print editions and Pee Wee Herman guest lecture honarariums.

moneybots's picture

"While some may cheer an earlier Fed rate hike, its hard to see the recent growth-inflation mix as anything other than discouraging."


Regardless what the mix is, it will be discouraging.  there is no way to get out of a hole by digging it deeper.  Global debt now 100 trillion and counting.

yrad's picture

Rates cannot go up. The US debt couldnt handle the payment shock. Its that simple. Smoke, bread, mirrors, and circuses.

deflator's picture

They can raise rates if they renege on SSI, medicare, medicaid. Probably saving that move for after the midterms.