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Strategies & Market Trends : World Outlook
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To: Les H who wrote (17148)10/15/2017 2:26:39 PM
From: Les H1 Recommendation

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bruiser98

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The CPI Understates Inflation And Skews Expectations

seekingalpha.com

The CPI probably understates inflation by 2.5 to 3 percentage points now. The housing inflation figures were replaced in 1983 with an owner-equivalent rent (OER) figure that rises at nearly constant rate of 0.3 percentage points per month. In 1996, the Boskin Commission recommendations to reduce the CPI were implemented. They were tasked with reducing the growth in the CPI by up to 1.5 percentage points per year.

Inflation expectations are obviously an irrelevant metric now since bond prices are set by the central banks.

ECB may decide in the next two weeks on the 26th what to do with the program expiring at the end of the year. All kinds of dovish remarks have been floated in Brussels and Tokyo on extending QE forever. They're aware of what's happened to the market the last four times QE and debt monetization was stopped.
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