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- Macro Monday: Fine, It Is A Soft Landing ... In Rent Inflation
Macro Monday: Fine, It Is A Soft Landing ... In Rent Inflation
The Macro Institute's Weekly Economic Primer
The Macro Institute
June 17, 2024
Inflation was really slow in May. Headline CPI essentially came in close to 0% for the month. Yes, headline and core inflation rates are still growing above 3%, but if we strip out the shelter component (i.e., rent inflation) then we are almost exactly spot on with the Fed's official 2% inflation target. The math behind the shelter component of CPI has been hotly debated on Wall Street for decades now. The most important thing to know about it is that it lags other measures of rent inflation dramatically. A quick glance at the Apartment List Rent Index or the Zillow ZROI reveals that both series point to slower shelter CPI in 2024 before levelling off in 2025. In essence, the Fed should be getting the data points it needs to start easing policy in the second half of the year.
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Top Tweets From The Macro Institute
I still see the refrain of the mid-90s cycle in the financial media, but the markets are just NOT behaving the same way. Small caps were on fire after the Fed finished tightening policy in that episode (as they should in a soft landing) and are struggling this time around.
— Francois Trahan, M²SD (@FrancoisTrahan)
2:43 PM • Jun 14, 2024
Want to know what lies ahead for financial markets in 2024? This webinar for financial advisors will analyze market drivers, risks, and opportunities in equities, fixed income, and cryptocurrencies in the second half of a volatile year. Sign up today and receive 1 CE credit for… x.com/i/web/status/1…
— etf.com (@etfcom)
3:27 PM • Jun 10, 2024
I'm the first to admit that I wish I had owned Nvidia this year! It's not unusual to see crazy trends that are overdone like this at a peak in the fed funds rate. In that vein, I also wish I would have owned CSCO back in the early part of 2000. This graphic gave me a good laugh.
— Francois Trahan, M²SD (@FrancoisTrahan)
3:04 PM • Jun 13, 2024
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