Stagflation

What Alan Greenspan Is Most Worried About

"... it's very difficult to see where the next step is except what I'm concerned about mostly, is stag-flation, meaning I think we're seeing the very early signs of inflation beginning finally to pick up as the issue of deflation fades.... we're in a situation now where looking at the interest rate levels that we're looking at and the inflation rates we're looking at, it's very clear that we're going to be moving reasonably shortly into a wholly different phase."

The Real Message From Asset Inflation

The earliest signs are developing of hyperinflation, more correctly described as a collapse of the purchasing power of all the major government currencies. Extreme one-way bets aside, the overriding reason for valuation disparities is becoming more consistent with the downgrading of cash, rather than a revaluation of assets

Frontrunning: July 5

  • Pound Tumbles to 31-Year Low as Its Post-Brexit Selloff Resumes (BBG)
  • Bad Debt Piled in Italian Banks Looms as Next Crisis (WSJ)
  • Stock Market to Bond Market: ‘La-La-La I Can’t Hear You' (WSJ)
  • A Prime Minister, a Referendum and Italy’s Turn to Get Worried (BBG)
  • Brexit Vote Paralyzes Companies Across Europe  (WSJ)

Global Stocks Sharply Lower As Bond Yields Hit New Record Lows; Oil Slides Below $50

Global stocks, U.S. index futures are sharply lower pressured by fears of another day of record low bond yields, as investors start to worry about numerous risk catalysts in the coming weeks, from the Brexit vote to Fed meeting. The Dollar spot index rose for the second day in a row, pushing commodities lower for their first two-day decline since May 24, while WTI has dipped back under $50.

The Fed's Rate Hike Cycle Is Likely Complete, Not Just Beginning

The Federal Reserve continues discussing the timing for a cycle of rate hikes and a return to "normal"... but there is more than ample evidence which points to exactly the opposite.  Seems the adage "watch what they do...not what they say" is appropriate as ever.  So where's the evidence?

The "Crazy Growth In Corporate Debt" Is Finally Noticed: Bloomberg Issues Stark Warning

One does not have to be financial wizard to to know that a firm which has to borrow more than it can generate from core operations is not a sustainable business model, and yet today's CFOs, pundits and central bankers do not. But more are starting to pay attention as the corporate debt pile hits epic proportions. As Bloomberg writes this morning, when it also issued a stark warning about the next source of credit contagion, while "consumers were the Achilles’ heel of the U.S. economy in the run-up to the last recession. This time, companies may play that role."

Keynes Must Die

The errors of Keynes have empowered sociopathic political classes all over the world and deprived the world of the economic progress we would otherwise have enjoyed. No amount of stimulus ever seems to be quite enough. And when the stimulus fails, the blinkered Keynesian establishment can only think to double down, never to question the policy itself. The Keynesians are pretending they have everything under control, but we know that’s a fantasy. Simply put, "Keynes must die so the economy may live."

The Eurozone Is The Greatest Danger

Financial and economic prospects for the Eurozone have many similarities to the 1972-75 period in the UK, which this writer remembers vividly.  This time, the prospects facing the Eurozone potentially could be worse. The obvious difference is the far higher levels of debt, which will never allow the ECB to run interest rates up sufficiently to kill price inflation. More likely, positive rates of only one or two per cent would be enough to destabilise the Eurozone’s financial system. Let us hope that these dangers are exaggerated, and the final outcome will not be systemically destabilising, not just for Europe, but globally as well. A wise man, faced with the unknown, believes nothing, expects the worst, and takes precautions.

Gold Money's picture

The Inflation Tipping-Point

The increasingly obvious trend reversal in inflation, amid softening growth, indicates the long predicted arrival of stagflation. While not unexpected, this is likely to propel the gold price higher.

BofA: "If You Go Down To The Woods Today It Will Be Full Of Bears"

What has professional investors so spooked? For the answer we look at the monthly survey question what FMS respondents believe is the biggest tail risk. Here, surprisingly, we find that after two months of everyone fretting about "quantitative failure", or the Fed losing control over markets more than anything, this is now only the third biggest concern and there is a new biggest "tail risk" - Brexit.