Dozens of citizens were killed in Kenya as a result of riots seeking to protest the possible signing of a bill that would approve tax hikes on daily services and items, such as internet and fuel, in a plan to raise an additional .7 billion in revenue. The protests, led mostly by young Kenyans who […]
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Fed Governor Bowman Insists High Inflation Could Necessitate Future Rate Hikes
Inflation in the U.S. has remained persistent, experiencing increases in the first two months of 2024, prompting members of the U.S. Federal Reserve to exercise caution against premature rate reductions. Federal Reserve Governor Michelle Bowman has voiced considerations for elevating interest rates, diverging from market anticipations of rate reductions within the year. Bowman’s concerns primarily […]
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‘Stagnant’ BTC Price and Rate Hikes Drove Down Crypto Miner Canaan Inc’s Revenues in Q3
Canaan Inc, the crypto miner and mining rig producer, said the company’s overall revenue in Q3 stood at .3 million or some million lower than the Q2 revenue. According to the company’s CEO, stagnant bitcoin prices and rate hikes by the U.S. Federal Reserve were some of the key factors that contributed to the decline in revenues.
Canaan’s Latest Mining Revenue Nearly 80% Lower Than in Q2
In the third quarter (Q3) of 2023, the overall revenue of Canaan Inc, the crypto miner and mining rig producer, stood at .3 million or just over million lower than the .9 million realized in Q2, the firm’s latest financial results have shown. The firm’s Q3 revenues are also significantly lower than the 5.5 million generated during the same period in 2022.
As shown in the company’s unaudited Q3 financial results, Canaan Inc revenues earned from mining activities were nearly 80% (.3 million) lower than Q2 revenues of .9 million. Similarly, Canaan’s 2023 Q3 mining revenues are almost 65% lower than the .2 million that was generated in Q3 of 2022.
Increased Price Competition
Commenting on the company’s performance in the quarter under review, Nangeng Zhang, the chairman and CEO of Canaan, said:
During the third quarter of 2023, the stagnant bitcoin price and further interest rate hikes by the Federal Reserve presented us with significant challenges. Despite these headwinds, we have stayed committed to our strategic plan. In mid-September, we launched and opened pre-sales for our new A14 product series, featuring computing power of 150Thash/s with superior energy efficiency of 21J/Thash/s.
Zhang also identified increased price competition and “a noticeable softening in purchasing power on the demand front” as factors that contributed to the drop in revenues. As a consequence, Canaan went on to record a loss from operations of 2.8 million. The loss is .3 million lower than that realized in Q2 of 2023.
Meanwhile, in its Nov. 28 press release, Canaan revealed it had been granted a “Type II license for mining hardware owners to conduct bitcoin mining in Kazakhstan.” Concerning a dispute with its U.S. mining partner, Canaan said its subsidiary had filed an arbitration demand on October 19, 2023. In addition, the subsidiary had taken “possession of approximately all 26,000 units of mining machines deployed in this project.”
What are your thoughts on this story? Let us know what you think in the comments section below.
Peter Schiff Anticipates No Further Interest Rate Hikes Amid Middle East War — Warns ‘Crisis Is Assured’
Economist Peter Schiff compared the attack on Israel to 9/11, calling it “the beginning of a bad situation.” He highlighted several factors that will weaken the U.S. economy, which he described as “already structurally weak.” The economist stressed: “The U.S. can’t even afford peace. It certainly can’t afford war.” Warning that Fed policies could “unleash run-a-way inflation, an implosion in the dollar, bonds, and the economy,” he cautioned: “Crisis is assured!”
Peter Schiff Says ‘Crisis Is Assured’
Economist and gold bug Peter Schiff discussed a number of topics affecting the U.S. economy on social media platform X and in his podcast, live-streamed on Monday, including the potential economic ramifications of the war in the Middle East.
Commenting on the attack on Israel, the economist described: “This is like September 11th for Israel.” He added: “What did America do as a result of 9/11? We didn’t just shrug it off, no. We had the ‘war on terror,’ we had all sorts of stuff that happened. And then we went into Iraq where we got Saddam Hussein even though he had nothing to do with 9/11. We still ended up having a war against Iraq anyway.”
Schiff stressed that following 9/11: “It wasn’t like it just ended. It was the beginning of a lot of things that happened.” The gold bug opined:
So I think this is the beginning of a bad situation unfortunately.
“None of this is going to be pretty in the short run. It’s all going to be problematic. It’s going to destabilize the region. There already is a lot of tension there,” he continued.
