Yield Curve Is Not Currently An Inflationist's Friend

The yield curve is flattening. I don’t cheer-lead a given view, but if I were to do that I’d be cheering for a yield curve flattener to put a correction to inflationist dogmatists quoting von Mises to the herds and otherwise sloganeering about inflation and a “commodity super cycle” (that term is pure promo).

Well, the curve is flattening.

Which means one of three things. Continue reading "Yield Curve Is Not Currently An Inflationist's Friend"

Are You Concerned About Inflation?

Twitter and Square CEO Jack Dorsey is the most vocal and alarming figure in the finance world who is not just raising the alarms on the potential coming inflation issues but is banging bells and yelling from the towers about the possible coming problem.

Dorsey said in a tweet, "Hyperinflation is going to change everything. It's happening." When replying to another tweet about inflation, he went further to say, "It will happen in the U.S. soon, and so the world."

While there have been other big-name investors, bank c-suite members, Federal Reserve members, and even the Treasury Secretary indicate that inflation will happen. Some have even said it is a little higher than what they expected. However, not many have said Hyperinflation was coming and would happen soon in the U.S. and then the world.

While some have and will continue to dismiss Dorsey's claims, we all need to remember that he is the CEO of Square, the payment company. So theoretically, Dorsey has access to information that others may not have, which could give him a better insight into how fast prices are increasing and what products are seeing big increases, which would undoubtedly help guide the thinking that higher than expected inflation is on its way. (Just a thought). Continue reading "Are You Concerned About Inflation?"

What To Expect From Powell 2.0

By renominating Jerome Powell as Federal Reserve chair over Fed governor Lael Brainard, whom he nominated to be Vice-Chair, President Biden has supposedly chosen the safer and less political route. But rest assured that in Powell's second term, which requires Senate confirmation, likely to be a slam dunk, the Fed will be involved in politics like never before.

That's because Biden has several other seats to fill on the seven-member Fed board of governors, and the composition and thinking of that board promises to be a lot different than the current roster, even if it has the same chair. It will likely move more aggressively to implement the current administration's progressive policies.

Indeed, while Biden may have chosen Powell to serve another term, it will likely be Sen. Elizabeth Warren and her acolytes who will have the biggest influence on Fed policy in the years to come.

The most important seat other than the top two is likely to be that of the vice chair for supervision, currently held by Randal Quarles, who said he plans to resign from the Fed board by the end of the year. If Sen. Warren and her allies have their way, that position will go to someone who will further the left's agenda to impose and enforce stricter regulations on banks, including climate change policies. Continue reading "What To Expect From Powell 2.0"

Inflation Hits 30-Year High - "Transitory"?

Inflation Hits 30-Year High

The U.S. consumer price index (CPI) jumped 6.2% in October, leading to the biggest inflation surge in more than 30 years. The core CPI (removing the impact of food and energy) mirrored these numbers, increasing 4.6% to another 30-year high. Either way, you slice these CPI numbers, these increases are screaming decades' high inflation. The sky-rocketing inflation numbers are negating wage increases that workers have been receiving. These data continue to be at odds with policymakers maintaining that the current price pressures are transitory and related to Covid pandemic-specific issues. Albeit they have admitted that inflation has been more persistent than they expected, they see conditions returning to normal over the next year or so.

Escalating inflation could cause the Fed to tighten policy more quickly than it has signaled. The central bank has indicated that it will within the next few weeks start reducing the amount of bonds it buys each month, though officials have indicated that interest rate hikes are still off in the future. These rising inflation expectations and the realization of these inflationary pressures could cause the Federal Reserve to change policy course sooner rather than later. It's going to be a tug-a-war between inflation, employment, Washington wrangling, and the delta variant backdrop. CPI reports will become more significant as these readings are used to identify periods of inflation. The recent CPI readings are resulting in a much stronger influence on the Federal Reserve's monetary policies hence the recent taper guidance.

Unsustainable Inflation

The CPI basket of goods is increasing at unsustainable rates. Fuel oil prices soared 12.3% in October, culminating in a 59% increase over the past year. Energy prices overall rose 4.8% in October and are up 30% for over the past 12-month period. Used vehicle prices continued rising 2.5% on the month and 26% for the year. New vehicle prices were also up 1.4% and 9.8%, respectively. Food prices also showed an uptick of 0.9% and 5.3% respectively. Within the food category, meat, poultry, fish, and eggs collectively rose 1.7% for the month and 11.9% year-over-year. The Federal Reserve will need to heed these real inflation numbers before it wreaks havoc on the consumer and businesses alike. Continue reading "Inflation Hits 30-Year High - "Transitory"?"

Is Bitcoin An Inflation Hedge? Maybe...

I don't have to tell you that no matter what economic stat you're interested in, the belle of the ball is inflation. It's the one that everyone loves to talk about. It's the one that politicians and talking heads like to worry you about. And it's the one that is responsible for a ton of real-world economic horror stories.

And right now, it stands a mind-boggling 5.4% annual rate, way above the Federal Reserve's target rate of 2%.

So, as a Bitcoin and blockchain enthusiast, is there something that maybe crypto can do for us as we navigate through increasing inflation?

You bet. And I'm about to tell you why.

Yes, Inflation Is Too High

If you're a fan of moderate inflation, you're probably not feeling great right now. Prices are at levels that haven't been seen in decades.

In fact, right now, inflation stands at an annual rate of 5.4% in September, up from 5.3% in August. And we haven't seen these kinds of levels in a long time. See for yourself... Continue reading "Is Bitcoin An Inflation Hedge? Maybe..."