After the blackout period prior to the FOMC decision last week ended the Fed speakers are coming out thick and fast to give their views on inflation. First out of the traps was Treasury Secretary Janet Yellen who reiterated her view that higher U.S. inflation will not continue beyond next year, however the Fed would act if it needed to dampen any 1970s-style price rises. ‘I'd expect price increases to level off, and we'll go back to inflation that's closer to the 2% that we consider normal as the pandemic fades’, Yellen said in an interview yesterday. She added that as the global pandemic eases, more people will return to work, helping consumer demand, which in turn will relieve the pressure from wages and goods prices.
Then we had Bullard saying he believed inflation issues are bigger in the U.S. than in Europe. However, the Fed is not contemplating hikes at the moment with the focus remaining on tapering. There was a caveat though ‘What we can do is assess the situation next spring and see where we're at, and at that point we can make a decision about raising the policy rate’ he said.
Daly said inflation figures were ‘eye-popping’ and she sees a lot of uncertainty around the numbers. She also touched on the labour market, saying time was needed to see through the fog, believing it will be mid-2022 before we see the true state of the labour market and as well as the outlook for inflation. ‘It's going to take time to know whether the job market is tight, as many employers say, or has room to expand by bringing people back into the workforce’ she noted.
Kashkari said prices have been elevated for longer than expected, and he doesn’t know how long supply-chain disruptions will last. He also expects more clarity on the economic outlook by the time the Fed ends its bond-buying program in mid-2022, and is keeping an ‘open mind’ on the timing of any rate hikes to follow.
We also read this morning that Jeffrey Carpoff, the man behind what could be one of the largest scams in US history, has been found guilty of the massive Ponzi scheme and sentenced to a 30-year prison sentence and an order to pay nearly $800m in compensation. Carpoff cheated investors out of nearly USD1bn and spent the money on a lavish lifestyle that included more than 150 sports and vintage cars, vacation villas in California, Nevada, the Caribbean and Mexico and a NASCAR sponsorship. He even owned a minor league baseball team.
Carpoff’s DC Solar built mobile solar generators for sporting events and music festivals. It polished its image with investors by wildly inflating the number of generators it had produced. The company only built and leased a fraction of the roughly 17,000 mobile units it claimed were in use, using new money from investors to pay off previous ones.
And don’t think it was just those wet behind the ears investors looking to make a quick buck that were sucked in. Berkshire Hathaway invested nearly $350m along with other big names that now look very red faced. However, if you fancy a 1978 Pontiac Firebird Trans Am once owned by Burt Reynolds (think Smokey and the Bandit) then now could be your chance. It's part of the online auction that the US Marshals Service has set up to sell Carpoff’s car collection.