Since 2007, the world’s Central Banks have collectively put more than $10 trillion into the financial system since 2008. To put that number into perspective, it’s equal to roughly 15% of global GDP.
It’s ironic that in a day and age where Keynesian economics is the “accepted view” we still don’t pay enough attention to what Keynes said about inflation: "By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some..." The problem today is that some people believe inflation is lower than it actually is. The Consumer Price Index CPI is used to measure the cost of maintaining a certain standard of living. Now it measures the cost of maintaining a certain level of satisfaction. You can argue the magnitude of the inflation understatement but you can’t argue that the official numbers are accurate. Under reporting inflation has led to many predictable outcomes.
Most people believe that when inflation hits, prices have to go higher. This is true, but higher prices can be manifested in multiple ways. Firms usually do not simply raise prices in nominal terms as price elasticity can kill revenues because it would hurt sales.
They can be handcuffed, they can be given coffins, they can be parachuted, they can be bungee’d, they can be life-jackets, they can be a hello and they can have their hands shaken. What are we talking about? Well, all of these things seem to have one thing in common, they are golden!
- IMF Tells Central Europe to Spend More (WSJ)
- Tornadoes Blast Oklahoma (WSJ)
- Frenetic search for survivors as 91 feared dead in tornado-hit Oklahoma (Reuters)
- JPMorgan investors on edge over vote on Dimon; what if they win? (Reuters)
- Wealthy bank depositors to suffer losses in EU law (Reuters)
- Yen Slips as Amari Backtracks (BBG)
- Japan Ready for More Yen Weakness Despite Recent Comments (WSJ)
- IRS officials back on Capitol Hill hot seat over targeting (Reuters)
- Li Keqiang pledges China boost to India trade (FT)
- Europe's Recession Sparks Grass-Roots Political Push (WSJ)
- Obama and Xi to meet in effort to calm growing US-China rivalry (FT)
- Berlin plans to streamline EU but avoid wholesale treaty change (FT)
- France must reform or face punitive measures - EU's Oettinger (Reuters)
"Clearly, the USDA has made up its mind that Big Sugar is going to trump the American consumer," is how industry exec perceives the news that the government is considerng buying 400,000 tons of sugar, as WSJ reports, to stave off a wave of defaults by sugar processors that borrowed $862 million under a government price-support program. Since these 'loans' were given nine-months ago, sugar prices have plunged 18% - and could leave the government's price-support program with an embarrassing $80 million loss given the additional sugar-to-ethanol purchase losses. Of course, rather than pass on lower prices to a struggling consumer, the government's decision is to avoid a loss for corporations such as American Crystal Sugar Co., Amalgamated Sugar Co. and U.S. Sugar Corp., and, as Sen. Jeanne Shaheen notes "unfairly leaving consumers and businesses on the hook to foot the bill and that is unacceptable." Moar Big Gulps...
Make no mistake, inflation is creeping into the system in a big way. And the Fed will not raise interest rates to fight it until it’s far too late. Debt levels are simply too high for the Federal Government and US corporations, particularly the large banks which the Fed has been doing everything it can to prop up.
Following last week's outlier of only 60x more insider selling than buying, the latest Bloomberg S&P500 insider selling (and occasional) buying update shows that corporate insiders are once again reverting to the mean of dumping as much of everything as they can with both hands. The last week saw nearly 150x more insider selling to buying, with just $2.3 million in purchases (nearly half of which was accounted for by the $1MM purchase in Medtronic), offset by $333 million in selling. The biggest sales were Hershey, Autozone, Abercrombie and Fitch, Agilent and Chipotle, better known as some of the biggest bubbles in the current market.
Stocks hit their two and a half year highs today as confidence in the markets skyrockets thanks to...
- Beijing city to raise minimum wage 21%; Second move in 6 months amid inflation concerns.
- Brazil raises duties on China-made baby dolls as Real gains hurt toymakers.
- China cuts rare earths export quota for 2011.
- Chinese CEOs reduces support for a stronger yuan as they criticize U.S. monetary easing
- Euro marks higher after disappointing US economic data, buys at $1.3151.
- Housing Starts seen rising to three-year high with belated US jobs boost.
- Oct. Case-Shiller home price down 0.8%; Non-adjusted house prices down 1.3%.
- Oil trades near 26-month high on Retail sales, supply forecast.
- Taiwan may increase interest rate to damp prices after countering inflows.
Taking physical delivery turns the market upside down. Speculation is rife about secret hedges, under the table contracts, or other back room deals. Banned in the US, but legal in London. A newfound penchant for chocolate by the rising Chinese middle class. Get involved, but you might consider taking a long nap first. (NIB).
- Administration pledges support for Greece while market regulators launch trading investigation.
- Calif. AG sues former pension fund officials for fraud.
- E. coli outbreak sickens 19 people in 3 states.
- Euro zone summit to try to cover debt crisis.
- Geithner urges Congress to equip regulators.
- German lower approves a law to free up Germany's contribution to a multi-billion euro rescue package for Greece.
- Jobs expected to grow in April; Wall Street tremors over debt crisis could limit future gains.
What expands asses across America alongside narrowing ranges on the NYSE? Easter chocolate, of course! A quick look at 30-minute, daily & weekly charts of Hershey (HSY), Kraft (KFT) and Tootsie Roll (TR) across several of our proprietary trading screens.
- Asian stocks advance for the first time in three days on higher metal prices, weak Yen.
- China money rates rise to the highest this year on signs government to rein in stimulus.
- Chinese Regulator orders some Chinese banks to limit loans due to insufficient capital.
- Chinese regulators expect its banks to issue about $1.1 trillion in new loans this year.
- Chinese shares fall on stimulus concern; Euro at four-month low on Greece.
- Euro slumped to four-month lows.
- Federal Housing Administration to announce more-stringent lending requirements, higher borrower fees on Wednesday.
- Asian shares were mixed, with tech stocks gaining after solid earnings from Intel.
- China charged US with “backsliding” toward protectionism; warns on Google.
- Chinese equity funds had a third week of outflows as the central bank tightened lending.
- Foreign Direct Investment in China more than doubles to $12.1B in Dec as economy recovers.
- Jobless Claims in US increased 11,000 last week to 444,000.
- Mortgage rates mostly fell in the past week, 30-yr fixed-rate mortgages back toward 5%.