10Y economy fed inflation

CPI Quick Take: What Happens When The Battle Is ‘Won’?

That's the question.

That's the question.
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1 comment on “CPI Quick Take: What Happens When The Battle Is ‘Won’?

  1. Ok heisy, let’s think this through for a second.

    First step is to identify the dominant market narrative that everyone is myopically focused on: inflation pressure drives yields higher putting bonds and equities equities at risk. Correlations go positive, nowhere to hide, blah blah blah. Check.

    Second step is to identify what this market narrative could be ignoring: deflationary pressures? I mean, look at the contribution from tobacco products alone to the ex food/energy CPI print. Many of these categories barely moved higher or even declined (deflation). Improved productivity drives real growth higher? Unlikely, since our current industrial system has basically maxed itself out. Real growth decelerates and even moves negative? Very real possibility here, considering productivity has basically hit a ceiling and especially as rates tick higher and so servicing debt steals market share from consumption.

    What am I missing? Can we take this discussion to the second derivative instead of just focusing on the obvious? I want to make some money!!

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