Inflation Is Poised To Soar, 3% By June Is "Almost Certain"

That is an angle I had not ever considered so let's put the thought to a test. 


CPI Top vs ISM Bottom

I took the ISM portion of the chart from TradingEconomics and kept resizing the CPI chart from Fred via trial and error until the years on both charts aligned.

I see no relation between the ISM and CPI. 

What about the Producer Price Index?

Healthcare is the Biggest PPI Component 

Healthcare, not energy is the biggest component of Producer Prices. And Producer Prices are not part of the CPI.

For discussion, please see Healthcare is the Biggest PPI Component With Over 3 Times Energy's Weight

Contrarian View

Now that the nearly everyone, but especially the average Joe, is looking for more inflation, the contrarian is looking the other way.

For discussion of the massive retail bet by small speculators on the inflation theme, please see my March 7 post Small Speculators Pile Into Treasury Shorts, Is a Short Squeeze Coming?

Also note my March 9 post Gold and Silver Pop as US Treasury Yields Drop

We are going to see a pop in year-over-year inflation, but then what? 

Inflation Largely in the Rear View Mirror

The Fed has blown another huge set of bubbles. Those looking for future inflation should instead look to the past.

We "have" inflation, and plenty of it. We will have it as long as asset bubbles keep inflation, but don't expect the CPI to follow except as pertains to easy year-over-year comparisons.

Factoring in housing prices, not just rent, inflation is already at 3.5% by my preferred measure, just not by the CPI.

For discussion, please see Fed Hubris: Housing Prices Show the Fed is Making the Same Inflation Mistake

With the real interest rate at -3.45% is it any wonder speculation in stocks, junk bonds, and housing are rampant? 

This is the same mistake the Fed made between 2002 and 2007 when it ignored a blooming housing bubble with dire consequences culminating in the Great Recession.

View single page >> |
How did you like this article? Let us know so we can better customize your reading experience.


Leave a comment to automatically be entered into our contest to win a free Echo Show.