Robert Brusca
Robert Brusca
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Inflation decelerated across a broad spectrum of core CPI areas -- about 40 percent of prices in the core showed declines in their year-over-year growth rate. That's a big proportion. The Fed is concerned and has a reason to be concerned.
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You count up the products (showing price increases) and you see there's a little more pressure just below the surface, ... The overall energy number showed a big decline. That covers up a lot of ills. But the PPI was the warning shot across the bow. With the CPI report we dodged the bullet.
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The claims numbers always do strange things at the end of the year. There was some improvement at the turn of the year, but the story is that claims are gravitating back to the 400,000, where they were for quite while.
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I think we're going to have a slower recovery, ... There are other things that suggest there are limits to what the Fed can do.
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This is a big leakage for our economy, ... We're at a very complicated situation with our economy.
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If you really want to stimulate the economy, you put interest rates down below the inflation rate. The lower the inflation rate goes, the harder it is to get the federal funds rate down below that.
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You can't repeal the laws of economics. Wages in China are so cheap, that you'll never make labor cheap enough in the United States to compete with that.
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It means we sort of dodged another bullet on the inflation front. These kinds of numbers put the Federal Reserve in a difficult box. We don't have inflation, the economy is growing too fast, they are afraid it won't keep up, but it's hard for them to raise rates without any inflation on the doorstep.
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The stock market is earnings-oriented. But if you're looking at earnings, you're not seeing anything improving.
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The rise, however, does not mean that housing is out of the woods -- far from it. The Fed is still hiking.
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The report is still a poor one given what has come before, but not terrible,
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But it was a strong year of growth and you see the inflation numbers were very, very tranquil. If anything, bonds are going to focus on inflation so we should be seeing a good bond market reaction to this.
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That mucked up trade flows, affected our economy and brought an unexpected easing by the Fed. I wouldn't downplay the risks out of China.
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It's like saying we're not going to hit as hard if you fall from the 50th floor of the Empire State Building instead of the 100th floor of the Empire State Building. The question is, what floor are you going to jump from and is it really going to hurt you?