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Is This The Chart Making Bernanke Nervous?
With the Fed nervous to even let a little MEP 'Twist' expire (tightening), we can't help but be a little nervous of their unbridled and passionate belief that if inflation should rear its ugly (or virtuous, perhaps, in their satanic eyes) head, they will be able to manage and tighten to control it. To wit, we note that one of the Fed's most-watched indicators of inflation - the 5Y5Y forward inflation breakeven - has just reached its highest level in 17 months and is near its peak since the financial crisis lows in 2009 at over 3.08%. We have six little words for Bernanke, Yellen, et al. "Be Careful What You Wish For." And by the way, the last few times, the 5Y5Y reached these levels marked a short-term top in the S&P 500.
17 month highs in inflation expectations...
These local peaks in inflation expectations have marked local highs in the S&P 500 also...
Charts: Bloomberg
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If you eat, and are not proximate to the money printing, then these two charts should make you nervous...
http://future.aae.wisc.edu/data/annual_values/by_area/2052?tab=feed
Well, I do eat, but since food isn't a part of CPI, I tend to believe that your fancy charts don't have much to do with anything. You can take your conspiracy theories elsewhere.
A quick and easy snack in under 10 minutes!!!
Ingredients:
Stir fry the CPI on high heat for 2 minutes until the edges begin to brown. Add a dash of the light soy sauce, reduce heat, cover with a lid and allow to steam for 6 minutes. The CPI should be tender, but not mushy. Turn off heat. Give the CPI a light coating of olive oil. Salt to taste. Serve and enjoy!
Serves: Zero persons.
We all have essentially four choices.
Looks like you know some nice craft Hedgeless horseman, congrats.
I'll forward your compliment to Mrs. Horseman. Her Colby is indeed sublime. Milk from our grass-fed cow, salt, rennet, and craftsmanship.
What inflation? (sarc) According to the BLS, people engage in substitution if prices get too high. When someone buys chicken instead of steak because meat has gone up in price, we all know cheaper substitutes are non-inflationary. Hell, I know of people who have substituted all the way down to cans of cat food.
" To maximize the utility with the reduced budget constraint, BC1, the consumer will re-allocate consumption to reach the highest available indifference curve which BC1 is tangent to. As shown on the diagram below, that curve is I1, and therefore the amount of good Y bought will shift from Y2 to Y1, and the amount of good X bought to shift from X2 to X1. The opposite effect will occur if the price of Y decreases causing the shift from BC2 to BC3, and I2 to I3."
And here is my MIT approved chart to back my Hedonic premise:
http://upload.wikimedia.org/wikipedia/en/thumb/7/74/Consumer_constraint_...
Bullish... once resistance is breached, my 401k goes to the moon!!
Seriously, the corellation between 5Y5Y and SP500 is amazing. More amazing is the lack of consistent response to inflation during periods of easing.
EVERYONE MUST WATCH THIS!! NEWBIES ESPECIALLY!!! Ann Barnhardt's 2.5 hour presentation "The Economy is Going to Implode... and You Deserve to Know Why"
http://www.youtube.com/watch?v=WraPInMTGwU
I suspect the correlation will break down this time around (at least in the short run, but perhaps not the long)....
Why? Bernanke will print like a crazy MuthaFucka, ignoring the 5Y5Y, because he is scared shitless of deflationary collapse.
It is refreshing to see a strong, well spoken woman tilting against the leviathon windmill.
But, her slanderous mis-characterization of Ron Paul and intellectually disabling affection for Israel suggest that she's the one who's either "bat-shit crazy" or an operative for the traitors.
It's 11:30 and I see this. Now I'm hungry. Great.
That looks freaking DELICIOUS. If I could reach through the screen that bread and cheese would be on my office desk right now. You know how to live, my friend.
So was that you, or did Mrs. hedgeless_horseman cut the cheese?
5. Hoard alternative cheese:
http://now.msn.com/novak-djokovic-is-purchasing-donkey-cheese?ocid=vt_twmsnnow
I would suggest we protect our cheese from the government rats who seek to steal it.
You forgot the fifth thing.....cut the cheese.
Is that REAL bread I see, the type that was made once by hand on a daily basis.
Must be an Old Old image. Its been so long since I tasted real bread that I accept Micky dees buns are as good as it gets.
Peak Hay
Corn is in a bubble. JPM has an unruly amount of corn shorts. Keiser said, "crash JPM, buy corn." Once all the corn is sold to Eastern interests, there won't be any physical corn left to satisfy delivery. Oh ya, and, YOU CAN'T EAT CORN.
lol.
I stopped eating hay and switched to alfalfa. Should show up in the chained CPI numbers soon.
You surely should not eat corn as it is all genetically modified crap now!
