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Hyperinflation In Turkey: Wine Prices Up 15% In One Day, Chicken And Cheese Up 10%

Hyperinflation In Turkey: Wine Prices Up 15% In One Day, Chicken And Cheese Up 10%

A few days ago we joked that with the lira collapsing at…

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This article was originally published by Zero Hedge

Hyperinflation In Turkey: Wine Prices Up 15% In One Day, Chicken And Cheese Up 10%

A few days ago we joked that with the lira collapsing at a record rate that would make Rudy von Havenstein and Gideon Gono blush, it was Turkish president Recep Erdogan’s secret grand plan to unleash hyperinflation in Turkey, and to wipe the country’s lira-denominated debt clean (foreign-denominated debt is a different matter).

Unfortunately, it turns out that this actually was not a joke, and as Turkey’s currency collapses – and will continue to collapse until either i) Erdogan is gone or ii) he reverses his uniquely insane brand of economic orthodoxy known as Erdoganomics according to which lower yields rates in lower inflation – Turkey’s prices are now literally hyperinflating with wine up 15% in a day, chicken by 10%, gasoline surging…

  • *TURKEY TO RAISE GASOLINE PRICE BY 1.02 LIRAS/LITER: EPGIS

… and virtually every other good and service up in the high single or double digits.

And not surprisingly, as a producer from Britain’s Sky found on the ground today, Istanbul’s sky is as gloomy as the mood in the households and on the streets of Turkey.

As Sky reports, prices had already hiked during the pandemic: over the past 18 months, while packaged goods shrunk and prices soared, there was not a single empty shelf. Compared to the western world, Turks prided themselves with not having to fight for toilet paper or masks.

But today the recent change in interest rates policy and the unorthodox economic strategy is impacting the exchange rate sinking the national currency to an all time low. Turks may not earn their wages in foreign currency but their currency is melting like ice on a summer day and prices increase by the week. And it feels like it is nearly every day.

As Sky’s Guldenay Sonumut reveals, “a bottle of wine I bought the day before had increased by 15%. It is hard to keep up.”

Ibrahim Koksal is a tiny shop owner in Yeniköy. He has a tiny “bodega” store that sells as many items as possible from cigarettes to batteries as well as fast food he cooks on the go. Running from his food stall to his cashiers’ desk all with a smile.

He has been a small shop owner since 1993 and admits the price increases have hit him, his household and his business as well as his customers.

“I cannot reflect the 10% increase from this morning on the chicken and cheese I use in my sandwiches.

“Because the business is so slow, it would scare off my last customers,” he tells me very honestly. “I have to create some turnover but I am losing from my profit”.

Ibrahim supports the president’s policy despite struggling to make a profit

Paradoxically, even though it means his financial ruin, Ibrahim supports Erdogan’s financial policies. When asked about what he thinks the reason for the current economic situation is, Ibrahim says: “Our neighbors are jealous. This is what I think”. He repeats President’s Erdoğan’s rhetoric of waging an independence war. It will demand time and sacrifice, a sacrifice he is prepared to make.

Actually it has nothing to do with Turkey’s jealous neighbors, and everything with Erdogan’s systematic plunder of his country which according to some is in the billions and which has left the country facing an all out financial, economic and monetary collapse coupled with bank runs and – now – hyperinflation.

Still, when one is brainwashed, nothing matters: Ibrahim does not believe in an early election or the ability of the opposition parties to handle the task. Ibrahim says Erdoğan is working for the country against everyone – and he stands by him.

Meanwhile, Turkey’s economy is disintegrating.

Sonumut then met 41-year old Özgür who owns a jewellery shop on the main Street in Yeniköy. The Sky producer was the second person who entered the shop in an hour. For Özgür, he is witnessing the slowest business since during the pandemic.

“I have made half of what I usually earn this last month. The price fluctuation between yesterday and today is over 10%.

“This is untenable. In my professional life I have never seen anything like the last 10 days we went through. Our customers do not know what to do. They are waiting to see what will happen.”

Jewellery shop owner Özgür says business is slower than during the pandemic

Özgür is slightly more rational than his bodega-running buddy: he says there is a definite need for stability, and a need to stop the obstinate stand with the interest rates. Does he think an election would be the solution: “I think we may see an election this summer. I think if the opposition gets elected there might be some easing of the tensions. But we need to come back to stability.”

It is a sentiment shared by everyone in supermarkets, shops, pharmacies – the conversations are one of worry of the unknown.

