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Marko Bjegovic Profile picture
Marko Bjegovic
@MBjegovic
Founder/CEO of Arkomina | Investor | Macroeconomist | Stock Picker | Not investment advice (see disclaimer) | Newsletter: https://t.co/9NRz67BK3k
Not Fred Goodwin Profile picture M Profile picture R0Y Profile picture david Christoph Profile picture 5 subscribed
Apr 10 • 9 tweets • 5 min read
At first glance Mar #CPI looks hot.

Some have even said the #Fed should hike rates from here based on the last 3 months of CPI.

Is #inflation reaccelerating?

Let's delve into details.

A CPI thread.

1/9 Headline (+3.477% YoY) and core #CPI (+3.801%) were 8 bps and 7 bps higher than I expected respectively.

My Mar estimate is available here (for free): .

My CPI estimates remain exceptionally accurate with an average error of -2 bps for headline and -4 bps for core.

#inflation

2/9substack.com/home/post/p-14…Image
Image
Jan 11 • 9 tweets • 5 min read
Many think Dec #CPI disappointed but actually it wasn't that much hotter than expectations like news headlines may suggest.

In the details, CPI remains pretty cool.

Let's delve deeper under the hood.

A CPI thread.

#inflation

1/9 On the surface headline #CPI was 0.1 pp higher than my estimates for MoM and 0.2 pp higher than my estimates for YoY.

Core was 0.1 pp higher than both my MoM and YoY estimates.



#inflation

2/9
Jan 5 • 8 tweets • 4 min read
Dec Employment Report looks hot on the surface with
💥NFP above +200K
💥UR not going up from 3.7% and
💥AHE running at +0.4% MoM for the 2nd month in a row.

However, there is much more weakness under the hood.

Let's dive deeper into the numbers.

A thread.

1/8 Dec NFP was +216K but Nov and Oct were revised down by a total of -71K with Oct now matching Jun for the lowest NFP number in 3 yrs of only +105K.

So far, almost all months (save Jul) were revised down in 2023 with total downward revision close to -0.5M.

If Dec is revised down in line with the avg revision in the last 3 months (-48K) NFP could end up in line with +170K consensus.

So the total downward revision in 2023 would equal all job gains in Q4.

Downward revisions of such magnitude and persistence don't happen in either strong nor tight labor mkt like some, including the #Fed, have been describing it.

2/8Image
Sep 13, 2023 • 9 tweets • 3 min read
Headline CPI at +3.7% YoY (it was +3.0% 2M ago) which is 0.1 pp higher than expected.

Core CPI at +0.3% MoM, again +0.1 pp higher than expected.

Are there reasons for us and the Fed to worry?

Let's delve deeper.

A CPI thread.

1/9 For accountability purposes, I'll say that headline came +0.1 pp higher on YoY basis and +0.1 pp higher on MoM basis than my estimates, while MoM headline and YoY core came in line with my estimates.



2/9x.com/MBjegovic/stat…
Aug 29, 2023 • 6 tweets • 4 min read
Lots of chatter around the latest #JOLTS number that went down to 8.827M, the lowest level since Mar 2021 (8.399M).

Important to note a few things:
1) despite the #Fed frequently saying it, this number was never representative of real labor demand bc it has included many fake job openings (IOW it has overstated labor demand by a wide margin which was especially evident after the lockdowns in 2020/2021)
2) right now JOLTS vs unemployed is 1.5 and the Fed wants to see it at 1. However, there is no guarantee this number will stop falling once it equates with unemployed ppl
3) by the time 2) happens this may actually mean that unemployed ppl are already way above JOLTS bc of 1)
4) if 3) is true this also means that #UR will go way above the Fed's desired level
5) Fed's desired UR is recessionary. IOW they have been expecting and hoping for a #recession while trying to convince every1 #softlanding is their base case

A short thread.

1/6 When the #Fed gets misled by inaccurate numbers like #JOLTS or lagging numbers like #CPI/#PCE one thing is certain - they will overdo it, no matter which direction they go.

And that is what they have done.

First they were 1 yr late to start tightening.

If they don't hike from here they will be 1 yr late to stop raising rates.

If they hike one more time this yr like they say they will then they will be even more late.

In this 1 yr so far they hiked by an unnecessary 300 bps.

At one point chickens will come home to roost.

When the lags from all of these (mostly unnecessary) hikes play out, we will get a long (maybe even severe) #recession.

