Kolanovic Warns Investors: We’re Not Out Of The Inflation Woods
Two benign US CPI reports in a row might make a streak, but they don't make a trend and they certainly don't mean the world's largest economy is out of the proverbial woods on the inflation front.
That was one message from JPMorgan analysts led by Marko Kolanovic who on Monday cited a litany of reasons why investors should remain wary of inflation despite growing optimism around a return to something that closely resembles policymakers' (arbitrary) definition of price stability.
"While we acc
Kolanovic can be very much correct and very much incorrect in his calls (made with reason). No matter which, his calls can move markets for a few hours until the darts are thrown again by another.
H-Man, I am in the camp that “material weakness in consumer spending” is the true headwind which I believe is around the corner. Home equity lines, retirement accounts and credit cards have all been raided. Once the piggy bank is empty, the only remaining choice is to stay home, read a book and learn how to cook a meal.
I think “now” may be the low point for YOY inflation in many categories. The base effect is reversing, energy commodities are rising, the health insurance adjustment will end, the job market remains tight, and the consumer still has some time before excess savings are exhausted.
IF housing follows market prices into disinflation, as the last couple of months seems to hint, won’t that swamp those other categories as far as headline or core inflation is concerned?
All good points and I agree. FYI, I believe the PCE favored by the Fed calculates health care cost changes differently than in CPI and is not affected by the annual adjustment.