Many feel free to voice their worry like Özgür or Ibrahim, but the everyday housewife does not want to answer any questions, “Don’t you see what is happening?” they all say.

Indeed, it’s pretty clear what is happening – the economic death of a country because its authoritarian ruler will drag the entire country down with him.

As Sky concludes, in a matter of weeks, “shopping carts have suffered from the price hikes.” People feel they are paying twice the price and get half of what they used to buy. “They want to go back to how it was.”

According to Erdoğan, a positive impact will be felt in a few months but there is a very tough winter ahead.

Tyler Durden
Wed, 11/24/2021 – 15:22





Author: Tyler Durden

Economics

Here’s Who Bought The Crypto Dip, And Why A Gamma Squeeze May Be On Deck

Here’s Who Bought The Crypto Dip, And Why A Gamma Squeeze May Be On Deck

The past 3 days have been a rollercoaster for cryptocurrencies, which…

Here’s Who Bought The Crypto Dip, And Why A Gamma Squeeze May Be On Deck

The past 3 days have been a rollercoaster for cryptocurrencies, which slumped alongside risk assets on Friday, only to see a wave of margined liquidations kick in during the Asian session on Friday into Saturday, leading to  crash in prices and a plunge of almost 30% in bitcoin and the rest of the crypto space, before a rebound lifted much of the space on Saturday and Sunday as a wave of dip buyers emerged.

Commenting on the move lower, UBS strategist led by Moritz Diller write that Crypto’s cons and pros have been underscored by the past fortnight. Sated long-term demand and signs of tighter regulation were weighing before Omicron. The knee-jerk reaction then caused prices to lurch lower as pro-risk and particularly inflation correlations made their presence felt.

But dip-buyers soon emerged to pick up BTC and ETH, largely at the expense of more leveraged recent coins and perhaps emboldened by
the prospect of renewed lockdowns spurring fresh retail inflows.

So who was buying?

According to UBS analysis of Glassnode on-chain data, the dip was bought by the smallest and the largest holder cohorts as well as crypto exchanges. In other words, both retail and whale were waving it in, as medium-sized clients were actively shorting. This sets the scene for the next short squeeze.

As UBS also notes, the realized price distribution chart for BTC has reinforced the 55,000-65,000 technical congestion zone, consequently

Meanwhile, ether’s price action has been firmer still, which comes as no surprise given building enthusiasm about next year’s shift to Proof of Stake and a fresh focus on bringing down transaction costs—witness Vitalik Buterin’s latest EIP-4488 proposal. ETH got back within striking distance of its all-time high as a result and the BTC/ETH cross just fell through its May low, triggering profit-taking.

And speaking of ether, even UBS admits that it is now “all about ETH”…

… and goes on to explain why crypto shorts have been so persistent in preventing ethereum from rising above $5,000, which would be a new all time high: as UBS explains, “ETH options for the March 2022 expiry are dominated by a single large 15k strike worth around USD400m in premium.”

“This setup suggests a reacceleration above all-time highs could create a gamma-driven surge. However, prices stalling or falling would add to the high decay bill and instead open up further downside given the insignificant amount of protection left outstanding into year-end.”

In other words, over the next few weeks we will likely witness an epic clash over ETH hitting a new ATH around $5,000 and if the shorts finally allow that to happen, the move from there to $15,000 will be fast and furious.

Tyler Durden
Sun, 12/05/2021 – 14:00

Author: Tyler Durden

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Economics

Will The Fed Break The Economy (Again)?

Will The Fed Break The Economy (Again)?

Authored by Steven Van Metre via The Epoch Times,

Last week, the Fed was handed an unexpected gift…

Will The Fed Break The Economy (Again)?

Authored by Steven Van Metre via The Epoch Times,

Last week, the Fed was handed an unexpected gift as first-time jobless claims fell to the lowest level since 1969, which gives the Federal Reserve the green light to continue tapering its $120 billion monthly purchases of U.S. Treasury and mortgage-backed securities. Given the Fed’s dual mandate of maximum employment and stable prices, low unemployment claims along with a low unemployment rate allow the Fed to focus on combating inflation.

To fight inflation, the Fed only has two policy tools. The Fed can raise the federal funds rate, which is currently at 0 percent, and it can taper or reduce the size of its balance sheet. While those two tools are good at fighting monetary inflation, or rising prices associated with money printing, neither are useful for fighting supply-chain inflation.

