Global Macro Monitor

The price of a full English breakfast jumped to a new high as stubborn food price inflation makes life harder for British consumers. 

The average cost of ingredients to make a traditional fry-up soared almost 23% from a year earlier in March. – Bloomberg

It is a turning point the world has not seen in centuries, and is unlikely to see again for centuries more.

India is on the cusp of passing China in population, according to the latest U.N. estimates. At 1.428 billion people, India has already edged past mainland China, the data show, and it will soon surpass the mainland and Hong Kong combined.

With China’s population declining, the margin between the two countries will only grow as India becomes the most populous country in history. What had long been the world’s largest democracy is now, simply, the world’s largest everything. – NY Times

Good piece on Bloomberg today about the auto repo industry.  It looks like many car owners bought too much auto:

With more Americans struggling to pay their bills, the $1.7 billion industry for repossessing such assets as cars, trucks and boats is gearing up for a boom. The effects are expected to reverberate through countless ordinary lives and onto Wall Street, where car loans are packaged into bonds and sold to investors…  

In March, the percentage of subprime auto borrowers who were at least 60 days late on their bills was 5.3%, up from a seven-year low of 2.58% in May 2021 and higher than in 2009, the peak of the financial crisis, data from Fitch Ratings show. While not all of those borrowers will face repossessions, the risk is high…

It’s difficult to determine exactly how many repossessions occur each year, but Cox Automotive estimates that there were 1.2 million in 2022, up about 5.3% from 2021 but still down from 1.68 million in 2019. The Repossessors Summit made its debut in 2009, when there were a record 1.77 million repossessions. – Bloomberg

Brazilian stocks and currency outperformed this past week as inflation came in lower than expected, increasing speculation the central bank may cut interest rates. 

The inflation problem, we believe, is not so much about the price of money (interest rates)  but the quantity of money.  The problem with money is that we can’t define what money is in our high-tech and digital economy, much less measure it.  My margin brokerage account —  from which I can write checks —  is money but not counted in the aggregates.  M2 is so Flinstone.  

Gimme Shelter! 

The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.1 percent in March on a seasonally adjusted basis, after increasing 0.4 percent in February, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 5.0 percent before seasonal adjustment. The index for shelter was by far the largest contributor to the monthly all items increase. This more than offset a decline in the energy index, which decreased 3.5 percent over the month as all major energy component indexes declined. The food index was unchanged in March with the food at home index falling 0.3 percent. – BLS

Inflation, however, remains too high. The core CPI, which economists view as the better indicator of underlying inflation, was up 5.6% from a year ago. It’s the first time in over two years that the core came in above the overall measure, which was up 5%…The report offers glimpses of disinflation ahead even while highlighting the sticky nature of inflation — particularly within the service sector. While policymakers are closely watching for any sign that the latest banking turmoil is weighing on the economy, brisk consumer price gains paired with a still-strong labor market are likely to lead the Fed to raise interest rates at least once more before what they say will be an extended pause. – Bloomberg

Wow!  The data in the following table are so surprising it makes us think we made a mistake in our calculation.  Please try and replicate the table and confirm our calculations.

Gold has trounced the S&P500, both in price and total return, since the beginning of the 21st Century, not by a little but by bunches.  Entry levels determine returns and entry points matter!

Note the quotable quote in our post from yesterday labeling gold, “Boomer Rocks.”

“Yields are starting to look toward the Fed to pivot, and it looks like gold’s just ready to break out. I think these boomer rocks, they’re set up for a boom…”  – Mike McGlone, Bloomberg Intelligence Senior Macro Strategist

Hat tip to Carter Worth for pointing out the relative performance.