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Inflation Downturn Hits FX Market

Sep. 17, 2021 1:56 PM ET27 Comments
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Long-time followers of EPB Macro Research know that we use baskets of leading indicators to spot cyclical inflection points in both the rate of growth and the rate of inflation. 

Through an objective process, we made a cyclical upturn call in global growth earlier in 2021, followed by a pivot in the summer months. 

The downturn in real economic growth and inflation is ongoing, with more evidence emerging in the FX market.

The foreign currency market, particularly commodity-sensitive currencies, can act as a leading indicator of industrial growth and inflation. 

In a recent interview, respected business cycle analyst Lakshman Achuthan from ECRI discussed the downturn in "commodity" currencies as another indicator of the ongoing industrial downturn, which is related to the inflation cycle downturn. The interview is highly informative and worth a few minutes of time.

In the August leading indicators report published to members of EPB Macro Research, we highlighted a past comment from Dr. Lacy Hunt, echoing a similar sentiment about the forward-looking power of the FX market. 

Remember what my work shows, that the most forward-looking of the markets are the currency markets and when the foreign currency markets are convinced that the US economy is weakening, the dollar will rally, and shortly after that, you will see the bonds improve considerably. It’s kind of counterintuitive thinking but that’s the way the world works. Foreign exchange markets are very forward-looking and they will point the way…

At EPB Macro Research, we uniquely weave long-term (secular) economic trends with the shorter-term (cyclical) fluctuations in both growth and inflation. 

The trending direction of growth/inflation or nominal growth is the most important fundamental factor impacting your investments. 

You can watch this short video for more data on the importance of growth rate cycles

If you are ready to start using long-term and short-term economic cycle trends to augment your investment strategy, then I invite you to join EPB Macro Research. 

You can join the hundreds of other investment professionals that have dramatically improved their investment performance by easily incorporating the economic trends we highlight in the weekly writings. 

The first 10 investors that leave a comment on this blog post or send me a private message will receive a 50% discount to EPB Macro Research and will have immediate access to the model portfolio, member chatroom, past articles, and more. 

There is also a table of contents for new users to help with the transition to a new service. 

I only have the ability to grant 10 discounted spots at this deeply discounted (50%) rate. 

I wish you a great weekend, and I look forward to speaking with you inside the members-only chatroom!


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