Article Category: Inflation

A Change in the Wind

Markets are reacting to Friday's abandonment of the GOP health care plan, and so far the narrative is one of uncertainty regarding the high expectations that have been set over recent months.

The new health care bill was seen as the first real test for Trump and fellow republicans, and it's probably fair to say that they are not delighted with the outcome. But what about the markets?

At first glance, the markets didn't like the news either, as they opened with steep losses. The Industrials were down nearly two hundred points in early trading, but interestingly, have since pared those losses and now sit just 50 points below their Friday close.

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Posted in: Corrections Federal Reserve Inflation Interest Rates Momentum

The Slippery Slope of Interest Rates

All attention is once again on Janet Yellen and the Federal Reserve this week, as the FOMC meets to determine whether an interest rate hike is warranted.

At this point, with Fed Funds futures prices pointing toward a 95% chance of a rate hike, an increase to the federal funds rate is a near certainty. But the implications and consequences of a rate hike are less so. Let's dig into that further.

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Posted in: Debt Economy Federal Reserve Inflation Interest Rates

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

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