“Fed Watch” is a macro podcast, true to bitcoin’s rebel nature. In each episode, we question mainstream and Bitcoin narratives by examining current events in macro from across the globe, with an emphasis on central banks and currencies.
In this episode, CK and I get down and dirty in the August consumer price index (CPI) data, some shocking Chinese economic data and we talk about the bitcoin and ether price.
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Food And Shelter Components Of CPI
After we cover some charts, like bitcoin, the S&P 500, the German DAX, and European natural gas futures, we dive into the big topic for this week, U.S. CPI data.
In this episode, I go into depth on the biggest story of the week, the U.S. CPI report from the Bureau of Labor and Statistics. We pay special attention to CPI’s food and shelter components. Food prices saw a decline in their rate of increase, resulting in what I interpret as signaling a peak in food price rises has occurred. We also cover shelter costs in the CPI. It is the largest single component by weight, and it has been continuing to increase. However, in the episode, I point to a couple reasons why shelter is a very lagging indicator and is likely 18-24 months behind other prices.
For CPI, the major takeaway from this podcast is the need to stress month-over-month changes, instead of year-over-year. If you only consider year-over-year rates, you’ll find yourself thinking prices are rising at 8% annualized right now, when, in fact, they’ve been rising less than 1% annualized over the last two months. There is a big difference there.
China Exports And Oil Demand
On “Fed Watch,” we pride ourselves that we have been on top of the crisis in China since the very beginning. When others were — and still are — on the China-rising bandwagon, we were calling out the obvious economic deterioration and fundamentally weak geopolitical position of China.
Well, things are not getting better for them. This week, we got reports that Chinese exports are falling off a cliff. In an article from the South China Morning Post, we read that instead of the normal peak season for Chinese exports with the approaching holiday season in the U.S. and Europe, Chinese exporters are claiming they are actually seeing a number that looks like the “off season.”
“This decrease reflects falling demand for freight, both because of excess inventories among some importers as inflation reduces spending among some consumers, and as others shift to other types of goods and to services as the pandemic recedes,” said Judah Levine, head of research at Freightos. “Many retailers pulled peak season orders earlier in the year to avoid delays.”
Not only are their exports plunging, but their oil demand is plunging as well. I read a report that explains China’s oil demand has fallen for the first time since 2002!
“The main downward pressure on oil prices in the past few days has been a report that China could see its annual oil demand shrink for the first time since 2002 because of Covid restrictions under Beijing’s zero-Covid policy.”
This is right in line with what I have been predicting, that the world has reached peak oil demand, at least for the next couple of decades. The main driver of sinking demand is deglobalization and the associated economic contraction. The world has grown to demand roughly 100 million barrels of oil per day and with the deglobalization depression, I can see that dropping to 90 million barrels per day and staying there for years.
Populism, Nationalism And Anti-Globalists
In the last segment of the show, we give an update on the political situation in Europe. The Swedish elections have been completed and the anti-globalist right has taken control of their parliament. It is a result that seemed to come out of the blue. In the country that is famously left leaning and seen as a bulwark for modern day European-brand socialism, Sweden has shifted rapidly against the global Marxists.
Two other elections of note are coming before the end of the year. Italy, where the Brothers of Italy and their anti-globalist coalition is set to take over a possible super-majority in their parliament, and the United States midterms, where anti-globalists are expected to win control of both houses of Congress.
Indeed, this is a massive swing against the Marxism of Davos, Washington and Brussels. It’s also a very good sign for individualism, more decentralized governance and the rise of neutral money.
This is a guest post by Ansel Lindner. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.