PB , to answer your question on inflation. I think there has...

PB , to answer your question on inflation. I think there has been significant murmurings of it in the last 4 weeks or so. IMO the most important sound bite was Lord Turner in the UK (formerly of the FSA and in Soros's think tank apparently) talking about the BoE cancelling its holdings of Gilts. By that I mean declaring that the bonds cease to exist and that the treasury no longer has a debt owing to the BoE.

I think this is important because outright monetization has always been a taboo subject and the UK were the first nation to QE in this cycle so their lead may well be important. This could lead to a real breakout of inflation. As an aside I think Turner is a buffoon who has made a mess of most things he has attempted.

Secondly, I believe Yellen's remarks that inflation is transitory sent a strong signal to the market that they are prepared to tolerate inflation being above their target. In other words, they will stick their heads in the sand.

I think there are a lot of people looking at official measures of CPI and believing them.... which seems ludicrous and simplistic. CPI may be low, however, there is rampant inflation in things that are easy to borrow against. Property, equities, bonds come to mind. The central banks have already created inflation I just believe most people are looking for it in the wrong places.

Could we have a late 90's scenario ? I believe we could .... though as soon as the CB's stop printing its over in a heart beat