Tuco
Referring to inflation, Adam Fergusson wrote: "The more materialist that society, possibly, the more cruelly it hurts." - When Money Dies
This does not bode well for us.
Look under the bed! Maybe you'll find the Hay/Corn conspiro's there...
Maybe they took food out of core CPI since everyone's on food stamps and gets it free.
What the heck are you talking about?
Of course food is part of the CPI...it is just not part of the Core CPI.
http://www.bls.gov/news.release/cpi.nr0.htm
Only poor people in foreign countries worry about food prices. What does the graph for iPhone prices look like?
This doesn't affect me in the least. I don't eat (dry or wet) hay or corn grain. I just eat all that wonderful processed stuff grown at the local Safeway.
/sarc
And if you drink water or crap, the rate of annual inflation is now up to 18% in CPI utilities:
www.ipu.msu.edu/research/pdfs/IPU%20Consumer%20Price%20Index%20for%20Uti...(2011).pdf
Luckily, I kicked teh habit so I don't drink crap anymore.
Yeah, here's where the "i can tame inflation in 15 minutes with a phone call" turns to complete and utter shit...
LOL!!
Im tellin ya. Nobody has a clue what about to happen.
Hay and corn prices aren't up because of infation - they're up because of the drought. The drought continues, because although The Won is capable of healing the planet and halting the ocean's rise, he somehow can't make it rain. The media aren't reporting the drought, because even they can't find a way to blame it on Bush or the Republicans.
High feed prices lead to higher meat prices, which means consumers will have less to spend on other things (or they'll go vegan in order to buy iPads), but that in itself is not inflation.
Wait till he gets the bill from the drive-through at McDonald's.
When the dollar menu is gone, then its time to panic.
When the $5 footlong turns to $6 footlong.....games over man, game over.
My liberal neighbor said that "There is no inflation, housing prices are falling. When milk gets to $5 a gallon then let's talk." Wait awhile, I told him. Wait awhile.
Housing is a barbarous relic. Besides you can't eat your house.
Brilliant.
People own houses, because...... tradition!
you've never been in a pure ice igloo?
Bottoms up! When the temp rise occurs.
What's remarkable about your story... If we were just starting a second term with a "conservative" president, he'd be right there with you. Idiots suck. Liberal and conservative alike.
Cognitive dissonance at its best. He always agrees with my critique of "conservative" politicians, but quickly has knee-jerk comebacks when I go after the "liberal" politicians. Oddly enough, my critique of both are the same at the core of the conversations, but he can't see that yet.
Name a conservative politician. There are none.
It's either Liberal, Liberal lite, or bat-sh!t crazy... seriously
Define "conservative."
I would be willing to concede that there are no conservative politicians, but in doing so I would have to support the notion that there are also no liberal politicians.
Bingo.
It's all "Neo" from here on out.
Eh, no. There are only liberal politicians... no "neo" needed. The conservative/liberal divide is solely predicated on their perspectives of the ideal size and scope of government... conservative wanting less, liberal wanting more. That's it. In other words, because you would have to concede that there are no conservative politicians has nothing to do with bootstrapping an admission that there are no liberal politicians... there are many.
Well, I suppose you could use a component of the very traditional definition of liberal: "advocating unregulated markets," although that seems suspect as well. If you want to use a different component: "advocating the rule of law," you're SOL.
You can use whatever definition you like, but I suggest reading at least one history book before you decide.
The pen is mightier than the sword.
Yes, that is the (or a) traditional narrative... But it isn't true. There is also a traditional divide over civil rights... Also not true. There are all sorts of false dichotomies engineered between the parties.
American thought has no precision and little context.
We are so uneducated.
By design.
No... this is the problem. There is an actual academic definition for liberal and conservative... that has nothing to do with what the parties engineer... this is how common ground is developed to actually discuss the issue.
Yesterday, my liberal neighbor said: "Do you know who I think will be a really good candidate after Obama? Hillary!!!" Seriously, this happened.
"neighbor said: "Do you know who I think will be a really good candidate after Obama? Hillary!!!"
I doubt She will run, she would be in her 70's if elected. I suspect she is going to retire. I have some doubts we will even see an election in 2016. US debt will be over $20 Trillion by 2016. Somethings likely to give before the 2016 election.
"Thunder Thighs" loves power and will always seek it!
Tuco
Naw....the Fed will keep printing. CNBC and Jim Cramer will still be touting the economic recovery. A majority of the American public will still believe that Starbucks and IPhones are much more imporant than debt. JPM will continue to skew Gold and Silver. Greece, Italy and Spain will continue to receive bailouts. What;s going to change..?
The biggest fly in the ointment will be ObamacCare. Now that could be the real wild card. If people, both working and non working, begin to see that they're being charged for something that they oppose....watch out. Obama will not be able to defy gravity after that.
