I hope everyone had some rest this weekend. The big news of course is that the Iran negotiations failed and no further discussions are scheduled, although it is unclear if the ceasefire will hold for another week.
This will not be a data heavy week. We get existing home sales tomorrow. Tuesday we get NFIB, ADP weekly, Redbook and PPI. Wednesday is MBS apps and import/export prices. Thursday has claims and Philly Fed and industrial production.
This note will be heavily focused on inflation. After last week’s reports, I have updated a number of my models and they are very concerning. The Fed thinks they are neutral, but their stance is in fact loose and worsening the issue by the day. As you will see below, if they do not get serious and at a minimum establish a hawkish tone, they are likely to lose control of the situation entirely.
Let’s dig in.
