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“Bigly”: Reflation Is Back As Dollar Rises, Global Stocks Rally, Oil Eyes EIA Data

Apparently, reports of the reflation meme's demise were greatly exaggerated. It wasn't too long ago when traders were beginning to wonder if the Trump trade was dying on the vine. One super awesome, extra bigly, "phenomenal" tax plan promise and one hawkish Janet Yellen later, and reflation is alive and kicking. Here's SocGen's morning take: Janet Yellen warned against the perils of the Fed dithering which, in the light of the last few years, is a bit rich. She also pointed out the Fed can’t see much of a relationship between wage growth and CPI inflation. If the Phillips reflects the relationship between wage growth and unemployment, then it’s in decent shape – the inverse correlation between the two is alive and well. From the 1960s onwards however, economists started using the Phillips Curve to describe a relationship between unemployment and inflation, and that relationship is far weaker. Which has allowed the Fed to dither. If ‘the curve’ is the Phillips Curve, then the Fed isn’t behind it because it’s not really a curve at all. Whether keeping rates too low for too long into an economic cycle is dangerous, is a completely different question. Meanwhile, markets
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