“Everybody is underestimating the impact that we’re going to see here. First of all, wars are expensive. They cost money. They come at the expense of civilians, production, to the extent that we have to divert resources,” Schiff detailed. “Any Keynesian economist who tries to tell you that it’s good because it boosts the GDP, again, they don’t know what they are talking about.”
While noting that “War is expensive,” Schiff emphasized that “Even without a war, we are broke.” He added:
Anything that happens over there with Israel, we’re going to get dragged into it. We’re going to be funding it. It’s going to be increasing our deficits, more fiscal stimulus which is inflationary, and that it is going to result in bigger deficits and more money printing — all of this just accelerates the problem now.
Overall, the economist cautioned: “All of this is going to weaken the U.S. economy and I think it’s already structurally weak.” He emphasized: “What’s happening now in the Middle East, with Israel and the Palestinians and Iran, potentially just escalates all the problems. I mean, we can’t afford peace let alone war.”
Moreover, Schiff does not expect the Federal Reserve to hike interest rates further, stating: “We’ve got war in the Middle East, so the Fed can’t raise rates with all that uncertainty out there. And maybe they’ll have to cut rates.”
On Wednesday, he wrote on X: “What’s missing from the ‘higher, for longer’ interest rate narrative is that it’s actually ‘much higher, forever.’ The days of ZIRP [zero interest rate policy] are over.” He further opined:
If they return it will unleash run-a-way inflation, an implosion in the dollar, bonds, and the economy. Either way, crisis is assured!
Schiff’s repeated warnings include a massive crisis, a rush to exit the U.S. dollar, and dire consequences of Fed policies. He firmly believes that a U.S. dollar collapse is on the horizon and predicts a more severe financial crisis than the one experienced in 2008. “Future rate hikes are now pointless,” he also said, adding that any effect will be more than offset by the Fed’s quantitative easing.
What do you think about the warnings by Peter Schiff? Let us know in the comments section below.
Powell: More Rate Hikes May Be Needed to Curb Inflation
The chairman of the U.S. Federal Reserve, Jerome Powell, warned on Friday that inflation remains too high and signaled the central bank may continue raising interest rates to get it under control. In remarks at the Jackson Hole symposium, Powell acknowledged recent progress in lowering inflation but said there’s “substantial further ground to cover” before returning to the Fed’s 2% target.
Powell Signals Further Rate Hikes Amid Lingering Inflation Concerns; Pledges ‘We Will Keep at It Until the Job Is Done’
While headline inflation has fallen from its peak of 7% in June 2022, Powell focused his remarks on core inflation, which excludes volatile food and energy prices. Core inflation remains elevated at 4.3% and Powell said “sustained progress is needed” through “restrictive monetary policy” to bring it down further.
Powell pointed to declining goods prices and a cooling housing sector as evidence that rate hikes are working to curb demand. But he also cited high service prices and an exceptionally tight labor market as areas needing improvement in the coming months.
“Given the size of this sector, some further progress here will be essential to restoring price stability,” Powell said. “Over time, restrictive monetary policy will help bring aggregate supply and demand back into better balance, reducing inflationary pressures in this key sector.”
The Fed chair indicated officials will continue assessing economic data but are prepared to raise rates further if appropriate. He reiterated the Fed’s commitment to reduce inflation while cautioning that doing so will likely require below-trend economic growth for a period.
“We will keep at it until the job is done,” Powell emphasized in his remarks. He said uncertainty around how much additional tightening is needed makes the Fed’s task challenging. But he stressed the risks of not doing enough outweigh concerns about tightening too rapidly.
While acknowledging a slowing economy, Powell said the Fed must see concrete evidence of easing inflationary pressures. His remarks suggest additional rate hikes lie ahead if price and wage growth fail to moderate substantially in the coming months.
What do you think about Powell’s statements at this year’s Jackson Hole symposium? Share your thoughts and opinions about this subject in the comments section below.
Consensus Pause: Majority of Economists Predict No Rate Hikes for 2023, With Cuts Delayed Until March 2024
A newly published Reuters poll reveals that most economists concur: the U.S. Federal Reserve has likely capped its rate hikes. Yet, rate cuts aren’t anticipated until March 2024. This survey drops just as markets approach the annual Jackson Hole Economic Symposium scheduled for next week. All eyes are on Fed chairman Jerome Powell, as investors eagerly await his remarks.