The Fed isn’t concerned about how inflation manifests itself but only its ability to fight inflation. At the Federal Open Market Committee’s Nov. 3 press conference, Fed Chair Jerome Powell announced the committee has decided it was appropriate to reduce its asset purchases.

Starting in mid-November, the Fed would reduce its purchases of U.S. Treasury and mortgage-backed securities from $120 billion per month to $105 billion per month. In mid-December, the Fed will further reduce its asset purchases to $90 billion per month. Many pundits believe the Fed will increase the pace of its reductions at its Dec. 15 press conference, which will mark the last Federal Open Market Committee meeting for 2021.

For the Fed, the need to slow the rate of inflation is a matter of maintaining credibility. Congress has assigned the role of maintaining stable prices to the Fed, which has determined that 2 percent annualized inflation is a reasonable target. With the Consumer Price Index rising at a rate of 6.2 percent on a seasonally adjusted rate in October, there are serious political ramifications for Congress should the Fed be unable to control inflation.

Politicians are nervous about the upcoming November 2022 midterm elections as voters tend to have a negative reaction to inflation—particularly when wages are running below the rate of inflation, which they currently are. As of October, total private average hourly earnings of all employees rose at an annualized rate of 4.9 percent, falling well short of the annualized increase in consumer prices.

The problem for politicians is that voters tend to place the blame on those in power by voting them out of office. With President Joe Biden’s renomination of Powell to chair the Fed for another term, he’s placing his party’s future on Powell’s ability to control inflation. While Powell will slow the rate of inflation, the outcome isn’t one either political party wants.

Quantitative easing has been largely responsible for the growth rate of the money supply by forcing commercial banks to purchase U.S. Treasury and mortgage-backed securities with customer deposits. While there’s little evidence to support that an increase in money supply has a direct correlation to an increase in consumer prices, reducing the growth rate of the money supply will slow the rate of consumer price inflation.

Historically, the M2 Money Supply, which includes cash, checking deposits, and easily convertible short-term money, grows at an annualized rate of approximately 6 percent per year. At its height during the pandemic, the M2 money supply rose more than 27 percent annualized and as of October has slowed to 13 percent annualized.

As the Fed reduces its asset purchases, which require an increase in commercial bank deposits, the growth rate of the money supply will fall below its trend rate of 6 percent per year. With less money being created by the financial system, consumers will be unable to afford higher prices. By rejecting higher prices through lower consumption, consumer prices will fall.

In the short term, due to continued supply-chain disruptions, consumer prices are likely to stay elevated. Food, energy, and rents remain high, which will have a direct impact on cash-strapped consumer budgets. Consumers will be forced to reduce their discretionary spending as a larger percentage of their budgets gets allocated to food, energy, and rents.

This is a similar story to that which led up to the Great Financial Crisis, where consumer price inflation outpaced wage growth and the growth rate of the money supply slowed. Consumers then were unable to afford higher prices, which in turn led to a reduction in consumption along with the inability to keep the red-hot real estate market rising. What followed was a financial crisis that nearly destroyed the global financial markets.

While the Fed will be focused on fighting inflation by reducing its asset purchases in the months to come, Powell and his committee seem unaware of how they’re keeping the economy afloat. As the Fed reduces its asset purchases, the growth rate of the money supply will fall below trend, and the economy will likely find itself mired in another financial crisis.

[ZH: Do not forget that the market is already expecting a major policy mistake (or flip-flop), pricing-in a rate-cut between 2023 and 2025…]

Just like the Great Financial Crisis triggered a deflationary crash, the next financial crisis will do the same. While many politicians and the Fed are worried about inflation, as long as the Fed continues to reduce its asset purchases, inflation will be the least of its concerns.

In the meantime, the Fed has the green light to proceed, and you can expect it to until something breaks.

Tyler Durden
Sun, 12/05/2021 – 13:29










Author: Tyler Durden

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Economics

With Inflation Emerging As Biden’s Biggest Nightmare, One Strategist Counters: “Inflation, Like Greed, Is Good”

With Inflation Emerging As Biden’s Biggest Nightmare, One Strategist Counters: "Inflation, Like Greed, Is Good"

Now that inflation is up from…

With Inflation Emerging As Biden’s Biggest Nightmare, One Strategist Counters: “Inflation, Like Greed, Is Good”

Now that inflation is up from 1.4% to 6.2%, and even Powell admits it is no longer “transitory“, BofA’s CIO Michael Hartnett pointed out in his latest Flow Show note what was obvious to most, namely that inflation is rapidly emerging as an economic and political problem, as he points to a chart showing Biden’s approval rating sliding from 56% to 42% YTD as inflation has soared, or as the BofA strategist summarizes, in the context of “inflation, politics (midterms Nov22), and credibility, the Fed set to be very hawkish next 6 months” something the market is finally freaking out over with high-duration (read growth and tech) names tumbling.