If ObamaCare doesn't do it...the next stop will be when interest on the national debt exceeds tax revenue. That occurs sometime around 2022. And Americans are calling China stupid for importing/buying over 500 tons of gold this year.
Hamburger is $5/lb at walmart for mid-level lean/fat mix
why wait?
http://www.freshdirect.com/search.jsp?searchParams=organic+valley+milk&x...
Or when the homeless beggar turns down your $1 bills and demands gold..
"Or when the homeless beggar turns down your $1 bills"
The Treasury is already one step ahead: The are going to stop printing $1 FRNs next year! Some coins may also be eliminated.
They arent asking for gold here, but a min 5$ donation.
The inflation is killing the poor.
Good beans at a all time high, the beans with rocks,insects and rat turds are still somewhat cheap.
Tighten !! hahaha
Carney paving the way for nominal GDP targetting
central bankers do not care about inflation, even if it suits them to pretend they do.
Inflation is all they care about. Everything Bernanke has done in the last 5 years has been to create inflation, to combat the deflation of the last inflation bubble they blew, which was blown to save us from the collapse of the previous inflation bubble, which was blown to save us from the one before that, etc etc etc back to the Reagan administration.
Do you mean Bernanke's sole strategy is to try and keep inflating asset bubbles (that are destined to pop loudly just as all fractional reserve fiat juiced asset bubbles preceding them have, without a single historical exception, hence the term "bubble"), in an attempt to kick the can further down the road, in order to hide the fact that the structural economy and all normal market forces that would exist in anything remotely resembling capitalism have been decimated?
Say it isn't so!!!
Most of the prior accomodative moves (before QE 3) was done with the purpose of "creating inflation" to combat the growing forces of deflation. (see the OP chart, which is really great).
With QE3 and today's move, the Fed is creating inflation to meet a different mandate. How do we know this? Becuse the FOMC gave their blessing on MOAR QE when the 5yr/5yr inflation expectation measure was at a peak-- as opposed to a trough. With these recent rounds, nominal inflation targeting is the underyling method -- and "full" employment has become the primary mandate. Price stability means essentially nada at this stage-- until it becomes unstable.
The scary thing is, not only has the FOMC piled on MOAR QE to create MOAR inflation, they are now doing so at an accelerating rate-- as the unsterilized nature of the new round of Treasury purchases will likely add fuel to the flames.
The move today SHOULD move the 5yr/5yr Treasury above and beyond the 3.0% or so threshold that has heald for the past 3 years or so. If not-- there are either larger deflationary forces at play here-- or the someone in the halls of the US government is lying. Of course, I was equally conviced that QE3 earlier this year would pop inflation expectations much higher-- and it never really happened to a great degree.
What I want to know... is that if the FOMC is looking to control forward inflation expectations that translates into the 2.5% stated threshold, what is the equivalent 5y/5yr rate?
Given recent PCI data, my guess on the 5yr/5yr is roughtly around 4.0%-- about 100 bps away from the current 5yr/5yr.
eating is overrated.
it is untill the sheeple can't afford to get into the buffet line at golden corral
Starving = the new eating
In Soviet Amerika starvings eats you.
right. You can't even "eat" gold.
well that, my friend would depend on what one is eating
This is the chart making Benny nervous:
http://stockcharts.com/h-sc/ui?s=AAPL&p=W&yr=3&mn=0&dy=0&id=p60152203014
It can bounce off the trend line again and again yet it only needs to drop though once.
Shalom Bernank....what, him worry?
If Ben Bernanke - and the rest of the Wall Street/D.C. white-collar criminals, for that matter - lived amongst us then, yes, he'd be nervous about this.
But, seeing as he doesn't, I'm sure he's not nervous in the least.
This era is actually making me long for the 1980s. At least, back then, we put white-collar crooks in jail. Today, they either get elected, appointed as CEO of a corporation, or both.
or treasury...or all
So, I wonder how long before this lagging indicator explodes in to world wide food riots? Any guesses?
Forget about food. My jaw dropped open at the price of lumber yesterday. Up 50- 80% in a year. Bad time to remodel. Maybe we can blame it on Sandy.
Sandy Berger has nothing to do with it. He is a good loyal globalist and is not into weather modification!
Tuco
Federal Gold Match ammo in .308 went from $21.89 to $37.95 in the past 2 weeks. All other bulk ammo has been picked clean. Lead was the winner last month!
the bernank is a pig [/apology to pigs]
Yea, I'm sure he's quivering in his boots.
15 minutes and all will be OK. Go back to looking at anne Hathaway's vagina, as all is in the hands of Big Boy Benny.
WHERE CAN I SEE ANN HATHAWAY'S VAGINA!!?
Google it. I am sure it is out there. TMZ, Egotastic, Superficial. something like that.
