Stagflation is a stagnant economy and inflating prices. Are we there yet?
Not quiet yet since the economy still seems to move forward but things might change on Friday. But we have Inflation big time on the rise! 4.2% in April
When you ask the FEDs about Inflation they say there is none! It is temporary. Alright. What are the facts saying?
When we bought fence board on the weekend we noticed the price went up 50%! Grocery prices went up too. Gasoline is up in the US by about 20% or locally more. In Alberta 20%. Demand is low since you cant go anywhere and the summer season is not here yet. Airplanes are grounded too. Do we have shortages? The demand is lower and we should have lower gasoline prices for that reason but we don't. Even though two refineries in Edmonton are offline due to maintenance.
And Canada's economy is usually following the US. Now we have two Clowns at the helm. One in the US and one in Eastern Canada.
It is clear that with printing Billions of Dollars inflation is rising. USD becomes cheaper and hence imported commodities more expensive. And fueling this trend is a falling DIXY. The US Dollar Index usually has a 14 day up or down kind of scheme going. But 6 weeks down trend is worrisome.
If the Index falls below 0.85 it might open the floodgates.
Here are two important graphs. Below you see different Asset Classes behaving in different inflationary environment. These data are the asset performances since 1973. So the data are the facts here no matter what our politicians trying to sell you and they selling you snake oil. Watch specifically Commodity Gains in RED and Stock / Treasury Gains in BLACK and BLUE.
Commodities outperform Stocks. TIPS are Barclays U.S. Treasury Inflation Protected Securities (TIPS), which are manipulated by the Government. They just had to be in this graph. We focus on Commodities, Treasury Bonds and Stocks. We can take these indices as a indicator for Inflation and Interest rates hikes. We can also predict the assets that will gain and those that will lose in an inflationary environment. And IMO Interest hikes will come even though they are denying it. This also will slow down the economy.
Here are the Year To Date, YTD weekly performance charts. And we can see that commodity prices are rapidly outperforming the S&P500/ Stock Market. You could take the DIA or any other Stock Market index and you would get the same picture. The S&P 500 is just the biggest Market in the US and world wide.
We clearly have inflation going! While the Stock Market made 10% since January Commodities made 19%. Treasuries under 1%. There you have it. Inflation is here.
Buy Corn, Granola Oil and Copper. :)
Inflation Canada
And for the Pinoy community, we can also learn that Canada has a bigger inflation rate than the Philippines, LOL
On Thursday we will also have our Preliminary GDP output. Then also new Jobless Claims will come out. The markets might move big up or down!!! A weaker job number will fuel inflation and stagnation fears.
Friday then is PMI and Inflation Day and we will see what the economy is up to. It's a leading indicator of economic health - businesses react quickly to market conditions, and their purchasing managers hold perhaps the most current and relevant insight into the company's view of the economy;
The confidence of Americans in the U.S. economy slipped in May for the first time in six months as they grew more worried about a rising cost of living and future job prospects.
And if the next Unemployment Claims on Thursday will be weak we might end up in Stagnation. The Stock Market might turn Bearish.
Also Inflation Core Data will be released. Without Food and Energy, though
Consumer Confidence Index. Financial confidence for consumers is a leading indicator of consumer spending, which accounts for a majority of overall economic activity. Are the Stimulus checks drying out or are we printing more Monopoly Money?
Source:
All over all the volume on the markets are 35-50% of the usual average for the most indexes today, which will result in higher stock prices for the rest of the week. The majority waits for Thursday and Friday.
Here you have it. Thank you for all those who supported Biden and the Squad. They are doing a fantastic job!!
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