Non-Inflation Thread

[JEast]

One or two data points do not make a trend, but thought we should have a voyeur thread on what is happening around the globe to watch the interaction between the central macro maestros and what Ludwig Von Mises calls 'human action.'  From this observer, it looks like a cat and mouse game for the last several years.  Though many on this board (and many high profile folks) feel that inflation is inevitable, human action seems to be taking the upper hand in a few isolated places.  Of course, the hour glass of time will tell.

 

http://www.marketwatch.com/story/europes-hot-new-export-is-deflation-2014-03-12

 

Cheers

JEast

[Palantir]

That's interesting, I thought Mario Draghi was turning Europe into a Truman Economy with rampant inflation and sky high asset prices.

[wisdom]

This could be defationary if China needs to devalue the Yuan.

 

Last Lever

As the economy slows, the Chinese currency has fallen 1.3 percent in the past month, Asia’s worst performance, according to data compiled by Bloomberg. It’s strengthened 35 percent since a dollar peg ended in July 2005, leading gains in emerging markets. The spot rate fell 0.06 percent to 6.1436 per dollar as of 11:31 a.m. in Shanghai.

 

The yuan’s exchange rate becomes “the obvious remaining policy lever left to pull” for China to support its economy, Richard Iley, a Hong Kong-based economist at BNP Paribas SA, wrote in a March 3 note.

 

“Any genuine attempt to rein in excessive credit growth is quietly being shelved as growth momentum continues to ebb,” Iley said. The yuan will probably need to depreciate further to loosen financial conditions to steer growth, he said.

 

 

http://www.bloomberg.com/news/2014-03-12/pboc-battling-bubbles-seen-keeping-rates-elevated-china-credit.html

 

[wisdom]

http://www.marketwatch.com/story/dollar-pares-losses-after-us-sales-claims-data-2014-03-13?siteid=yhoof2

 

Now Europe wants to follow China and devalue too.

[JEast]

Maybe my lens is too focused to be objective, but noticed this from Poland.

 

http://www.bloomberg.com/news/2014-03-14/polish-inflation-rate-undershoots-estimate-boosting-rate-pledge.html

 

Also, a funny item (to me) from the US,

http://www.bloomberg.com/news/2014-03-14/wholesale-prices-in-u-s-unexpectedly-drop-on-cheaper-services.html

None of the 73 economists surveyed by Bloomberg projected a decrease.

 

Cheers

JEast

[Phaceliacapital]

http://www.zerohedge.com/news/2014-03-14/core-inflation-drops-most-9-months

[wisdom]

http://finance.yahoo.com/news/euro-soft-yields-fall-china-021854137.html

 

spainish deflation

[wisdom]

http://www.ft.com/intl/cms/s/0/21bcfac0-b661-11e3-b230-00144feabdc0.html?siteedition=intl#axzz2xQATpo1v

 

ft article on inflation in spain and europe

[Valuebo]

http://www.bloomberg.com/news/2014-03-31/euro-inflation-at-lowest-in-over-4-years-misses-estimates.html

 

Uh oh...

[wisdom]

http://www.bloomberg.com/news/2014-03-31/draghi-europe-scenario-points-to-lowflation-still-painful.html

 

Euroope non-inflation.

 

http://www.cnbc.com/id/101538075

 

China's PPI deflation

[JEast]

Again one or two data points do not make a trend, but the data we do have is sure enough information to make one ponder a little. 

 

Given what we now know about behavioral finance these days (compared to 10 years ago) and the adapation of our cognitive biases into marketing efforts, they still can not get us to buy 2% more!!  This seems just crazy.  Stay tuned for more voyeurism this summer.

 

[randomep]

the following video by a Japanese economist really explained things to me:

 

[JEast]

Yes, Richard Koo's Balance Sheet Recession (published in 2003) has been a big influence on my thoughts/opinion on this matter for the last 10 years.

 

[Guest wellmont]

my contribution to the no inflation thread, I mean other than the cost of my health insurance almost doubling over last year.

 

http://www.economicpolicyjournal.com/2014/04/condo-prices-go-crazy-in-san-francisco.html?showComment=1396385634073

[Rabbitisrich]

Yes, Richard Koo's Balance Sheet Recession (published in 2003) has been a big influence on my thoughts/opinion on this matter for the last 10 years.

 

His focus on household balance sheets makes sense from a business perspective, but he hugely overstated his case against monetary policy. His debt based argument not only presumed monetary inefficacy in real terms, which is defensible, but it also presumes impotency in nominal terms.

[JEast]

Funny how the tide goes in and out.  A year ago you were believed to be an idiot if you owned bonds, now the attached Bloomberg story tells us why 30-year bonds will continue to rally.

 

http://www.bloomberg.com/news/2014-05-04/can-t-find-enough-30-year-treasuries-to-buy-here-s-why.html

 

Cheers

JEast

[oddballstocks]

JEast,

 

I don't have anything to add except that I'm glad you continue to create threads like this.  I like your perspective on the macro.  I also have a fascination with how the real world never fits into neat and tidy story lines.

 

Nate

[ERICOPOLY]

Why isn't the US Treasury issuing more 30 yr bonds?

[CorpRaider]

Yeah, Gundlach was the only bond guy (maybe the only person, haha, I certainly wasn't amongst them) I remember getting it right on treasuries over the past year or so.

[Guest Dazel]

 

 

Brian Bradstreet of Fairfax is once again right...he blows anyone's record out of the water over the last 15 years...and of course this year!

 

Dazel.

[Ham Hockers]

Why isn't the US Treasury issuing more 30 yr bonds?

 

You mean in addition to what they're issuing, or in lieu of shorter duration bonds?

[JEast]

Not to beat a dead horse on this thread, but I find this stuff interesting.  Again one or two data points do not make a trend, but some data points are starting to gather potential steam.

 

Hungary unexpectedly posted a negative inflation rate in April for the first time since 1968, widening the central bank’s room to continue Europe’s longest uninterrupted cycle of interest-rate cuts.

http://www.bloomberg.com/news/2014-05-13/hungary-inflation-turning-negative-widens-rate-cut-scope.html

[wisdom]

http://finance.fortune.cnn.com/2014/05/14/david-tepper/?iid=HP_LN

 

Tepper concerned about deflation and stocks. Holding cash though not ready to short.