Market Forecasts No Rate Cuts Through 2023; Powell’s Jackson Hole Remarks Could Shift Outlook
Following the recent uptick in the federal funds rate (FFR), the U.S. central bank is seemingly hitting the brakes. This sentiment is echoed by the lion’s share of economists surveyed by Reuters. Of the 110 economists polled, a staggering 90% – 99 of them – predict the rate will remain unchanged this September at the forthcoming Federal Open Market Committee (FOMC) meeting. Furthermore, about 80% opine that we won’t see any additional rate hikes for the remainder of the year.
CME Group’s Fedwatch Tool shows that the market is pricing in the belief that there will be no rate hike this September. There’s roughly an 89% probability of no changes at the September 22 FOMC gathering and an 11% chance that there will be a 25 basis point rise. Out of the polled participants, 23 anticipate one more rate hike this year, while a pair of economists foresee the FFR jumping twice more. Approximately, 48 out of 95, predict the Fed will maintain rates till the end of March.
Two economists bet a rate cut could take place by the end of 2023’s final quarter. “We have long seen a high threshold for cutting because Fed officials will want to minimize the risk they could regret cutting if inflation stays too high,” David Mericle, the chief U.S. economist at Goldman Sachs told Reuters. Predictions may change, however, after Fed chair Jerome Powell speaks at the Jackson Hole Economic Symposium on August 25. Investors are hoping Powell will shed light on policy for the end of the year.
CME Group’s Fedwatch Tool paints a clear market sentiment: a rate hike this September seems unlikely. The odds? An 89% likelihood that the Federal Open Market Committee (FOMC) will stand pat on September 22 and a slim 11% possibility of a 25 basis point ascent. Among those surveyed, 23 of them forecast a solitary rate increase this year, while two economists envision the FFR surging twice. Of the lot, nearly half, precisely 48 out of 95, believe the Fed will stay its hand on rate changes until March’s end.
Two financial seers are wagering on a rate decrease by the curtain fall of 2023. Goldman Sachs’ chief U.S. economist, David Mericle, conveyed to Reuters, “We have long seen a high threshold for cutting because Fed officials will want to minimize the risk they could regret cutting if inflation stays too high.” Yet, predictions might pivot post Fed chair Jerome Powell’s discourse at the Jackson Hole Economic Symposium on August 25. Investors are on edge, eager for Powell to illuminate the policy trajectory for the year’s end.
What do you think the Fed will do for the remainder of 2023? Do you expect a long pause? Do you expect rate cuts? Share your thoughts and opinions about this subject in the comments section below.
Federal Reserve Governor Hints at More Interest Rate Hikes
Federal Reserve Governor Michelle Bowman says additional interest rate increases will likely be needed to get inflation on a path down to the Fed’s target. “I will also be watching for signs of slowing in consumer spending and signs that labor market conditions are loosening,” the Fed governor added.
More Interest Rate Hikes Likely Needed, Says Fed Governor
Federal Reserve Governor Michelle Bowman indicated in her remarks on Saturday at an event hosted by the Kansas Bankers Association in Colorado that the U.S. central bank may need to implement additional interest rate increases to completely restore price stability.
She also affirmed her endorsement of the rate hike decision made at last month’s Federal Open Market Committee (FOMC) meeting. In July, Fed officials raised the federal funds rate to a range of 5.25% to 5.5%, the highest level in 22 years.
Governor Bowman stated:
Additional rate increases will likely be needed to get inflation on a path down to the FOMC’s 2% target.
“The recent lower inflation reading was positive, but I will be looking for consistent evidence that inflation is on a meaningful path down toward our 2% goal as I consider further rate increases and how long the federal funds rate will need to remain at a restrictive level,” she detailed.
“I will also be watching for signs of slowing in consumer spending and signs that labor market conditions are loosening,” the Fed governor continued, noting that Fed policymakers will be monitoring incoming data and will be willing to raise interest rates in the future if inflation progress stalls.
Federal Reserve Chairman Jerome Powell said on July 26 after the Fed announced its latest rate hike decision that prevailing economic conditions suggest that monetary policy will likely need to be restrictive for longer. “I would say that what our eyes are telling us is that policy has not been restrictive enough for long enough to have its full desired effects,” Powell stressed, adding:
We intend to keep policy restrictive until we’re confident inflation is coming down sustainably to our 2% target, and we’re prepared to further tighten if that’s appropriate.
Do you think the Fed will raise interest rates again this year? Let us know in the comments section below.
