A perfect inflationary storm? Over the years we have watched many financial storms develop but few have been as perfect as this. From an inflation perspective this is about as perfect as you can get…..we now have multi-week highs in:
- Crude Oil;
- Broad based commodity indices;
- Inflation protected treasuries vs. non inflation protected;
- Commodity currencies vs. the USD, Euro, and Yen;
- Commodity stock indices vs. the broad based market;
- Multi-week lows in the USD Index with 5% downside before any support of significance.
What is quite remarkable, and why we say that it is the perfect inflationary storm, is that everything is confirming each other. When this condition occurs in nature storms intensity only increases, financial markets are not too removed from nature.
You can argue from a deflationist perspective as much as you like, in fact we would like to hear what you are seeing in the market that we are missing. To us the evidence put forward by the market itself suggests an inflationary hurricane is fast approaching. Who are we to argue with the market!
They say a picture says a thousand words………we will let the picture do the talking!
