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The Inflation Trader  

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  • Summary Of My Post-CPI Thoughts [View article]
    Uh, that's simply false. Friedman wanted to replace the Fed with a computer, and he said that the only reason he even made THAT suggestion was that the Fed already existed; his preference was for the Fed to have never existed at all. Honestly, you haven't the faintest idea what you're talking about.

    If you're going to bash Friedman you should at least read him first. But I guess can't help with problems on the receiving end.
    Jul 22, 2015. 08:06 AM | 2 Likes Like |Link to Comment
  • Summary Of My Post-CPI Thoughts [View article]
    You're right. Thirty-five years of Fed-watching clearly has given me absolutely no grounds to be able to understand what these wise people are saying. I concede the point.
    Jul 22, 2015. 08:02 AM | 1 Like Like |Link to Comment
  • Summary Of My Post-CPI Thoughts [View article]
    To be fair, they have been saying they would raise rates when circumstances permit for about five years, and for most of that time they have been firmly easing even though, for most of the past five years, circumstances were consistent with at least neutral, if not rising above-neutral interest rates.

    I really have no reason to write a textbook to repeat what anyone who knows how to READ a textbook would already know.
    Jul 20, 2015. 08:26 AM | Likes Like |Link to Comment
  • Whither Bonds? Arnott Answers [View article]
    They most certainly have NOT said that they will raise interest rates at the end of the year. Some Fed officials have spoken in favor of that, some have spoken against it, and almost all of them feel that it is "data dependent." The official statement requires them to think that inflation is going to return to target, which is (I think intentionally) squishy.

    They have been trying to sound hawkish for the last three years, but have always behaved dovishly. I doubt that there is any serious consideration being given to raising interest rates although there is lots of talk as they want to seem like sober central bankers and that is what sober central bankers are supposed to do.

    All that being said, if markets start to demand higher interest rates (e.g., inflation expectations rise sharply - no sign of that yet), they may hike nominally just to say they've done it. But the difference between the current target and 0.50% is immaterial. The real question is how soon do they get to 2-3%? Answer to that is: years. Years and years.
    Jun 28, 2015. 09:05 PM | 2 Likes Like |Link to Comment
  • Summary Of My Post-CPI Thoughts [View article]
    When inflation is approaching 3% with no signs of slowing. Now, they could do a token tightening ... one just to look tough ... but they aren't going to make any progress towards neutral policy until they are forced to (and, as I keep reminding people: defining rates higher rather than draining money is not even tightening, really).
    Jun 20, 2015. 08:29 PM | Likes Like |Link to Comment
  • Stocks Look Less Scary This Way [View article]
    ...unless you can find either (a) the good institutional investor, who has performance persistence, or (b) a good market where there is alpha to be mined by any competent institutional investor. Both (a) and (b) are rare, but they exist.
    Jun 11, 2015. 11:55 AM | Likes Like |Link to Comment
  • Swiss Jeez [View article]
    Just for the record for the benefit of other readers: I was not one of those who thought it would be a disaster! My comment was about the fact that they would be back in deflation, which they are - but inflation and deflation have nothing to do with growth so I was not making any statement on how the Swiss economy as a whole would do.
    Jun 10, 2015. 03:33 PM | Likes Like |Link to Comment
  • Money, Commodities, Balls, And How Much Deflation Is Enough? [View article]
    Money supply growth in the EZ is now the highest it has been since the crisis! And actually higher than in the US. Low interest rates, if maintained (recently they've been headed higher) will put downward pressure on money velocity and thereby keep inflation from jumping higher, but money supply growth is most definitely accelerating with this new policy.
    Jun 10, 2015. 02:00 PM | Likes Like |Link to Comment
  • Swiss Jeez [View article]
    Jun 10, 2015. 01:58 PM | Likes Like |Link to Comment
  • Grab The Reins On The Dollar [View article]
    Interesting comment, but of course the movement of the dollar has nothing to do with global inflation or deflation - currencies just divide up the global inflation or deflation. If the dollar is super-duper strong, we will have deflation in the US, but all of the countries that have super-duper weak currencies will see inflation.

    Currencies don't determine the size of the cake. They only cut the cake.
    Jun 2, 2015. 08:36 AM | 4 Likes Like |Link to Comment
  • Summary Of My Post-CPI Tweets [View article]
    ghiblinewt -

    Perfect answer.
    May 26, 2015. 03:15 PM | Likes Like |Link to Comment
  • Inflation Risks Behind, Beside, And Ahead [View article]
    Sure. Stagflation happens when money growth is too fast, but economic growth stalls for other reasons. And global money growth is too fast - moreover, there is a lot of "potential energy" in central bank balance sheets that will eventually move into money, unless those balance sheets are shrunk. But no central bank seems to care about its balance sheet.
    May 6, 2015. 10:44 AM | 1 Like Like |Link to Comment
  • Inflation Risks Behind, Beside, And Ahead [View article]
    Actually, it has been those calling for very low inflation or deflation who have been wrong. Median inflation has been above 2% for several years now, and hasn't shown any sign of the deceleration they have been calling for since they were calling for deflation after 2008. It never happened, and never will happen.
    May 6, 2015. 08:04 AM | 4 Likes Like |Link to Comment
  • If Liquidity Is Your Sword, Keep Swinging [View article]
    I don't make investment recommendations per se here. I remain bullish on commodities although after further research earlier this year I think the margin over other asset classes is less than I thought and the asset class isn't screaming cheap on an absolute basis - just cheap to other asset classes. TIPS are quite cheap to other fixed-income instruments but on an absolute basis they are rich. Stocks are rich to all.

    At this point I generally suggest to people that they barbell between TIPS as the 'safer' asset class and Commodity indices (not individual commodities) as the 'risky' asset class. Being naked long Apple has outperformed that approach but I am concerned about protecting my wealth right now, given the general state of overvaluation in the markets, and not taking the risks that would be necessary to double it.
    Apr 29, 2015. 07:45 AM | 2 Likes Like |Link to Comment
  • Whither (Wither?) Profits [View article]
    CeeB - I can't really do that in this forum. Partly because I need to avoid making "recommendations" in order to keep compliance off my back, but partly because that would involve a whole lot of work. We don't track MLPs because they require individual research (every MLP is totally different, so looking at them like an asset class is fraught). REITs are more similar to each other but REITs are really stocks - we track commercial RE and residential RE but REITs are highly correlated with equities and therefore don't tend to be good inflation hedges. Ditto miners. Infra also requires lots of in-depth individual research - there are some decent values there, but most individuals don't have access to those and it's hard to unravel the listed infra plays.

    We do analyze not just commodities but individual commodities. Without saying too much, we are talking to people about both a better commodity index (performance-wise) and long/short approaches in that market. But it isn't stuff I'd want to publish here.

    Sorry for the bad news! :-)
    Apr 29, 2015. 07:40 AM | Likes Like |Link to Comment