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Tag Archives: Economics

Inflation vs. Deflation – Which Is The Bigger Threat In 2022?

Print Friendly Inflation vs. deflation – while headlines get filled with “inflation” concerns, historical data shows “deflation” remains a threat. The Financial Times recently had a great piece on Central Bankers and their stance that inflationary pressures remain transient. However, as FT concluded: “For the first time in many decades, there is the possibility that a significant turning point has arrived, that price rises will be more than a flash in the pan and something more...

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Do Bonds Accurately Price Inflation? Since Before Any of Us Were Born

Many, likely the vast majority believe that the recent wave of consumer price increases is going to stick around. It’s already painful and even if it isn’t inflation, they’re thinking, it soon will be. Maybe not 1970’s bad, not yet, at the very least something like then.The bond market doesn’t just disagree, it keeps doing so vehemently. Nothing new, bond yields have signaled distrust and skepticism each and every time we go through one of these inflation panics. There was 2008’s fiasco...

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Patrick Hill: Is a Volatility Storm Coming?

Print Friendly Is A Volatility Storm Coming? “Volatility often refers to the amount of uncertainty or risk related to the size of changes in a security’s value. A higher volatility means that a security’s value can potentially be spread out over a larger range of values. This means that the price of the security can change dramatically over a short time period in either direction.”    – Investopedia Federal Reserve Bond Tapering & Interest Rate Hikes Reduce Liquidity Federal...

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Trying To Invest Prosperously In These Times Of China’s Common Prosperity

Maybe the problem is the slogans, though I seriously doubt it. There are, admittedly, way too many and perhaps there is something lost in the translation. Going from Chinese to English can be notoriously tricky, and by sheer number of official catchphrases odds are a few are going to be miscast at the very least. Rebalancing. Rejuvenation. Dual Circulation. No Sharp Turns. Nowadays what Xi Jinping and the rest are calling Common Prosperity.It doesn’t take much to filter each via the...

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Investors Starting To Realize “Stagflation” Is A Problem.

Print Friendly Investors are slowly waking up to the realization that “stagflation” is a problem. For years, the term “stagflation” has been thrown around and dismissed like a sighting of “Bigfoot.” However, rising inflationary pressures are now colliding with slowing economic growth. This collision presents a challenge for Central Bankers and their monetary policy experiments. Let’s start with a definition of “stagflation.” “Stagflation is characterized by slow economic growth and...

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The 5000-Year View Of Rates & The Economic Consequences

Print Friendly The fact we have the lowest interest rates in 5000-years is indicative of the economic challenges we face. Such was a note brought to my attention by my colleague Jeffrey Marcus of TPA Analytics: “BofA wants you to know that ‘Interest rates haven’t been this low in 5,000-years.‘ That’s right, 5000 years. ‘In the next 5,000 years, rates will rise, but no fear on Wall Street this happens anytime soon,’ said David Jones, director of global investment strategy at Bank of...

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The Debt Ceiling Non-Crisis & Why Rates Will Fall.

Print Friendly The financial media is rife with misinformation on the debt ceiling and the jump in interest rates. However, a review of history shows that not only is the “debt-ceiling” issue a non-crisis, but the recent rise in rates is likely an opportunity to buy bonds. Let’s start with the media scare tactics over the debt ceiling: If Congress doesn’t raise the debt ceiling, the Treasury will run out of money. The U.S. will default on its debt.The markets and economy will...

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The Coming “Reversion To The Mean” Of Economic Growth

Print Friendly From stimulus boom to income thud, the coming “reversion to the mean” of economic growth is happening faster than economists expected. We previously noted that while many mainstream economists believed the current economic “boom” would persist, several factors suggested it wouldn’t. The first problem is the math. As I previously discussed in “As Good As It Gets,“ the “second-derivative” of growth is now problematic. To wit: “There is much at risk in the market as we...

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Expecting “Stimulus?” Household Credit Explodes Higher.

Print Friendly In the second quarter, household credit exploded higher as stimulus payments ran dry. Was the surge a function of excess spending, inflation, or an expectation of more “stimmies” coming? The chart below shows the total amount of household credit currently. If you stare very hard, you can make out the slight dip in credit usage during the “pandemic-driven shutdown.” However, such is not the case despite the narrative households paid down a bulk of their debt. However,...

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Not your father’s stagflation threat

Stagflation worries are rising. A recent analysis of search activity shows that searches for stagflation have spiked compared to other inflation search terms.  The latest BoA Global Fund Manager Survey also shows that stagflation concerns are rising. These fears are misplaced. The conventional mechanisms for stagflation are not present. Instead, investors should be prepared for a different sort of stagflation threat. What is stagflation? When investors think about...

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