2/6
Aug 9, 2023 • 7 tweets • 2 min read
Tomorrow we will get Jul #CPI.

Lots of worries around gasoline prices and what will they mean for the #inflation in both July and going forward, as this will be a determinant of the #Fed's policy going forward.

So, where will Jul CPI print at?

A thread.

#inflation

1/7 Before we get to the #CPI estimates, oil prices have (finally) broken to new 2023 highs tdy.

Still, that doesn't necessarily mean that we will see higher #inflation going forward.

More on this in a days old tweet:


2/7
Jul 17, 2023 • 11 tweets • 4 min read
Just realized I forgot to address the stellar Jun #CPI report.

I'm sure you've seen a lot about it by now but you definitely haven't seen what you're about to see here.

A CPI thread.

#inflation

1/11 #CPI
+0.2% MoM for headline and core
YoY headline +2.97% and core +4.83%

Better than consensus in every aspect.

I was 🎯 for MoM figures, but also 0.1 pp too optimistic for the headline and 4 bps too pessimistic for the core.

#inflation

2/11

Jun 2, 2023 • 11 tweets • 6 min read
May employment report came in mixed with both NFP and UR increasing.

Again, no Wall Street analyst came nowhere close to guessing the headline number with the highest estimate missing it by 129K.

What does that all mean for the #Fed?

A thread.

1/11
NFP rose for the 29th M in a row with +339K which is 149K above consensus (+190K).

Apr number was revised up by 41K from +253K to +294K.

Total gain in Apr and May is +633K, 190K higher than expected (+443K).

#employment

2/11
Mar 31, 2023 • 8 tweets • 6 min read
Feb #PCE, #Fed's preferred measure of #inflation, came in cooler than expected.

But 1M doesn't make a trend.

What does the #PCE tell and what it all means for the #Fed?

Let's dig deeper.

A thread.

1/ As I said in in the Jan #PCE thread, Jan reading looks a lot like Oct. Both were outliers in an otherwise deflationary trend since July.



#inflation

2/8 Image
Mar 28, 2023 • 16 tweets • 12 min read
Time to update this chart.

With everything going lately this may be the single most important chart to look at.

What do the latest numbers tell us?

A thread.

#inflation

1/16 I made the quoted tweet on Feb 2 which was before Jan employment report, #CPI , #PPI and #PCE when most were still talking about great Dec numbers.

In the meantime most indicators showed higher #inflation numbers but, as I noted beforehand, that is only seasonality.

2/16 ImageImage
Feb 25, 2023 • 13 tweets • 10 min read
Jan #PCE came in hotter than expected tdy.

After Jan employment report, #CPI and #PCE some have been calling for the #Fed to step up their hikes in order to solve the #inflation problem.

Should the #Fed do it?

A thread.

1/13 Before we go into the #PCE details, here is a comprehensive overview of the Jan employment report:


#inflation

2/13
Feb 18, 2023 • 17 tweets • 12 min read
@LynAldenContact suggests Taylor Rule implies 10.2% FFR citing @stlouisfed FRED (#Fed).

Is 10.2% really what Taylor rule suggests the FFR should be currently at?

A thread.

1/13 Taylor Rule:

FFR = R* + 0.5 (GDP est - potential GDP) + 0.5 (inflation est - 2)

R* - natural interest rate (estimates vary from 2-2.5%); IOW FFR which is neither expansive nor restrictive

#Fed's Dec projections:

GDP est - 0.5%

Potential GDP - 1.8%

Inflation est - 3.1%

2/13
Feb 13, 2023 • 12 tweets • 7 min read
The long awaited Jan #CPI report goes out tomorrow (Feb 14) at 8:30 am ET.

Lots of talks about BLS revisions of their seasonal adjustments and whether #inflation is picking up again.

So where will the #CPI print at?

A thread.

1/11 Friday BLS published revised figures for SA #CPI data 2018-2022 with recent figures gathering attention bc they were revised somewhat higher.

This sparked speculations whether they purposely did that to make future figures look lower than they otherwise would be.

2/11
Feb 3, 2023 • 24 tweets • 13 min read
Jan NFP came in 200K+ above the highest Wall Street estimate, UR came in lower than expected, while AHE came mostly in line.

How come Wall Street analysts were all so off?

What does that say about the labor mkt?

Let's dig deeper.

A thread.

