Manufacturing in the U.S. is spiking, oil price is bid. GDP is falling. Markets are over staked with information and economic gauges. Feels chaotic, although still underwritten by the Federal Reserve. Rates are far too low to combat inflation. England is a good example, with inflation now runaway at 10%.
The high frequency trading systems or HFTs are not that smart, they're just quickly than you and me, they are, at the end if the day, programmed by humans and it is human consumption which makes up 100% of the economic information that is pumped into the market to digest. In turn, the market tries to make makes decisions, whether to trade bullish or bearish. And when there is too much information pouring in and HFTs, humans and everybody else in between, tries to gauge a trend, it can lead to information chaos. The volatility (not information chaos) has been smoothed out by Central Banks trying to globally coordinate interest rate hikes, that if looked at from 2017 inflation (globally) has doubled from 3.23% to 7.4% inflation they, (Central Banks) have moved at a ridiculously tardy pace, which speculation likes, because in all this confusion laced with self interest, the market is trying to buy the recession cue over inflation and economic stagnation.
So, which one is it? Recession or stagflation or both? What we do know is the U.S. economy is packed to the rafters with post-stimulus cash which is still floating around, in fact $5.2 Trillion was injected into the American economy in 2020 at $1.73 Trillion a year, which according to this info chart from Washington Post, dwarfed the collective wealth of the two richest men, Elon Musk and Jeff Benzos. Stimulus is always for consumption and speculation, not for sustainable investment or assisting people with savings. And did we spend, with food being the main consumption, also housing went through roof during the pandemic, greed was rife across the board, more so with crypto coins, the main one being Bitcoin as people bought up feverishly during the pandemic and lockdowns, encouraged by a certain billionaire.
Chart 1 shows the Philadelphia Fed Manufacturing Index in expansion territory spiking from negative 12% now sitting at 6.20%, oil at $90 on U.S. inventory declines and U.S. growth GDP at 0.9% which is showing the economy is slowing down i.e stagnated growth, adding more evidence that stagflation is lapping at the shore and what could lie ahead is a brutal storm brewing.
Chart 2 is U.K inflation at double digits (10.10%), with the Pound down and interest rates from the Bank of England at a measly 1.75%. Very self explanatory.
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