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Fed's Goolsbee: inflation has not been great. Job market is pretty much stable

The job market is pretty much stable.There is not a lot of evidence that job market is falling apart.Inflation has not been great and is going the wrong way.There is not a lot of evidence of the job market deterioration. Inflation rises not just energy, was elevated before war. We stop making progress on inflation last yearIn the last few months as I started to go back up rather than downFed has to keep an eye on inflation situation.Everything should always be on the table for Fed. There is an argument that these are one time inflation shocks. Trying to figure out if energy shock will lastNot a big fan of using words to jawbone policy decisions.Worries about markets trying to price in AI productivity gains before they arriveThe problem with calling inflation a series of “one-time shocks” is that the shocks keep coming — one after another. Prices jump higher, but they rarely come back down. If the increase is truly temporary and caused by some artificial disruption, then when the shock fades, where’s the negative shock that brings prices back to normal? It almost never comes.A dinner for two at an Italian restaurant — two glasses of wine and a shared dessert — $258. That’s the new baseline.
This article was written by Greg Michalowski at investinglive.com.

đź”— Source

đź’ˇ DMK Insight

The job market’s stability amidst rising inflation is a double-edged sword for traders. While the absence of signs pointing to a job market collapse might seem reassuring, the persistent inflationary pressures—especially in energy—could lead to tighter monetary policies. This scenario complicates trading strategies, particularly for those in equities and commodities, as higher interest rates typically dampen growth prospects. Traders should keep an eye on inflation metrics and employment reports, as any signs of deterioration could trigger volatility across markets. It’s worth noting that while the job market appears stable now, historical trends show that prolonged inflation can eventually lead to job losses, creating a lagging effect that traders need to be wary of. Watch for upcoming economic indicators that could signal a shift, particularly any changes in consumer spending or wage growth, which could impact market sentiment significantly.

đź“® Takeaway

Monitor inflation data closely; a shift could lead to volatility in equities and commodities, especially if job market stability falters.

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