Inflation or Deflation 02 (Aug 14 - Dec 24)

Inflation or Deflation 02 (Aug 14 - Dec 24)

Postby winston » Wed Aug 13, 2014 6:41 am

New data suggest inflation could be taking hold

Source: Bloomberg

http://thecrux.com/new-data-suggest-the ... ive-shift/
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Europe - Stocks

Postby behappyalways » Fri Aug 22, 2014 4:48 pm

Nobel guru fears it may be nigh impossible to stop deflation
http://blogs.telegraph.co.uk/finance/am ... deflation/
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Re: Inflation or Deflation ?

Postby winston » Thu Sep 04, 2014 5:31 am

Shrinkflation

Inflation may be lurking in the aisles of supermarkets.

Even with price pressures tame to non-existent in the industrial world, economist Pippa Malmgren says they’re there if you look.

A former adviser to President George W. Bush, Malmgren is zeroing in on what has come to be known as “shrinkflation” — where companies charge consumers the same, or more, for less. That may foreshadow an overall jump in prices, an alarm she has been sounding for a while.

“Shrinking the size of goods is exactly what happened in the 1970s just before inflation proper set in,” she writes in her new book, “Signals: The Breakdown of the Social Contract and the Rise of Geopolitics.”

It also explains why people are so agitated by a higher cost of living, writes Malmgren, who founded London-based DRPM Group, a consulting firm.

Take the Dairy Milk bar produced by Kraft Foods (KRFT) Group Inc.’s Cadbury unit. In 2011, the company lopped two squares of chocolate from the snack, holding the price unchanged. At the time, the company cited rising costs. Last year, it made the corners of the bar more rounded, reducing the weight.

The U.K. consumer group Which? turned up other examples in a study it conducted last year. It found boxes of Nestle SA (NESN)’s Shredded Wheat cereal had shrunk to 470 grams from 525 grams yet still cost 2.68 pounds ($4.45).

Source: Bloomberg
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Re: Inflation or Deflation ?

Postby winston » Thu Oct 02, 2014 6:40 am

Controversial chart suggests deflation could be coming by Chris Kimble

Click on chart to enlarge

Well, October is here and it’s time for the baseball post-season to start…

Speaking of baseball, is a “New Deflationary Ball Game” starting in a variety of assets?

This 5-pack reflects that a variety of long-term support and resistance line breaks are taking place.

The U.S. dollar (upper left) is pushing above a 9-year resistance line recently.

At the same time the TR commodity index, gold, and silver are each breaking a support line that has been in place for over a decade.

Crude oil is attempting to break a 5-year support line at this time as well.

Are we seeing the beginning of a whole new price game for these key global assets? It is still early in this process.

Should the U.S. dollar keep pushing higher, these other assets could find themselves a good percentage below current prices.

I have shared for the past two years that silver’s downside target that I am interested in comes into play around the $15 zone, which is fast approaching.

Source: Kimble Charting Solutions

http://thecrux.com/trader-alert-controv ... 37gMXBU%3D
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Re: Inflation or Deflation ?

Postby winston » Sat Oct 25, 2014 6:41 am

If you’re worried about deflation, check out this chart

Source: Tom McClellan’s Chart in Focus:

http://www.mcoscillator.com/learning_ce ... kly_chart/
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Re: Inflation or Deflation ?

Postby winston » Fri Nov 07, 2014 7:03 am

The Magic Of CPI: Watch How Economists Transform A 400% Price Increase Into A 7.1% Decline by Tyler Durden

Source: Zero Hedge

http://www.zerohedge.com/news/2014-11-0 ... 71-decline
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Re: Inflation or Deflation ?

Postby winston » Sat Dec 06, 2014 6:47 am

Believe it or not, deflation is here today. Here's what you should know...

by Sean Goldsmith

Source: The Stansberry Digest

http://thecrux.com/believe-it-or-not-de ... 37gMXBU%3D
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Re: Inflation or Deflation ?

Postby winston » Tue Dec 09, 2014 5:54 am

Is the Fall in Oil and Commodities a Good Thing? Not in a Deflationary Environment

Three trends have come together and are igniting a deflationary environment. Central banks are fighting them with a fire hose of quantitative easing (inflation).

The first trend and, it’s slow at this point, is deleveraging the greatest debt bubble in history. The second is aging populations in the developed world and the third is falling commodity prices.

If governments and central banks are intent on fighting deflation, as they clearly are, they can’t be happy about commodity prices, especially oil, continuing to fall.