2 Rate Hikes or Hold? Fed Predictions Vary From No Rate Hikes to 6% in 2023
Based on projections from the U.S. Federal Reserve, it is anticipated that the central bank will implement two additional increases to the federal funds rate within the span of 2023. As indicated by Fed policymakers, they estimate the benchmark bank rate to fall within the range of 5.5% to 5.75% by the end of this year. While there are those who predict the possibility of the Fed raising the rate to as high as 6% in 2023, not all market observers share the same level of certainty regarding the central bank’s decision to raise interest rates before the year concludes.
Some Doubt Fed’s Rate Hike Plans, While Others Brace for 6% Ceiling
For the next 23 days, the market will await the Federal Reserve’s next rate hike decision. On July 2, 2023, at 7:18 p.m. ET, the CME Fedwatch tool indicates an 84.3% probability that the central bank will raise the benchmark rate by 25 basis points (bps) to approximately 5.25% to 5.5%.
There is a 15.7% chance that the Fed will pause again at the July 26, 2023, Federal Open Market Committee (FOMC) meeting, according to the Fedwatch tool. Although the Fedwatch tool is generally accurate, its projections are based on market sentiment and are subject to change due to economic conditions and other factors.
Some believe the Federal Reserve policymakers’ current projection of ending the year with the federal funds rate at 5.5% to 5.75% will be realized. Last week, Mary Daly, the president of the San Francisco Federal Reserve Bank, said she considers two more rate hikes this year to be “reasonable,” but she also cautioned that the Fed should balance the risks of both “under- or over-tightening.”
There are still those who believe that the U.S. central bank will not raise rates further this year. For instance, Ryan Sweet, chief economist at Oxford Economics, stated to bankrate.com that he does not anticipate any additional hikes this year.
Economist Tuan Nguyen from RSM informed bankrate.com that there is the possibility of one more rate hike. “It’s important for the Fed at the moment to have all the options on the table,” Nguyen explained. “Whether it’s the July meeting or the September meeting, all of those meetings will be live, meaning the Fed will have the options of whether to pause or hike.”
In late May, Jamie Dimon, the CEO of JPMorgan, informed analysts and reporters that individuals “should be prepared for rates going higher from here.” At the time, Dimon mentioned the federal funds rate could potentially reach 6% or 7%.
Study Says 6.5% Bank Rate is Needed to Tame Inflation, Expert Insists ‘We’ll Wind Up Somewhere Around 6%’ This Year
A research paper written by Kermit Schoenholtz, a professor emeritus at New York University, Stephen Cecchetti from Brandeis University, Michael Feroli of JPMorgan Chase & Co., Frederic Mishkin from Columbia University, and Peter Hooper of Deutsche Bank AG suggests that the U.S. central bank might have to increase the federal funds rate to 6.5% in order to address inflation.
“Our analysis casts doubt on the ability of the Fed to engineer a soft landing in which inflation returns to the 2% target by the end of 2025 without a mild recession,” the paper details.
Tom Luongo, the publisher of “Gold, Goats ‘n Guns” told Kitco’s lead anchor and editor-in-chief Michelle Makori that he believes the rate will end up at 6% this year. “I think [Powell] will raise again, and possibly even raise multiple times before the end of the year,” Luongo said in an interview. “We’ll wind up somewhere around 6 percent by the end of the year,” he added.
Luongo also said that he believes more bank failures are coming. After the three largest bank failures in the U.S. in 2023, more banks are due to fail he said. “I just see the entire banking system imploding, detonating like a nuclear bomb,” Luongo told Makori.
What are your predictions for the Federal Reserve’s interest rate decisions in 2023? Will it reach 6% or remain unchanged? Share your thoughts and opinions about this subject in the comments section below.
Federal Reserve Chair Pushes Stronger Measures to Tackle Inflation, Considers Back-to-Back Rate Hikes
Federal Reserve Chair Jerome Powell has reaffirmed the Fed’s hawkish stance. Noting that the latest economic data indicates that the Fed’s policy “may not be restrictive enough” and “has not been restrictive for long enough,” Powell stated that the central bank could raise interest rates “at consecutive meetings.”
Fed Chairman Powell on Rate Hikes
Federal Reserve Chair Jerome Powell reaffirmed the Fed’s hawkish stance on Wednesday during a central banker panel hosted by the European Central Bank in Sintra, Portugal. With the next Federal Open Market Committee (FOMC) meeting slated for July 25-26, Powell emphasized that the Fed is not done curbing inflation and hinted at the possibility of consecutive interest rate hikes. The Federal Reserve paused raising interest rates in June after 10 consecutive rate hikes.
