Well, Janet lived up to form on Wednesday basically saying everything I laid out in Wednesday morning’s post.
She will raise rates at a modest pace and only once this year, perhaps.
No not this year as I have told you. Yellen and her cohorts know there is little reason economically or monetarily to raise rates. This economy is going nowhere but sideways.
Case in point. Macy’s. It’s a huge retailer that can sell enough items to stay profitable. Why? Its core shoppers are feeling the pinch of stagnant wages or lost wages for the aspirational shoppers and have severely cut back spending.
What Macy’s is looking at doing to keep its share price from cratering? Selling the land under its stores or maybe spinning it out as a REIT.
That should speak volumes as to where the middle class sit in this “recovery.”
So consumer price index comes out with 0.4 rise in May, which missed estimates despite a rise in gas prices. Ex food and fuel it was 0.1% also a miss.
There is no pricing power in a deflationary environment. That’s why if you look at the latest CPI data regionally, the Northeast is -0.3% on pricing.
That’s deflation, which is a rate rise killer all on its own.