I’ve been arguing for years now that falling commodity prices is one of the least recognized indicators of the next global crash and financial crisis. The falling prices trigger a vicious cycle of slowing exports for emerging countries.

Look at China’s export bubble… falling commodity prices slow its emerging country markets, but China is the biggest importer of commodities to feed its manufacturing export machine (now the largest in the world). Then that in turn slows commodity prices further.

And there’s the perfect picture of the vicious cycle…

Emerging markets (EEM) are 29% below their late 2007/mid-2008 highs and commodity prices (CRB) are 47% below their mid-2008 highs. The first commodity crash hit sharply in 2008. The next one looks like it’s emerging progressively into 2015 to 2016.

The last global financial crisis was triggered by the subprime debt crisis in the U.S. and the next one we face could well be triggered by continuing falls in commodity prices and in the emerging markets that correlate most with such prices.

Commodity Breakdown

I have been commenting on how the CRB commodity index – including oil, gold and copper - have been trading in a sideways pattern for the past three years and that at some point they would break down.

The break down just happened. Oil broke below support at $75 to $80, copper broke below $2.90 to $3, gold broke below $1,180 and the CRB broke below $270.

But just when you would normally think they would break down sharply out of such long trading ranges, these commodities are now holding and look like they may have bottomed for now. Gold got extremely oversold, the most in years, and now looks likely to rally back towards $1,300 to $1,380 in the months ahead.

This is what these now trader-dominated bubble markets are doing. Traders take things up higher than anyone would think and then take them below support to scare every one out, then they buy and drive prices up again.

They’re intent on screwing everyone. The central banks are enabling them with zero interest rates which in turn allows them to leverage at unprecedented rates and producing a much high impact on the markets.

This makes these the trickiest markets I’ve ever seen to call short-term.

Oil’s Landscape

Oil’s plunge has been the most dramatic, as it was back in the crash of 2008 — $147 to $32 in just over four months. I’ve never seen a market fall that much… that fast.

It was caused by the high leverage of such increasingly dominant traders and hedge funds. And it was steep because they had to sell due to massive margin calls.

Oil has traded between $114 and $75 and finally broke down more sharply than other commodities, hitting $64 on December 1. It’s traded between $63 and $68 since then.

Oil is extremely oversold right now and has minor support from the early 2010 low around $64. After that there’s no obvious support on this chart. The next support is at $32, the late 2008 low… definitely not a pretty picture.

Saudi Arabia thinks oil will settle down around $60. Maybe near term, but that’s not what this chart is suggesting just down the road.

See larger image

The most likely scenario would be a rally back to $75 to $80, then another crash sometime in 2015 down to as low as $32. I see oil ultimately bottoming around $10 to $20 in the years ahead.

But that could only happen if global growth slows much more and especially in emerging countries. A new China momentum indicator suggests China will slow to 4% to 5% over the next year, lower than its 6% low in 2009.

This can’t be good for the global economy and would strongly suggest another crash in stock prices as well.

Our view is that falling oil and commodity prices are a sign of the slowdown and deflation crisis ahead — not a good sign this time around.

In a deflationary environment, falling commodity and oil prices is not a good thing even though there are obvious benefits to consumers in the U.S., developed countries and China. Likewise, rising oil and commodity prices aren’t good in an inflationary environment (think about the one in the 1970s) even though such prices do benefit emerging countries and commodity exporters.

And what does this do to the fracking industry in the U.S.?

That outcome won’t be good at all, especially as some producers will go under at current prices and many more below $58 a barrel. Energy companies are responsible for 20% of the junk bond debt in the U.S.

That’s the whole purpose of Saudi Arabia not cutting production with the increasing excess oil capacity. It wants to kill off its fracking and less-efficient oil-producing rivals.

If oil does rally in the coming weeks or months and then turns around and starts to collapse again and breaks back below $63 — it’ll be downhill from there.

Watch out for the next global stock crash if it happens.

Source: Economy & Markets
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Re: Inflation or Deflation ?

Postby winston » Thu Dec 25, 2014 7:05 am

Switzerland ends neutrality, joins the War on Deflation By Simon Black

I want you to imagine this nightmare scenario for a moment.

You walk into the grocery store and head down the aisles, family in tow, procuring your normal ration of foodstuffs for the fortnight.

Something doesn’t make sense.

Aisle after aisle you wander, the same sneaking suspicion tugging away at your consciousness, until the horrific realization finally cold-cocks you: prices are CHEAPER than they were a month ago.

You stand aghast at this sinister new reality in which prices dropped a big fat whopping 0.4%.

