sorry, but i think you are wrong...the last PPI showed cost push inflation accelerating at a disturbing pace. raw materials and intermediate goods inflation(excluding energy) rose at an annualized pace of 21,6% and 10% respectively. it is only a question of time until these price rises are passed on as the weakening dollar pushes up import inflation and thereby lessens competitive pricing pressures. wage pressures are clearly rising as well, as the ECI and NAPM numbers clearly show. what's more, productivity growth is slowing down, and may have largely been a mirage anyway, as the computer (box makers) industry accounts for the best part of the productivity increases in recent years. however, this industry is only a small part of the economy. so is technology overall btw. - it may have a 25% weighting in the S&P 500, but it only represents 5,7% of GDP.
so the bond market is now telling us: the Fed is behind the curve, and inflation is therefore due to make a cyclical comeback.
the next 1/4 point hike is a fait accompli imo and it won't be the last either.
see you at Dow 5,000.<ggg>
oh, the PoG: as long as it was going down, the new era economists were carrying on about how it proved that there was no inflation - now that it's going up, it's all of a sudden meaningless of course. |
