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Tag Archives: inflation

Deflation Returns To Japan, Part 2

Japan Finance Minister Taro Aso, who is also Deputy Prime Minister, caused a global stir of sorts back in early June when he appeared to express something like Japanese racial superiority at least with respect to how that country was handling the COVID pandemic. For a country with a population of more than 126 million, the case counts and mortality rates suggest something in the nation’s favor. Total reported coronavirus cases didn’t top 100,000 until the end of...

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Where Is It, Chairman Powell?

Where is it, Chairman Powell? After spending months deliberately hyping a “flood” of digital money printing, and then unleashing average inflation targeting making Americans believe the central bank will be wickedly irresponsible when it comes to consumer prices, the evidence portrays a very different set of circumstance. Inflationary pressures were supposed to have been visible by now, seven months and counting, when instead it is disinflation which is most evident...

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Meanwhile, Outside Today’s DC

With all eyes on Washington DC, today, everyone should instead be focused on Europe. As we’ve written for nearly three years now, for nearly three years Europe has been at the unfortunate forefront of Euro$ #4. We could argue about whether coming out of GFC2 back in March pushed everything into a Reflation #4 – possible – or if this is still just one three-yearlong squeeze of a global dollar shortage. Either way, Europe gets at it first. In 2018, what had been...

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What’s Going On, And Why Late August?

This isn’t about COVID. It’s been building since the end of August, a shift in mood, perception, and reality that began turning things several months before even then. With markets fickle yet again, a lot today, what’s going on here? What you’ll hear or have already heard is something about Europe and more lockdowns, fears about a second wave of the pandemic. No, that doesn’t fit the herdlike change in direction you can observe across many different markets (below)....

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Consumer Confidence Indicator: Anesthesia

Europeans are growing more downbeat again. While ostensibly many are more worried about a new set of restrictions due to (even more overreactions about) COVID, that’s only part of the problem. The bigger factor, economically speaking, is that Europe’s economy has barely moved, or at most not moved near enough, off the bottom. To interrupt now what has already proved to be a seriously impaired rebound should get people thinking more realistically about 2021. Once...

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Why Aren’t Bond Yields Flyin’ Upward? Bidin’ Bond Time Trumps Jay

It’s always something. There’s forever some mystery factor standing in the way. On the topic of inflation, for years it was one “transitory” issue after another. The media, on behalf of the central bankers it holds up as a technocratic ideal, would report these at face value. The more obvious explanation, the argument with all the evidence, just couldn’t be true otherwise it’d collapse the technocracy right down to the ground. And so it was also in the bond market....

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Inflation Karma

There is no oil in the CPI’s consumer basket, yet oil prices largely determine the rate by which overall consumer prices are increasing (or not). WTI sets the baseline which then becomes the price of motor fuel (gasoline) becoming the energy segment. As energy goes, so do headline CPI measurements. CPI Changes on Energy, 1995-2020 - Click to enlarge And that’s a huge problem…if you are Jay Powell. We’ve been making a big deal out of him making a huge deal out of...

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Powell Would Ask For His Money Back, If The Fed Did Money

Since the unnecessary destruction brought about by GFC2 in March 2020, there have been two detectable, short run trendline upward moves in nominal Treasury yields. Both were predictably classified across the entire financial media as the guaranteed first steps toward the “inevitable” BOND ROUT!!!! Each has been characterized as the handywork of master monetary tactician Jay Powell. There is some truth underlying, only stripped of all that hyperbole. These backups in...

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Wait A Minute, What’s This Inversion?

Back in the middle of 2018, this kind of thing was at least straight forward and intuitive. If there was any confusion, it wasn’t related to the mechanics, rather most people just couldn’t handle the possibility this was real. Jay Powell said inflation, rate hikes, and accelerating growth. Absolutely hawkish across-the-board. And yet, all the way back in the middle of June 2018 the eurodollar curve started to say, hold on a minute. That’s the part which caused so...

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Growing Dollar Demand, Silver Weirdness, Market Report, 15 June

The Federal Reserve has become more aggressive again, after several years of acting docile. As you can see on this chart of the Fed’s balance sheet, it has very rapidly expanded from a baseline from (prior to) 2015 through 2018, of about $4.4 trillion. After which, it had attempted to taper, getting down to $3.8 trillion last summer. Then it was obliged to reverse itself well before responding to the COVID lockdown. Since then, its balance sheet has gone vertical....

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