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The Inflation Trader

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  • Fed Gearing Up To Stand Down [View article]
    it's a great paper. I heartily recommend it for knee-slappers like this!!
    Jul 31 03:27 PM | 2 Likes Like |Link to Comment
  • Fed Gearing Up To Stand Down [View article]
    I don't think we'll get deflation again in Japan unless the BOJ loses its will. There's some sign of that (they haven't doubled the money supply as they promised), but so far so good.

    In Europe, if the ECB follows through on its STATED plan then inflation there will start to rise again. But they have failed to follow through on many of their stated plans. We started writing in our Quarterly Inflation Outlook late last year that Europe is the best candidate for Japanification now, hands down. But I still think that when push comes to shove, they'll print enough. The problem is that Germany and Greece have such different needs. But right now they all need inflation.
    Jul 31 03:02 PM | 1 Like Like |Link to Comment
  • Fed Gearing Up To Stand Down [View article]
    Thanks for your kind words, and anecdote, Happy!
    Jul 31 08:43 AM | 1 Like Like |Link to Comment
  • Setting Up For A CPI Surprise? [View article]
    I am interested in the feedback on water cooler talk. I suspect that my 'real feel' temperature misses one important effect. It takes a wide variance in price changes to represent "feels like inflation but isn't inflation" since people recognize what's going up and don't see what's going down. But I think at the other end, where many things are going up in unison, there's also an effect that seems like more inflation because it feels more "pervasive." I am suspicious of this low reading as well. Thanks for that feedback. The measure is clearly an unfinished one.
    Jul 25 09:02 AM | Likes Like |Link to Comment
  • Setting Up For A CPI Surprise? [View article]
    That doesn't answer his question, and moreover it's from a site that is known to be completely clueless when it comes to inflation. I would strongly caution anyone from using anything found there, because the purveyor doesn't understand math (as I've demonstrated repeatedly in the past).
    Jul 25 08:59 AM | 1 Like Like |Link to Comment
  • Setting Up For A CPI Surprise? [View article]
    The BLS has an experimental index for 62-and-over consumers, but I am not aware of one that parses by income groups. However, all of the price series are there, so all one needs to do is to describe the consumption basket and a series can be created. Probably someone has done this, but I can't point you to it.
    Jul 24 07:11 AM | Likes Like |Link to Comment
  • Patience Is A Pain [View article]
    March CPI: 236.604 (the base figure)
    April CPI: 237.163
    May CPI: 237.776
    June CPI: 238.083 (released today)

    We have had 0.625% core inflation so far (2.50% at an annual rate).
    With 9 months to go and 240.626 the push, Mr. de los Angeles needs aggregate core inflation to be 1.068% or less (1.42% at an annual rate). I need the over.

    Interestingly, although the figure today was well below expectations, Mr. D actually fell behind slightly more. Previously, he needed 1.44% annualized or less; now he needs 1.42% annualized or less. In other words, if each of the last 9 months was +0.129%, then it would be close but Mr. D would still be on the wrong side. In such a case, I'd probably proffer a draw though.
    Jul 22 04:25 PM | Likes Like |Link to Comment
  • Dog Bites Man: Markets Still Not Making Sense [View article]
    Well, for starters you listen to what they say. If they decide to begin to be aggressive, to shrink their balance sheet or to keep the excess reserves inert in some way, they will first have to start talking about it very aggressively. Because right now, no one believes they will do anything except maybe raise interest rates, and raising interest rates without removing reserves will actually increase inflation rather than decreasing inflation. (That's actually my vote for what is the most-likely Fed mistake in this cycle).

    But until they start talking not about "maybe some day" starting to increase rates, but draw a line in the sand and say "inflation can't go higher than this or we are going to respond aggressively and in this explicit way," it's not going to happen. Because they are going to give the financial markets a HUGE lead time before they make a meaningful change in policy.
    Jul 9 09:12 PM | Likes Like |Link to Comment
  • Dog Bites Man: Markets Still Not Making Sense [View article]
    They CAN act long before inflation gets to that level, but they could also have done it in the 1970s and chose not to. It isn't clear to me that the current Federal Reserve is any brighter or has any greater foresight than the Arthur Burns Fed. The question is not CAN they arrest inflation - of course they can, in the same way they can always ensure that deflation doesn't happen. The question is always whether they have the will to do so. The jury is out, but there seems to be no urgency even though median inflation is at 2.3% and rising, and policy takes many months before it has any impact on inflation...even if there AREN'T loads of excess reserves to remove first.

    I'm not saying inflation is inevitable. I am only saying it is inevitable if the Fed doesn't do something hawkish in 2013. Oh. Whoops.
    Jul 8 04:15 PM | Likes Like |Link to Comment
  • Dog Bites Man: Markets Still Not Making Sense [View article]
    Okay, then why did stocks go up last year, when interest rates were rising? If they go up when interest rates fall, but then go sideways or up when interest rates rise, then we simply have a perpetual motion machine and we should have the Fed continue to lower rates forever. Make them good and negative, in fact!
    Jul 8 12:29 PM | Likes Like |Link to Comment
  • Awareness Of Inflation, But No Fear Yet [View article]
    Over the last 3 months, the annualized rate of change of CPI has been 5.3%. Seasonally-adjusted, it was 3.2%. It seems to me that the BPP is right in there. Who is it that is keeping silent on the BPP? Certainly not me. I use it all the time to silence the naysayers who claim the CPI is off by 3-5% every year for decades at a time.
    Jun 26 08:32 AM | Likes Like |Link to Comment
  • Awareness Of Inflation, But No Fear Yet [View article]
    Thank you, thank you, thank you!! I have been wracking my brain for days trying to remember who that was so I could search my own commentary for it. Here is my article, which further links to the Wesbury article. Thank you for helping me find it!!

    Looking at it, I never saw #1 but something akin to #2 is happening - "noise" is partly code for "Medical Care inflation, which was holding everything down, is now moving up and that's what's causing the volatility." And there have been some murmurs about #3. Maybe they're just not in order. :-)
    Jun 25 04:35 PM | Likes Like |Link to Comment
  • The Fed's 'Own Goal' [View article]
    Wow, that's the first time I have ever been called a populist! I guess that means I am hiding my radically-conservative views better.
    Jun 21 11:53 AM | 3 Likes Like |Link to Comment
  • The Fed's 'Own Goal' [View article]
    You should go and re-read what you wrote originally. I have re-read it a bunch of times and you have absolutely no qualifier in there that SOME investors lost 70-98%. There is a world of difference between "SOME bank shareholders sustained losses from 70 to 98%", and what you said, which was "bank shareholders sustained losses from 70 to 98%." I acknowledge that you meant the former, but it isn't what you said.

    But I don't really care.
    Jun 20 12:48 PM | 3 Likes Like |Link to Comment
  • The Fed's 'Own Goal' [View article]
    Yeah, I hate to fly on airplanes. 100% of passengers die!*

    *100% refers to passengers on one particular plane. I didn't say that but I assumed you would understand.
    Jun 20 08:43 AM | 2 Likes Like |Link to Comment