Why Inflation?

The simple answer is that is what they are doing, inflating.

The slightly less simple answer is that they inflated in 2001 and it worked (for gold, silver, commodities and eventually stocks, roughly in that order). It also worked in 2008-2009 (for gold, silver, commodities and eventually stocks, roughly in that order).

The more complicated answer is that we are down a rabbit hole of debt and the hole appears bottomless. What’s a few more trillion on top of un-payable trillions? As long as confidence remains intact in our monetary and fiscal authorities – and COVID-19 or no COVID-19, stock mini-crash or not, confidence to my eye is intact, speaking of my country, anyway – they will inflate, and what’s more, they will be called upon to inflate.

Confidence may be failing in other parts of the world but the average American is behind this thing they don’t even really understand, known as the Fed. The average American expects the bailout checks from the fiscally reflating government too. Angst, of which there has been plenty lately, is much different from lack of confidence.

I can’t include here all the ways and means the Fed has (frankly, I don’t know about them all) to prop the system, but if you go to the St. Louis Fed website you will find a whole slew of Keynesian egghead stuff. They are on it! Continue reading "Why Inflation?"

The Yield Curve Steepens - Deflation To Inflation

This morning the 10/2yield curve is again steepening and that is the headliner and one of my two most important indicators (the 30-year yield Continuum being the other). But I thought I’d dust off a bunch of existing charts from my chart lists that tell their stories as indicated by the bond market to go along with said yield curve. But let’s begin with the headliner.

Is this just another bump as in 2016 (2nd chart) or is it a real steepener like 2007 (3rd chart)? After all that post-Op/Twist manipulated economic booming it is due, I can say that much.

yield curveyield curveyield curveyield curve

Everybody has the memo. Deflationary destruction it is! The yield curve (bottom) can steepen under either deflation or inflation. Right now it’s deflation hysteria… Continue reading "The Yield Curve Steepens - Deflation To Inflation"

Yield Curves, 2-Year Yield, SPX (and a crack up boom?)

While the 30-5 year yield curve does this, implying some inflationary issues…

30yr yield minus 5yr yield

The more commonly watched 10-2 year does this, implying ongoing Goldilocks…

yield curve

While the nominal 2-year yield does this, implying “ruh roh!”Continue reading "Yield Curves, 2-Year Yield, SPX (and a crack up boom?)"