Monday, January 24, 2022

"More inflation shoes to drop on NASDAQ by end-2022"

David Goldman at Asia Times, January 22:

Soaring rent increases will hit the Consumer Price Index with a lag of up to eight months 

[Climateer here: that's the number we want, lag time, as units come off leases that have been unchanged since the start of the pandemic, both the rental component and the Owners Equivalent Rent, adding up to one-third of the CPI weightings should be trending up from the ridiculously low 4.1% official figure for shelter.] Back to AT:

The latest reading for the Zillow Index of US rents shows no letup in the worst bout of housing inflation in US history. Year on year, the average US rent rose 14%, according to the real estate website. That should worry equity investors, who have watched the NASDAQ give up nearly 8% of its value during the past week as bond yields rose.

Shelter accounts for a third of the US government’s Consumer Price Index, but the official numbers have lagged far behind private-sector surveys. Lagged data reporting means that today’s observed price increases will ratchet into faster CPI inflation months from now, putting more pressure on the US Federal Reserve to tighten credit. That’s bad for stocks.

There’s no let-up in inflation pressures in most of the available high-frequency data, including input costs to service businesses, used cars, and transport costs, along with shelter (“Nowhere to hide in US stock market,” Jan. 20, 2022). Input costs to US manufacturers rose less quickly in December, to be sure, but the subsequent jump in the oil price to a seven-year high probably will lead to a worse reading in January....


Complete December 2021 CPI, released January 10:

Table 2. Consumer Price Index for All Urban Consumers (CPI-U): U. S. city average, by detailed expenditure category