You can barely bring yourself to contemplate how the economy could possibly withstand such a gruesome price swing.

But there’s no time to waste.

Trying not to panic, you grab your children and race home, speeding through every red light on the way, and then immediately hunker down to wait for the coming zombie apocalypse.

Deflation has arrived. And as terrifying as it sounds to have to suffer from prices that have fallen ever-so-slightly, that’s exactly what the unfortunate people of Sweden had to deal with earlier this year.

You can just imagine the chaos that ensued in this otherwise pristine, stable, freedom-loving country.

(After all, Sweden is so free that they launched a worldwide manhunt for Julian Assange because he -allegedly- had sex with a Swedish girl and may or may not have worn a condom.)

If you’re still reading this far and haven’t fainted yet from the sheer terror of deflation, not to worry. Paul Krugman came to the rescue to save the people of Sweden from falling prices and effectively declared WAR on Deflation.

In a bold act of brazen courage not seen since the Normandy Invasion, General Krugman risked serious wrist injury several months ago when he wrote a strongly worded letter, chastising the Swedish central bank for not cutting interest rates fast enough.

General Krugman barely escaped with his life, but the people of Sweden were saved.

The War on Deflation, however, is far from over. While Sweden’s dizzying price collapse of 0.4% has now halved to 0.2% deflation, General Krugman cannot rest until ALL prices EVERYWHERE are once again rising.

Luckily the people of Switzerland have a more proactive central bank than they have in Sweden.

As such, the Swiss National Bank has just announced that, rather than wait for deflation to hit, it will join the European Central Bank (ECB) and take its own interest rates into negative territory.

In other words, rather than wait for the evil deflationary terrorists to strike, they will bring the fight to the terrorists and preemptively strike with negative interest rates to destroy these evil terrorists who hate them for their economic freedom.

Remember, it was the ECB that has led the world into negative interest rates. They are clearly the most valiant soldier in the War on Deflation, having pushed negative interest rates into the broader banking sector.

If you are a very lucky German, for example, you may now be finding yourselfPAYING your local bank for the privilege of letting them make loans at your expense.

And lucky institutional investors across the world are finding themselves fortunate enough to be paying NEGATIVE yields to loan money to bankrupt European governments.

Look at the bright side: it’s quite an honor to be able to fight for your country (or whatever quasi-federalized supra-national entity the EU is supposed to be). You too can do your part in the War on Deflation.

Yes, it might cost you your entire life’s savings and your family’s future livelihood.

Yes, it’s completely counterintuitive that falling prices are somehow bad for consumers who have been responsible enough to save.

Yes, we see that the European Central Bank has been (by its own admission) trying to stoke deflation by encouraging the Spanish government to “take exceptional action” to limit the growth of wages.

Yes, we know that the long-term costs of fighting the War on Deflation probably aren’t worth the benefits, and that the tactics like negative interest rates have changed the world for the worse.

None of that matters.

As good citizens we should all have blind faith and allegiance to General Krugman and his intrepid central bank lieutenants around the world.

Together, we can win this war against the enemy that they tell us to fear.

Will you be prepared when everything we take for granted changes overnight?

Source: Sovereign Man
http://www.thetradingreport.com/2014/12 ... deflation/
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Re: Inflation or Deflation ?

Postby winston » Sat Jan 24, 2015 6:11 am

Surprising 50-year chart says deflation could be here now by Chris Kimble

CLICK ON CHART TO ENLARGE

The TR Commodity Index has been in a fairly well-defined rising channel over the past half century. After a solid rally that lasted around a decade (1972-1983), the index then peaked and fell for the next 20-years.

The index then hit the bottom of the channel back in 2000 and again rallied for around a decade (2001-2011), taking it back to the top of this long-term channel.

From a very long-term perspective, it appears that the index created one of the largest “Head & Shoulders” topping patterns I have seen in my 35 years in the business.

Even if I am 1,000% wrong on the H&S pattern, without a doubt the index did kiss the underside of an 11-year support line that became resistance last year and resistance held, as the index has been falling off the table since!

FYI – In case you were wondering, the index kissed the underside of resistance in March of 2014, months before crude oil peaked!

Joe Friday, “just the facts”… This index remains in a downtrend and channel support comes into play around 30% below current prices.

Bond players like this, commodity players are concerned about it, and the jury is out on how stock players will react should this index fall another 30%!


Source: Kimble Charting Solutions
http://thecrux.com/trader-alert-this-ma ... e-economy/
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