“If you look at the data over the last quarter, what you see is stronger than expected growth, a tighter than expected labor market, and higher than expected inflation,” Powell detailed, adding:
That tells us that although policy is restrictive, it may not be restrictive enough and it has not been restrictive for long enough.
Powell noted that Fed officials have not decided on the timing and magnitude of additional interest rate hikes. Nonetheless, he shared:
I wouldn’t take moving at consecutive meetings off the table at all.
During an event held by Spain’s central bank in Madrid on Thursday, the Fed chair clarified: “We expect the moderate pace of interest rate decisions to continue.”
Last week, Powell said: “Inflation pressures continue to run high, and the process of getting inflation back down to 2 percent has a long way to go.” He further stated that a minimum of two more interest-rate hikes this year are likely necessary to steer inflation towards the Fed’s 2% target. The Fed chairman also rejected the possibility of a rate cut in the near future, stating that while “it will be appropriate to cut rates at a time when inflation is coming down really significantly, we’re talking about a couple of years out.”
What do you think about Federal Reserve Chairman Jerome Powell’s statements? Let us know in the comments section below.
San Francisco Fed President Deems 2 Rate Hikes in 2023 ‘Reasonable,’ Urges Caution in Monetary Policy
Mary Daly, the president of the San Francisco Federal Reserve Bank, expressed her views this week, stating that she believes two additional rate hikes this year would be appropriate. However, she maintains a neutral stance regarding the forthcoming July Federal Open Market Committee (FOMC) meeting, emphasizing her desire to preserve flexibility by “maintaining optionality.”
Fed’s Daly Doesn’t Want to ‘Trip the Economy up Into an Unforced Error’
During the June FOMC gathering, the U.S. Federal Reserve members decided to refrain from raising the federal funds rate for that specific meeting. Jerome Powell, the current chairman of the Federal Reserve, informed the media that the upcoming July FOMC meeting would be a “live” one, as it would determine whether or not the central bank would increase the interest rate during that period.
Powell then testified before the House Financial Services Committee last Wednesday and indicated that the benchmark bank rate is likely to rise again this year. In an interview with Reuters, Mary Daly, the president of the San Francisco Federal Reserve Bank, expressed her belief that two more rate hikes would be a “very reasonable” projection. However, Daly also emphasized the need for caution and a gradual approach, given that the rate is currently at its highest level in 16 years.
“It is, in my judgment, prudent policy … to slow the pace of policy as you near the destination,” Daly stated.
During an interview with CBS’s “Face the Nation” last year, Daly discussed the Fed’s response to inflation and stressed the importance of caution and a “measured” approach. “History tells us with Fed policy that abrupt and aggressive action can actually have a destabilizing effect on the very growth and price stability we’re trying to achieve,” Daly said at the time.
Now, Daly asserts that the situation is “about balanced,” and a measured approach is still necessary to navigate through the current economy. “I want to make sure that we balance those risks on both sides, of under- or over-tightening,” Daly said. “Adding another six weeks to our decision space, to me that seems optimal and prudent.”
Daly stated that “taking a slower pace as we approach our destination means we save many Americans from either stopping short and wishing we had done more, or going too far and wishing we had done less.” In other words, Daly insists that if the central bank proceeds at a more gradual pace, it will be less likely to make mistakes that it may regret later. Daly told Reuters that she is committed to restoring price stability, but doing so requires caution.
“What I want to do, while we resolutely work to restore price stability – give these people back some peace of mind, and lives and livelihoods – is make sure we are doing it as carefully as we can so we don’t end up inadvertently, in our rush to do it today, trip the economy up into an unforced error,” added the president of the San Francisco Fed branch.
Last month’s consumer price index indicated that inflation is cooling, but at 4%, it still exceeds the Fed’s annual target of 2%. Americans are also grappling with the highest credit card debt since 1999, when the Fed began recording the figures, and a Newsweek poll shows that Americans are actively relying on credit cards to mitigate inflationary pressures. While a more restrictive monetary policy may be necessary, Daly is currently uncertain if it will achieve the desired balance.
“More tightening may be required to get the economy sustainably back into balance. But do I know that? No….we are going to have to find the terminal rate by looking at the data,” concluded Daly.
What are your thoughts on Mary Daly’s perspective of two rate hikes in 2023 and her emphasis on caution in monetary policy? Share your thoughts and opinions about this subject in the comments section below.