Article Category: Inflation

The Key to Predicting Inflation

If there's one overarching theme that's accompanied the Trump rally, it's the idea of reflation. In fact, if you look at the price action across nearly all asset classes, it reflects the anticipation of inflationary forces.

But are we truly seeing the whites of inflation's eyes? Or is this a temporary reprieve before deflationary forces again spoil the fun? The answer may be morecomplicated than you think.

To begin, let's check in on where inflation currently sits. Using the Fed's preferred measure, Personal Consumptions Expenditures (PCE), we can see that both headline and core (excluding food and energy) inflation levels are trending higher. And for the first time in over two years, headline inflation is actually higher than core.


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Posted in: Economy Federal Reserve Inflation Interest Rates Oil Psychology

Global Reflation?

After years of fighting against the forces of deflation, many areas of the world, including the U.S., are experiencing a rebound in inflation and growth prospects. The promise of rising prices and accelerating economic growth are causing asset prices to head higher, but how long will this phenomenon last?

There's no question that things have gotten a lot rosier over the past few months. The chart below shows inflation levels rising in the U.S., the EU and Japan.


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Posted in: Bonds Economy Inflation Interest Rates Oil

It’s Not All About Trump

With new executive orders being signed on a seemingly daily basis, it's easy to get sucked into the belief that this rally is all about Trump. It's not.

Beneath the surface, our economy has been quietly humming along, with that fact made more apparent by the plethora of economic data released last week.

Today we're going to review some of the fundamental aspects of our economy, and in doing so, we'll see that the fundamentals are pointing in very much the same direction that the technical picture has been lately.


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Posted in: Dollar Earnings Federal Reserve Inflation Momentum Oil

Secular Shift in Interest Rates?

When the cost of money changes, everything changes. Interest rates affect every aspect of the financial universe.

At the global level, they impact currency and trade flows between nations. At the national level, they affect the discounted value of future cash flows, the market's multiple, and the desirability of items such as real estate and debt. And at the micro level, they impact the financing and investment decisions of all individuals and small businesses.


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Posted in: Corrections Dollar Economy Federal Reserve Inflation Interest Rates

Productivity Growth: The Missing Link?

Spend enough time listening to financial news or reading economic reports, and you're bound to come across the topic of productivity growth. This concept, which can be easy to gloss over, plays a critical role in each one of our lives.

That's because productivity growth is the single most important determinant of a country's standard of living.

Defined as the output of goods and services per hour worked, increased productivity allows people to get what they want faster, or to get more of what they want in the same amount of time. At a macro level, these benefits translate into higher economic output, higher wages, and more leisure time for all.


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Posted in: Economy Federal Reserve Inflation

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