The fate of the world to be decided here...

Again, the fate of the world and the economy and markets comes down to a central bank/economist gathering in the beauty of a valley. While we hang on their every word, the rate hike odds for September is just 10% and is 36% for one more by yr end. How long rather than how much more in terms of tight policy is MUCH more relevant. And that's where we'll hear from some about r* which I want to remind everyone that it is a made up central bank theory and econometric driven construct. But as long as they talk about it, we have to listen and it's just the REAL rate they want and how is that measured. Should it be on one month of CPI/PCE or the TIPS market or something else. Longer term they want it to be .50% but for now it could be 1.5-2% and some believe that it is trending higher. 

I'll say again, there is one thing to see inflation fall back down but another to keep it there. Let's talk transportation costs related to this. From February 2020 to January 2022 the per mile cost of trucking doubled (see chart below) and they've since collapsed to below where it was in early 2020. Now with the Yellow bankruptcy, spot prices are stabilizing and signs are developing that we're about to inflect higher again. The Journal of Commerce wrote a piece on Friday and said, "For the LTL sector, the collapse of Yellow is an inflection point for pricing, if not for overall freight volumes." They quote David Menzel who is the president and COO of Echo Global Logistics who "expects LTL rates to rise between 5 and 15% depending on how much exposure shippers had to Yellow." From another one in the industry, "We're already starting to see LTL prices creep up." He expects rates to increase about 7% on average, "though companies that relied more on Yellow's carriers will pay a higher price."