Yet while Biden will do everything in his power to crush consumer inflation ahead of the midterms, perhaps even nuking the market in the process (only to force the fed to launch the biggest and probably last monetary stimulus shortly after), some like Academy Securities strategist Peter Tchir take the other side and in a note published overnight in which he channels his inner Gordon Gekko wrties that “Inflation, Like Greed, is Good.

Paraphrasing the best Wall Street movie made, Tchir writes that “Greed, in all of its forms…has marked the upward surge of mankind” and adds that “while I may not believe everything that I write today, it seems as though inflation, much like greed, is in dire need of someone to champion it.

This topic is relevant because, as we first showed on Friday and as Tchir writes today “some of Friday’s price action could be linked to markets pricing in monetary policy mistakes. The shape of the yield curve and the sectors that underperformed all fit into a narrative that could encompass a monetary policy mistake (and is also partly due to the market trying to adapt to The Training Wheels are Off).”

The Academy strategist next makes the point that “the politicization of inflation is the biggest reason that we might get a monetary policy mistake!” and goes on to note that “it is the politicization of inflation (which could lead to monetary policy mistakes), that leads me to take up the mantle and defend inflation.”

As Tchir lays out in further detail in his full note below, here are the core tenets behind his argument:

Inflation is Good

We start by examining what central banks have been trying to achieve, what they’ve achieved, and why they aren’t taking victory laps.

Stagflation is Bad

We agree that stagflation is bad and through a series of charts focusing on jobs and wages, we demonstrate that we are nowhere close to stagflation and the economy is outpacing inflation.

What About Gas?

Somehow inflation always seems to come back to gasoline, and we address some of the absurdity around this issue. We also introduce the concept of carbon offsets and where this fits into the inflation argument.

Hedonic Adjustments

If you didn’t think that we could make an argument that rising gas prices aren’t actually rising, you are in for a pleasant surprise. In all seriousness, thinking about hedonic adjustments for products and processors that are sustainable isn’t as strange as it might sound.

What is Driving Inflation?

It is difficult to argue whether inflation is good or bad if we don’t examine what is driving it:

  • Jobs and wage growth.
  • Supply Chain issues.
  • ESG.
    • Transition plans.
    • Supply chain repatriation.
  • Monetary policy.

Tchir summarizes his controversial argument as follows, “Maybe Inflation Isn’t “Good” But It is Necessary: At this moment in time, I do not see any way of achieving our goals without generating inflation. So long as inflation is accompanied by job and wage growth, who really cares about it?”

Bottom Line: Don’t bet on a policy mistake. Bet on cyclical, domestic growth. As Bud Fox says, “Life all comes down to a few moments” and I think that we need the courage to ride this paradigm shift through and accept inflation as just a part of that goal!

* * *

Tchir’s full note is below:

Inflation, Like Greed, Is Good!

Today, I will channel my inner Gordon Gekko, who told us that “Greed is Good.” That “Greed, in all of its forms…has marked the upward surge of mankind.” While I may not believe everything that I write today, it seems as though inflation, much like greed, is in dire need of someone to champion it.

For purposes of this report, there are a few things to clarify:

  • If I had been Chair of the Fed (please stop laughing), I would have finished with bond purchases a long time ago. I don’t necessarily agree with the path that the Fed took, or some of their inflation goals, but we will play this hand with the cards we’ve been dealt.
  • I’m reasonably on board with carbon and climate efforts, though want to highlight a few caveats, which might get lost in this report as today’s goal is to justify inflation rather than fixate on the details of carbon and climate initiatives:
    • We need a transition plan. I’ve harped on this and we see the harsh reality in Europe almost every day. Without a well thought out transition plan we put ourselves at risk.
    • Incentives and rules are ripe for manipulation. Any policy or rule instantly creates a cottage industry for those trying to get around it (and for those trying to take advantage of it). It may well be that the goals are laudable enough that we can tolerate or even benefit from this behavior, but ignoring this reality doesn’t help us much.
    • Acting without China’s full cooperation is a very serious issue. The climate is global, so without China, a massive contributor to the world’s carbon issues (including plastics, and other nasty environmental issues), we run the risk of not only failing to fix the problem, but getting left behind economically and in terms of global power (not power, like energy, but power like might).

