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Jackson Hole 2022: This is what to expect – Gary Wagner – Kitco NEWS

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On Friday, Federal Reserve Chairman Jerome Powell will give his speech at the annual Jackson Hole Symposium in Wyoming.

The widely anticipated event will give hints about upcoming Fed policy.

To help market participants, Powell will need to be clear about when the Fed will stop raising rates, said Gary Wagner, editor at TheGoldForecast.com.

Wagner spoke with David Lin, Anchor and Producer at Kitco News.

“The main thing [market participants] want to understand is at what point will the Federal Reserve stop raising rates… and more importantly, at what point will they start to unwind or, in other words, reduce the Fed Funds rate,” said Wagner.

The Fed has raised its rate by 225 basis points from January to July. The inflation rate in July was 8.5 percent, down from 9.1 percent in June.

Prior to the 2021 Jackson Hole speech, Wagner had forecasted higher inflation going into 2022, when the Fed still had not raised rates.

“If you listen to some of Chairman Powell’s statements, over the past couple of months, he has acknowledged that they should have acted sooner,” he said. “I really do believe that had they started to use their toolbox sooner, we wouldn’t be looking at inflation sitting at 8.5 percent today.”

The Fed’s Forecasting Errors

The Fed failed to forecast inflation accurately, and thus failed policy-wise, said Wagner.

“At the last Jackson Hole symposium… [The Fed] was still under the assumption that inflation would be transitory, that it would work itself out of the system naturally,” he said. “If they had begun with small rate hikes of 25 basis points a year earlier, they could have had a series of them that wouldn’t shake the economy as quickly and as hard as it has.”

At the same time, Wagner acknowledged that unforeseen events, beyond the Fed’s control, had also caused higher prices. He pointed to the war in Ukraine as a “wild card” that increased oil prices “like a second-stage booster on a rocket.” He also said that food and energy prices, in general, are unlikely to be affected by Fed policy.

Labor Markets

The unemployment rate in July was 3.5 percent, a low rate despite high inflation and supply chain shortages.

However, Wagner predicted that once the job market reaches a new equilibrium, there will be “one job for every two people looking for one,” although he did not see this happening soon.

Other job market indicators also look favorable, with wages and salaries up 5.3 percent from last year.

Some economists are concerned about rising wages during inflationary times, since they claim that higher wages can lead to more inflation, as businesses raise prices to offset greater costs.

Wagner said that although wages were not a “critical” factor in causing inflation, they were “a very important and large piece of the puzzle.”

“We got to where we are because of multiple events occurring,” he said. “And the fact of the matter is that higher wages definitely added to the inflationary pressures we see now.”

To find out Wagner’s forecast for the gold price, watch the video above.

Follow David Lin on Twitter: @davidlin_TV (https://twitter.com/davidlin_TV)

Follow Kitco News on Twitter: @KitcoNewsNOW (https://twitter.com/KitcoNewsNOW)

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Netflix’s subscriber growth slows as gains from password-sharing crackdown subside

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Netflix on Thursday reported that its subscriber growth slowed dramatically during the summer, a sign the huge gains from the video-streaming service’s crackdown on freeloading viewers is tapering off.

The 5.1 million subscribers that Netflix added during the July-September period represented a 42% decline from the total gained during the same time last year. Even so, the company’s revenue and profit rose at a faster pace than analysts had projected, according to FactSet Research.

Netflix ended September with 282.7 million worldwide subscribers — far more than any other streaming service.

The Los Gatos, California, company earned $2.36 billion, or $5.40 per share, a 41% increase from the same time last year. Revenue climbed 15% from a year ago to $9.82 billion. Netflix management predicted the company’s revenue will rise at the same 15% year-over-year pace during the October-December period, slightly than better than analysts have been expecting.

The strong financial performance in the past quarter coupled with the upbeat forecast eclipsed any worries about slowing subscriber growth. Netflix’s stock price surged nearly 4% in extended trading after the numbers came out, building upon a more than 40% increase in the company’s shares so far this year.

The past quarter’s subscriber gains were the lowest posted in any three-month period since the beginning of last year. That drop-off indicates Netflix is shifting to a new phase after reaping the benefits from a ban on the once-rampant practice of sharing account passwords that enabled an estimated 100 million people watch its popular service without paying for it.

The crackdown, triggered by a rare loss of subscribers coming out of the pandemic in 2022, helped Netflix add 57 million subscribers from June 2022 through this June — an average of more than 7 million per quarter, while many of its industry rivals have been struggling as households curbed their discretionary spending.

Netflix’s gains also were propelled by a low-priced version of its service that included commercials for the first time in its history. The company still is only getting a small fraction of its revenue from the 2-year-old advertising push, but Netflix is intensifying its focus on that segment of its business to help boost its profits.

In a letter to shareholder, Netflix reiterated previous cautionary notes about its expansion into advertising, though the low-priced option including commercials has become its fastest growing segment.

“We have much more work to do improving our offering for advertisers, which will be a priority over the next few years,” Netflix management wrote in the letter.

As part of its evolution, Netflix has been increasingly supplementing its lineup of scripted TV series and movies with live programming, such as a Labor Day spectacle featuring renowned glutton Joey Chestnut setting a world record for gorging on hot dogs in a showdown with his longtime nemesis Takeru Kobayashi.

Netflix will be trying to attract more viewer during the current quarter with a Nov. 15 fight pitting former heavyweight champion Mike Tyson against Jake Paul, a YouTube sensation turned boxer, and two National Football League games on Christmas Day.

The Canadian Press. All rights reserved.

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