If Japan is serious about wanting inflation then instead of flooding money into the global pool they should just turn to the UK and announce that they will soon -
Have UK energy companies running their utilities.
Have UK insurers insuring their cars.
Have UK government price tobacco.
Have any UK train company running their public transport.
Have UK's "PC World" fix their computers.
Have UK main dealers fix their cars.
Have UK local authorities run their car parks.
Have UK motorway service stations provide all fuel.
Have their children educated at English private schools.
Have all online billing done by Ryanair.
Have UK "payday loans" run their bank lending.
Have EasyJet supply all preprepared foods
Have UK Farmers' Markets supply all fresh food.
And then make everything organic.
That should scare the hell out of the population with respect to inflation expectations. It's worked wonders in the UK. Just a shame about no growth.
If they do need to go further then perhaps-
Have USA run their fighter jet programs.
Have France run fiscal policy.
Have Singapore tax their cars and price the beer.
Have Norway provide their holidays
Have Switzerland run their McDonalds.
Have Courchevel run their ski resorts.
12 comments
Click here for commentsC Says'
ReplyToday I have a faint temor of unease that has nothing to do with my baby boomer fears of the Grim Reaper calling (if he can't run like Mo Farrah he better come back when he can if he wants to catch me).No, I think I detect shades of UK fiscal policy coming together from Obama,and I really do not like the outlook for that. The US has done relatively well staying loose both with monetary and fiscal policy.It would be a damned shame if they f..k it up now by following examples from the otherside of the Atlantic.
Lets' just hope it is my baby boomer challenged eyesight misleading me.
TMM neglected to mention the most important aspect of the UK inflation generator. The Swerve, the genius architect of MERVYNFLATION.
ReplyImport The Swerve to run all press conferences for the BoJ and deny the very existence of that which is all around you rising. If the Japanese heard The Swerve deny that prices are rising they would immediately fear the British Disease. STAGFLATION....
US markets are really a bit mental at this point. Everyone with a brain is already in the fallout shelter while Mickey the Margin Monkey continues to press the lever and receive a banana.....
LB i dunno that it is wise to be so bearish at this moment in time. We broke new highs in S&P. If we can sustain it for 2+ months, there will be a flood of money into US equities post Q2.
ReplyIf the CB's want asset inflation, the market now seems obliging to reach for the fences. Nifty fifty here we come!
As for inflation, TMM you got it. Might I add US Hospital bills, US colleges
with all due respect, I'd be very surprised if S&P could sustain this break out for more than a few days
Reply(although i recognise S&P is not working as a proper market - has not for a while - this is the last index to short imho)
but talking my book here (have been short Eurostoxx for a while now, all good with lower lows after lower highs etc)
market (media) is at work to stuff as many as possible on this lat leg. They just mentioned a bear trap? it is a gigantic bull trap being set up just now
happy trading
more thoughts:
Replythe result is here yes (new high) but the FOMC leak, triggering that giant squeeze (for shorts).. where dogs were getting lifted (for longs)?
dodgy. Meanwhile:
http://www.reuters.com/article/2013/04/10/us-eu-banking-bailin-idUSBRE9390NQ20130410
things are getting tougher for European banks. Sell this bounce on European banks..
C Says'
Reply"chained CPI," which recalculates the growth of benefits by using an index that doesn't rise as quickly as inflation."
This is in effect what happened first in the UK.We changed fom using RPI to CPI.This is a stagflationary policy. It's conceptually what BB has asked of the govt.That is,to get the overspend under control going forward ,because there is only so much his monetary policy can do.
In effect I sum this up to be BB saying hey I can only make so much growth happen with my tools so you (govt) need to make sure your expenditure stays below that level.
I also believe that it a policy acceptance of below trend growth. That is the way it has playe out for the UK.
Can people not make the distinction between demand pull inflation and stagflation ? I mean FFS its not that f in hard to grasp.
ReplyLong time lurker
abee,
ReplyThere are a lot of ways of expressing bearishness, mate, but stepping off the train while passing a convenient station seems preferable to standing on the tracks in front of the locomotive.
Being long US fixed income has worked fine for 6 weeks now. I have no position whatever in Spoos. That's a fool's errand for now as a classic Pump n Dump proceeds to its inevitable conclusion.
I did select some US beta for "special attention", which I believe will reverse in an abrupt and decidedly Newtonian manner whenever gravity is reinstated. Some of this group is already lagging, or otherwise showing technical weakness. Mostly this group have P/Es between 50 and infinity and are all showing the classic hallmarks of fading momentum plays.
We don't need to know why (data too hot, data too cold, Bernanke stubs his toe on his way into the Eccles building), but one day soon, for some reason or other, the Monkey will press the lever and no banana will appear. Pretty soon after that, things will get messy for Mickey the Margin Monkey.
Same as it ever was....
As of yesterday, you can see how the builders are now lagging and showing technical weakness. If you want to short in this type of market, you have to be surgical.
ReplyNew Highs, But Not For All Sectors
if your not long Spoos or something similar you are under performing. And as the momo train keeps going, the pressure to follow along builds. Not saying i agree, but it is the simple reality. Almost all managers are closet benchmarked to equities.
ReplyI am not talking my book as I am mostly flat and so is the firm but I am not so comfortable in accepting the notion that there will be a large pull back anytime soon. I accept a contrarian position may be to consider more of the same.
agreed that certain sectors are lagging and it doesnt bode well.But in the go go fifties and tops of other markets, you had divergences carry out a long time. Feeling like we might be closer to 1997 irrational exuberance vs 1999 irrational exuberance, thats all. And if that is the case, I still wanna play along and make a little easy $
We haven't really had any meaningful Q1 earnings reports as yet. So the monkeys have been able to crack on with the lever pressing undisturbed.
ReplyNext week it gets rolling and then the following week is the big one for numbers of reports. Tomorrow we get retail sales, and we have more US macro data next week. We'll see if it can move the needle.
Divergences between Spoos and the Citi US economic surprise index, Spoos and emerging markets, and between Spoos and HY credit are becoming extreme. Large divergences like these occur often, but they aren't usually sustainable for more than a few weeks, and they almost always precede fairly substantial sell-offs in risk assets.
I know the prevailing wisdom is that markets cannot sell off during QE episodes. But this is all uncharted territory (except for Japan). I've got news for bulls. Japan saw sharp sell-offs in the Nikkei, EVEN DURING PERIODS OF QE.
The new widowmaker here is to be short US Treasuries for anything but a swing trade. We are the new Japan, and USTs are the new JGBs. Don't be that guy....
If the CB's want asset inflation, the market now seems obliging to reach for the fences. Nifty fifty here we come! I cant understand what does this means.??
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