This topic is relevant because some of Friday’s price action could be linked to markets pricing in monetary policy mistakes. The shape of the yield curve and the sectors that underperformed all fit into a narrative that could encompass a monetary policy mistake.

The politicization of inflation is the biggest reason that we might get a monetary policy mistake! It is the politicization of inflation (which could lead to monetary policy mistakes) that leads me to take up the mantle and defend inflation.

Inflation is Good

Whenever I focus on a topic, I try and figure out what the smart people are thinking. What do the people who live and breathe inflation think about it? Well, until about a month ago, every single major central bank was fixated on generating inflation. Generating sustained inflation (at an acceptable level) has been one of the main goals of monetary policy across the globe for years (if not decades).

So, we have a group of very intelligent people from across the globe who’ve fought to create inflation for years (which I take as one sign that it might be a reasonable goal). Does their sudden aversion to inflation represent a real shift in their thinking? Or are they bowing to political pressure?

It seems somewhat odd that this group has finally started to achieve their goal and rather than doing victory laps, they are barely defending their actions. It is this behavior that sparks my fear that we could get a policy mistake – not because they think their policies are wrong, but because they face intense political pressure to adjust their policies.

We will come back to why inflation is good in a moment, but let’s address why it isn’t bad.

Stagflation is Bad

We can all agree that stagflation is bad. That slow growth coupled with high inflation is bad. Thankfully that is NOT what we have right now! We have inflation (I’d argue more medium than high), but we have STRONG growth!

While not quite back to pre-pandemic levels, the number of people employed in the U.S. is at a level that has only been better for a few months in the entire history of the country.

I went with the non-seasonally adjusted version since I think that the seasonal adjustment this year will turn out to be incorrect. At the same time, we have a record number of job openings and people are extremely comfortable quitting their jobs!

From a job’s perspective, the economy looks pretty darn good! This is the jobs picture without any form of infrastructure spending getting passed (which should only increase the outlook for jobs). It will also increase inflation, but isn’t that worth it?

Not only are there jobs, but the pay is pretty darn good!

Average hourly earnings are now much higher than they were pre-pandemic and are at their highest levels ever. The average hourly pay just before the pandemic was $23.88 and is now $26.40, almost $3 per hour higher, and that will buy a lot of gas (more on that later).

Even adjusted for inflation, they are 2.2% higher than they were before the pandemic started. This doesn’t even attempt to account for all the benefits that have been paid to people over the past few years, including the signing bonuses many are getting. If anything, the official wage data understates the total income people are receiving.

So, jobs are coming back with a vengeance and they are paying more. Heck, the pay is keeping workers ahead of inflation, and while I do not think inflation is transitory, I do think it will settle into a range between 2% and 4%, which should be low enough (if we can maintain growth) that almost everyone who is working will be better off!

What About Gas?

Somehow inflation always seems to come back to gasoline. I’m not sure about you, but I probably use less than 10 gallons of gasoline a week. I checked and according to the U.S. Department of Transportation’s Federal Highway Administration, the average American drives 13,500 miles per year (higher than me but seems reasonable). They choose to use Ford F-150’s average miles per gallon (which seems conservative) to come up with 562 gallons a year (weirdly, not much above my guess of 10, which means that on average, Americans buy less than 2 gallons of gas a day!)

So, for all the handwringing about gasoline prices (something sensationalized by the media, which has sparked interest from politicians), most people can pay for their extra cost of gas with 1 hour of their higher pay. Seems like a reasonable trade-off.

While this data series only goes back to 2006, average gasoline prices were higher for several years as we emerged from the GFC. They are up about 51 cents per gallon since late 2018 (so $1 a day for the average American).

There are huge differences by state. According to AAA, California is at the higher end at $4.68/gallon, while New York is $3.54 and Virginia is $3.22. Not all states had similar moves in gasoline prices and we shouldn’t ignore various state rules that cause their gas prices to be different.

While I’m not here to argue about European gas prices, I cannot help but bring up the following chart, as I think it is crucial to the inflation is “good” argument.

This is the EUA carbon allowances front contract. My understanding is that refiners, amongst others, are forced to buy offsets to their carbon footprint. The rise in prices would make even the crypto market green with envy!

