MI2 Partners

Nov 01, 2024

“Why is it people got so incensed about the reason why inflation might be happening?”

Happy Halloween! Tis the season for ghouls, gremlins and zombies, so perhaps we should not be so surprised that even President Biden has gained a taste for flesh! (Though it’s not the first time?) We kid of course, but one might be forgiven for suspecting “Irish Alzheimer’s”, given the latest “garbage” gaffe/misstep. Of course, Trump is not one to miss an opportunity. This comes at an inopportune time as the election heats up with various election-related stories battling for headlines. Voter fraudEarly voting shenanigans! Election market manipulation! Some might joke that POTUS himself would be hard to pick out among the ranks of the undead (we would never stoop so low …), but the more intriguing zombie speculation is the election. It wouldn’t be the first time the lawyers have found ways to keep the monster alive. This got us thinking about the economic issues which just refuse to give up the ghost and have yet to be settled: “undead” topics that just won’t die!

Consider the port strike. You thought it was all over? Actually, some manufacturers feel the need to take action, shifting cargos to “safer” ports. Has the German economy hit bottom? Volkswagen suggests not. Similarly, US CRE market just won’t go away, and Bloomberg ran a story on just how many bondholders might be the walking dead (the Horror of AAA debt holders being less-than-whole coming to a screen near you!).

And let’s not forget inflation. While the Fed seems strongly of the opinion that we are on the bumpy path to target, you can’t rule out that it needs to be killed with fire? Yesterday’s PCE was in line on a MoM basis, but Core PCE rounded up again (2.7% YoY vs the expected 2.6%). Andy Constan shared a scary take… “To get to Fed Target the next two core PCE’s will have to be 0.09%”. Well, let’s just hope the Fed doesn’t view hitting its forecast as obligatory. Ernie Tedeschi took to the Atlantic for a postmortem on inflation: He suggested grocery inflation is not a product of greedflation, so all those pitchforks were for nothing. The former Whitehouse official noted that “markups explain about a tenth of the cumulative grocery inflation we had over time [since 2019]”, and said that much of the rise in grocery retail margins was due to compositional effects as “people are buying… higher-markup items”, and even goes so far as to call windfall-profits taxes “a horrible way to approach this [seller’s inflation]”. Rehashing the inflation story, while seemingly a bit like the movie “Groundhog Day” (a horror movie from some perspectives…) may serve a purpose, as the Atlantic Interviewer explains, “Like, why is it people got so incensed about the reason why inflation might be happening? Part of that is, of course, like, it might affect the types of policies you would recommend doing if inflation is happening for different reasons.” Perhaps if you understand the origin of the monster, you can more easily destroy it?

https://www.gocomics.com/calvinandhobbes/1987/04/29

The countdown is on!

Get the inside scoop on MacroCapture by MI2Share your best email to stay updated on the upcoming launch. MacroCapture, designed with feedback from individual investors, brings you actionable macro analysis, trade ideas, timely alerts, and live interaction with Julian Brigden and the MI2 team. JUST MACRO!

Other posts

Day Hagan/NDR Smart Sector® with Catastrophic Stop Strategy May 2024 Update

BY BRIAN SANBORN
Day Hagan/Ned Davis Research Smart Sector® with Catastrophic Stop strategy, model and allocations update. Read more →

C8 Weekly Bulletin:  Trendrating on US Bank Stocks

BY JON WEBB
C8 Technologies are delighted to announce that Trendrating will be adding 7 US and European equity indices to C8 Studio. They have been working with investors over the past 10 years to enhance equity portfolios, using a proprietary methodology which focuses on determining the ongoing trend in individual equities. Trendrating have just produced a timely report on US bank stocks which they have kindly allowed C8 to share. This illustrates that, whilst the Silicon Valley Bank failure had idiosyncratic issues, investors perceive a much wider problem with smaller US banks.  Read more →

NDR Dynamic Allocation Strategy October 2024 Update

BY BRIAN SANBORN
Dynamic Allocation Strategy, indicators, weightings update Read more →
Back to all posts →