Wifey tells me prices are exploding at the supermarket, just in the past couple of weeks. Good thing fuel is down, huh?
Yeah. A dozen of store-brand eggs are $2.00 now here (Western PA).
No shit. My normal grocery shopping trip that I take every two weeks has exploded from about $350 every two weeks to over $500. Now I purchase the same quantity and type of goods. This week I did get a Christmas ham and some shrimp cocktail, but the rest was a normal jaunt. It would be safe to say that the normal goods purchased at $350 are now costing over $400, so it is safe to say that there is a good 13% inflation that I saw spike in just two weeks. I should probably pull my receipts and take a look, but fucking prices are sky rocketing. Trouble is the sheep cannot think back a whole two weeks, let alone prices paid. Even if they could, they would blame the inflation on those fucking speculators, if they even know what a speculators is.
Our area's largest chain grocery store (Giant Eagle, if you're familiar) announced a month ago that it would be putting what it terms a "Price Lock" on a bevy of staple items until after the New Year begins.
Then, I think we all know what is going to take place upon such time as those "locks" become unlocked.
Giant Eagle? You from Pittsburgh?
Yes, unfortunately.
" I did get a Christmas ham and some shrimp cocktail,"
I highly recommend avoid consumption of Shrimp. Its all contaminated. From the Nuclear fallout from Japan, Chinese Coal burning (heavy metals) in the Pacific, to the BP Oil spill (Oil + chemical dispersants) in te Gulf, to the heavy garbage and sewage dumping in the Altantic. Shrimp are bottom feeders which is where all the crap ends up. Not worth messing with your long term health for a cocktail!
Another issue is the ever decreasing portion sizes. Most of the Supermarkets have even cut down on the sizes of meat cuts (either much smaller size, or half the normal thickness). 5 Lb bags of Sugar are now 4 lb bags. Most package containers are considerably smaller than they were a few years ago.
FWIW: Some of the blame on higher food prices is due to the really bad drought. I doubt we will see a reverse in this trend, since we are in a long term drought that will last for years, perhaps as long as a decade.
built out a huge garden last year... this year i will spend more time planting ..and weeding.. and grow a ton a food! chicken coop getting rebuilt.. last one got broken into.
Yeah, I am eyeing that greenhouse a little more closely this year. Perhaps I should build it finally.
Built it and they will come. The hungry homeless I mean.
Time for them to pull the rug out from under the market and bring out the deflation trumpeters on all their media outlets
Can't be....Bloomberg declares 'Bawnds show no sign of 'inflation' (nevermind it's Bernank buying them all now with your money) so Bernank critics need to STFU!'
Bernanke Critics Can’t Fight Bonds Showing No Inflation - Bloomberg
The FED has many clients. They are all drug addicts. They want free money so they can enjoy the next fleeting high. The bankers and the White House have no choice but to hold Ben's nuts in a vice to make sure he hits the Cntrl P button.
now check the divergence with the treasuries yield almost all time low. Sodium + Water = Kaboom
I root for currency collapse. It's the only thing, IMO, that will wake people up.
"I root for currency collapse. It's the only thing, IMO, that will wake people up."
Well then Bernanke and O'bama are your men! Instead of Batman and Robin, the Dynamic Duo, we have Ben and Barry, the Destructive Duo! . Ben and Barry battle villians like "Lady Liberty" and "Common Cents"
Ben and Barry are a one-two punch to knock out the dollar. Assuming they don't end up starting WW3 first.
Then, you'll probably enjoy this Head and Shoulder pattern:
http://www.finviz.com/quote.ashx?t=uup
Beef prices to rise 20% next year. I'm in the shoe business and we expect price increases across the board from rising leather/hide prices that will follow. Print bastards print!! (oh, forgot, "I will not monetize the debt)
I go to Bj's ( Not Blowjobs). Very good deals and always busy. The only requiremment is a Bj's card for $45 a year.
Ha what, it's drivel like this that has eroded ZH's credibility....Do you understand the intended implications of such recent monetary policy actions (Regardless of whether you agree on their viability)???
'Recent monetary policy actions'....you mean monetizing the debt?
'ZH 'credibility' has been 'eroded'.....lol whatever keep dreaming Steve Liesman...go home you're drunk.
Yeah right, this time is different. CPI = wages increase, it does not measure prices, it measures wages because of systematic substitution.
If food prices go up then those who work (non welfare) eat less , they then have better health and use less toilet paper. And thats how the cpi works.
Just watch out for food-jackers when you're wheeling out all your steaks and stuff, go to the store armed.
Just wait until the dollar buuble *pops*! Gas will double overnight. Then there will be riots.
Well, at least the "blood on the streets" from the union battle in Michigan will result in a war that is "civil'.
Their Majesties Satanic Request?