Stocks Finally Wake Up to Higher Inflation. It Isn't Pretty

The ugly reality of inflation has begun to raise its head.

As we have noted previously, inflation is WELL above the Fed’s so-called target of 2%. Indeed, two of the Fed’s own in-house measures of inflation (the NY Fed UIG and Atlanta Fed Sticky Inflation measures) are clocking in at 3.14% and 2.5%, respectively.

That, in of itself, is a REAL problem for the debt-based financial system. Since 2008, the US has added over $9 trillion in public debt along with another $3 trillion in corporate debt, and $1.2 trillion in consumer debt.

ALL OF THIS was based on the assumption that interest rates would stay low.

So much for that. The yield on the 10-Year US Treasury has now spiked to 3%, breaking a 10-year downtrend.

Put simply, for a world that is TOTALLY saturated in debt like the US today, that blue box in the chart below is a MAJOR problem.

Stocks finally woke up to this reality in February. The results haven't been pretty so far.

This is the single biggest trend for 2018: INFLATION. And it could very well burst the Everything Bubble.

On that note, we are putting together an Executive Summary outlining all of these issues as well as what's coming down the pike when the Everything Bubble bursts.

It will be available exclusively to our clients. If you’d like to have a copy delivered to your inbox when it’s completed, you can join the wait-list here:

https://phoenixcapitalmarketing.com/TEB.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

Comments

bshirley1968 Wed, 04/25/2018 - 12:23 Permalink

I was wondering when Graham would have a new chart for us.  Had a feeling the 3% rate would bring him out.

Sooner or later this guy is going to be right.  Sooner left a long time ago, and later is right around the corner.

Better buckle up, Buttercup.

Honest Sam Wed, 04/25/2018 - 12:27 Permalink

I moved that red line south about an inch and whadayaknow?  The rate dropped from 3.0 in 2014 to lower than 1.5 in the middle of 2016.  

Seeing as how historical events sometimes, a lot of times repeat or rhyme, or reflect an event in the future, who's to say that in a yr and a half or sooner rates won't be back to 1.5%?  

 

Teletubby Wed, 04/25/2018 - 15:52 Permalink

Given that I owe my family's financial security, and well being, to Nourial Roubini for getting me out before the last flush, I'm following his advise again, and pulling out by May 1st this year. Dr Doom. Indeed.

Good luck kids.