Hedonic Adjustments

For some reason, I want to call them “hedonistic adjustments” when the BLS adjusts prices to account for quality.

It is something that they have done for a long time. It is questioned by many, but it is a tool that they use to try and reflect large changes in quality that can affect prices over time.

So, if you have gasoline that protects the environment (because the refiner had to offset their carbon usage), did the price go up? That sounds weird at first, but that is the nature of hedonic adjustments.

Is gasoline that will “save the planet” better than gasoline that doesn’t offer that? For this portion, I’m going all in on the carbon/climate side of things.

The price will go up because the offsets are a cost and some of that will get passed on to the consumer, but if you are willing to believe that 2,000,000 pixels are so much better than 2,000 pixels and the price of that “thing” hasn’t really gone up, then why not accept that products that are made more sustainably or have purchased carbon offsets are better? Please go back to my caveats from earlier, I haven’t forgotten them, I’m just getting on a roll here.

This all gets tricky (I don’t have any answers) and this gets a little bit away from the “inflation is good argument”, but this is tied to it because it would be a reason to accept higher prices.

What is Driving Inflation?

Whether we are going to hedonically adjust for prices or not, let’s look at what is driving inflation:

  • Jobs, wage growth, and government payments (though these are less important now than during the worst parts of the pandemic). Plain and simple, jobs and wages are boosting inflation and I don’t see that as a problem. Should we not try and rebuild our often-decrepit infrastructure and not create jobs and demand for raw materials that would increase inflation? That seems silly to me.
  • Supply Chain issues. Trying to address some of these. Whether it is overtime at the ports or flying goods in, etc., both have a real cost. Much of this will dissipate over time as countries across the globe figure out what the new post pandemic normal is. This should somewhat take care of itself and is somewhat out of our control.
  • ESG. I’m not going to spend much time on this as I’ve written so much about the subject over the past year, but I want to highlight a few things:
    • Any transition plan will call for massive investment in new things, but there will be maintenance investment required for old things for some time (i.e., more money will be spent than if we weren’t transitioning). That will be inflationary, but I don’t see how to avoid it (or why we’d want to avoid it).
    • Supply chain repatriation. Some of the existing supply chain “issues” will be resolved by shifting where things are made (including domestically). Some industries, like anything related to healthcare, will feel intense pressure to produce in areas where we have complete faith in the jurisdiction and quality of the products as well as access when we need them most. This will have a cost, but will create jobs, so again, I’m not sure why we wouldn’t accept inflation as a cost of this.
    • Monetary policy. I didn’t even bold this, because quite frankly, when I think about what is causing inflation, monetary policy isn’t high on my list. Which is why I’m so concerned that we could see a monetary policy mistake as the politicians weigh in.

Maybe Inflation Isn’t “Good” But It is Necessary

At this moment in time, I do not see any way of achieving our goals without generating inflation.

If national health and safety is a goal, then how do we achieve that without inflation?

If carbon reduction and sustainability is a goal, I don’t see how we achieve that without inflation?

So long as inflation is accompanied by job and wage growth, who really cares about it?

Again, I’m not sure I want to go down these paths, but if people are correct and this is saving the planet, maybe it’s not inflationary at all compared to the cost of not doing it. Okay, that statement is a bit out of my comfort zone, but there are many who adamantly argue this point.

I think that the stupidest thing we could do right now is cut off our growth trajectory because a few politicians can’t do basic math, can’t understand that there will be some trade-offs, and are pandering to some audience who isn’t more than benefiting from the economic growth being generated as we make massive changes to our economy and how we compete globally.

So, what the heck, inflation is good while accompanied by growth and it would be a policy mistake to kill that growth too early (especially when monetary policy isn’t what is driving inflation in the first place).

Bottom Line

Don’t bet on a policy mistake. Bet on cyclical, domestic growth. Credit spreads should do fine from here. Yields should drive higher and steeper and while I think that some recent market excesses and extreme positioning will continue to work themselves out (bitcoin is below $50k as I type this), the end to the recent volatility is coming closer.

As Bud Fox says, “Life all comes down to a few moments” and I think that we need the courage to ride this paradigm shift through and accept inflation as just a part of that goal! Be vigilant for signs of stagflation, but don’t kowtow to ill-informed soundbites.

Tyler Durden
Sun, 12/05/2021 – 12:00








Author: Tyler Durden

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