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Pointy-see Wolf's recent explanation within the article re the...

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Max5

10,195 Posts.

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12/06/21

22:01

Post #: 53815640
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Originally posted by Pointyfigures: ↑

You are on the money Joe.
It is currently about money flow and where to park it.
Clearly bonds are not the go. The bond markets are the canary but yields are being suppressed.
The stock market is unsure and is clearly struggling to make new highs.
I would have expected the USD to fall on the announcement, which did not happen and the next day it popped higher.
I suspect there is movement from inflation sensitive sectors, initially to the USD. Offloading is going to those that believe the narrative.
Most players in the markets have never seen inflation.
You can read all the books and texts you like but you need to be around 60+ to have experienced it (and a decent wages strike) and remember how insidious and suddenly it appears and just how sticky it is. And the unintended consequences which were never talked about.
Does anyone honestly believe we are going to see reads of -0.7% for 3 months this year? That is the only way the current spike is eliminated.
This may happen in 12 months or 5 years time.
The markets have to digest this and with gold being subject to unusual behaviour and gold equities even more so, this may scare away investors, possibly into cryptos that are also exposed to manipulation via the futures market.
CB's have never been ahead of inflation. They have had targets for years that they have been unable to maintain so how can you expect them to be able to control inflation under the current circumstances (debt levels).
I used the MOM inflation data from the BLS (the same mob that overestimated employment numbers by 40,000 per month for 12 months straight).
As it is compound it came out as prices having risen by 25% since 2010. Over the same period, average wages in the US went from $40,000 to $60,000, a 50% increase .If wages were rising at twice the rate of inflation then the economy would be running red hot a long time ago so something is not right. Guess I needed to use the 'adjusted' figures.
It is worth looking up what constitutes the basket of goods and services that make up the numbers.
From memory, housing (all costs) only makes up 17%. If house prices are rising much faster that CPI then it should be a greater component, rather than a fixed %. It also takes into account pensioners (many would own their own home or be in care) and the unemployed. The basket should be measured against the majority of tax payers.
This is why we now have classes of working poor and destitute.
.
In a similar vein, the interview with the Perth mint consultant was also revealing.
Like the Fed they are claiming the supply issues are transitory - which has been an issue since March 2020.
When is that claim defeated - when premiums are 30%, 60% or 100% of spot?
Or is it when delivery takes 6 weeks, 3 months or a year?
Apparently demand is outstripping supply (particularly from overseas) but is expected to ease. BS.

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Pointy-see Wolf's recent explanation within the article re the housing component calculation of the CPI and why it's not reflective of what it actually is.

https://wolfstreet.com/2021/06/10/it-gets-ugly-dollars-purchasing-power-plunged-at-fastest-pace-since-1982-its-permanent-not-temporary-wont-bounce-back/
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0 Great analysis

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