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Minyan Mailbag: Core CPI



Note: Our goal in Minyanville is to remove intimidation from the financial markets and encourage an interactive dialogue among the Minyanship. We share this next column with that very intent.


The focus on core CPI is the rule of the game. However, given retail
inflation annualized hit 6% last month, this focus seems completely
insane. I can't help wondering that if we were in any other economic
reality other than denial, economists would be screaming for rate
increases from the roof tops.

Seems to me with a headline CPI rate of 3.5% y/y, that pretty much ought to be where we see rates head. Long rates are staying persistently low. This appears to me to be a train wreck for financials in progress.

Secondly as wages are not rising, and have not in 5 years, real
household buying power is dropping in cash terms. Eventually despite
easy credit this will bite us all [consumers must slow down].

What have I missed?

Minyan Bryan


I have gotten to the point where I realize that the facts just don't matter right now. As long as they keep bonds stable (by monetizing without anyone knowing) and liquidity high, the herd will follow.

As I said yesterday I am now reading selected economic reports where some are now recommending a higher trade deficit as desirable (there are stages and degrees of such that make sense, but to advocate higher levels than we currently have makes no sense, especially when we see foreign investors from Japan and China beginning to falter in their desire to own dollars). This smacks of lunacy, but illustrates the abnormal situation we are in.

Prof. Succo

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