1/24

#Fed

Before analyzing the final data, let me explain adjustments and revisions BLS does every Jan:
1) revisions to Establishment Survey data and
2) adjustments to population estimates of the Household Survey

#employment

2/24
Jan 27, 2023 • 22 tweets • 14 min read
Q4 #GDP advance print shows 2.9% after 3.2% in Q3.

2 positive Qs after 2 negative Qs suggest there is no #recession.

Now that #inflation is nonexistent, a non-#recession would actually mean a soft landing.

Is that plausible?

A comprehensive 🧵.



1/22 Before we go into the #GDP details, let's delve deeper into the #recession data.

Since 1954 there were 10 recessions and ALL came after the #Fed hiked rates.

There were only 3 instances when their hikes didn't cause a #recession:
1) 1961-1966
2) 1983-1984
3) 1994-1995

2/22
Jan 12, 2023 • 17 tweets • 13 min read
At first glance, Nov #CPI was somewhat better-than-expected report (headline MoM slightly lower than expectations -0.1% vs 0%) and mostly in line (YoY headline, as well as MoM&YoY core).

But in the details #inflation is much weaker than gets recognized.

A thread.

1/17 Unadjusted headline #CPI is down for the 2nd M in a row with -0.31% which is the lowest print since Apr 2020 (-0.67%).

In the last 8 yrs there were only 2M with materially lower prints (Apr 2020 and Jan 2015 -0.47%)!

2/17 Image
Dec 21, 2022 • 14 tweets • 9 min read
Ever since the #Fed meeting last week 2YR has been below the FFR.

2YR has long served as a proxy for the mkt perceived terminal FFR.

Hence the mkt doesn't trust the #Fed's estimates of 5%+ rates but thinks this is THE terminal rate.

What will the #Fed do?

A thread.

1/14 In the last 46 yrs there were quite a few instances with negative 2YR-FFR spread, 17 to be exact.

Interestingly enough, almost every time the spread went negative, the #Fed actually cut rates.

Let's take a closer look.

2/14
Dec 13, 2022 • 16 tweets • 12 min read
Nov #CPI was the 2nd better-than-expected report in a row.

The last time that happened was, prepare yourself, in Oct 2018!

It didn't even happen during the lockdowns in 2020 making this report all the more significant.

Let's delve deeper.

A thread.

1/15 On an unadjusted basis headline #CPI was down -0.1% MoM, the lowest MoM reading since April 2020!

Back then the economy was on forced lockdown and this is only second to that lowest 2 readings (Mar-Apr 2020) in the recent history.

2/15
Dec 12, 2022 • 11 tweets • 7 min read
This week we get the 2 most important things that will end this year:
1) FOMC meeting on Wednesday
2) November #CPI report tomorrow that will likely determine what we'll hear by the #Fed on Wednesday

Can Nov #CPI make the #Fed go sub-50 this week?

A thread.

1/11 We had a better-than-expected #CPI in Oct which was only the 2nd beat on the headline, and 3rd beat on the core this yr.

Since beats on the #CPI have been so rare, many (among which @biancoresearch) have been using it as an argument against potential beat again in Nov.

2/11 Image
Nov 27, 2022 • 22 tweets • 16 min read
I've been saying this the whole yr.

Earlier many disagreed saying the #Fed needs to go to 4, 5, 9%... to "kill" the #inflation but, just as I was saying, it turned out the #Fed can't do a thing to this #inflation as it's running its course no matter what the #Fed does.

🧵

1/22 In hindsight what could have the #Fed done differently?

Their first policy mistake was not starting hiking #FFR in Mar 2021.

Still, I don't think they could have done much to this #inflation.

Maybe the peak #CPI YoY would be 8%-ish instead of 9.1% but not much less.

2/22
Nov 10, 2022 • 18 tweets • 14 min read
Oct #CPI came in way better than consensus estimates and even better than I projected.

This is only the 2nd beat on the headline and 3rd on the core #CPI this yr.

Does that mean the #CPI has really started to come down and the #Fed can #pivot?

🧵

1/18

In the details this was a good report. MoM unadjusted:
1) Food +0.7%, same as Sep
2) Energy +1.0% vs -2.6% in Sep due to higher gas prices (+3.1% vs -5.6% in Sep), while #electricity and #natgas went down (-1.3% and -4.0% respectively vs +0.8% and +2.6% respectively in Sep)

2/18