Wednesday, March 12, 2008

Stagflation Fears Escalate

It is unlikely that rising commodity prices will lead to a rise in core CPI inflation because manufacturers will be unable to raise prices amidst weak demand. Moreover, the softening job market will help prevent second round effects. Bottom line: Stagflation has returned as a hot word. However, as occurred the last time stagflation had its moment in the limelight in 1990; weak growth will soon undermine pricing power.

See att,

The important key to the whole economy is more debt, and that debt must come from lower rates or else stock markets and Real Estate markets will collapse further because of valuation metrics. Based on historical data, it will require coordinated efforts from all central banks to bring short and long-term rates to near zero to have any success in reflation, and it require a willing lender and borrower to facilitate that reflation, or else deflation will become the dominant outcome.

Global Investment cycles


This Global Historical probability model is intended for information only and under no circumstances should items be considered as recommendations to purchase or sell investments.
Any statements contained herein that are not based on historical fact are forward-looking statements. Any forward-looking statements represent the Investment advisor’s best judgment as of the present date as to what may occur in the future. However, forward-looking statements are subject to many risks, uncertainties and assumptions, and are based on the Investment advisor’s present opinions and views. For this reason, the actual outcome of the events or results predicted may differ materially from what is expressed. Furthermore, this investment advisor’s views, opinions or assumptions may subsequently change based on previously unknown information, or for other reasons. The Investment advisor assumes no obligation to update any forward-looking information contained herein. The reader is cautioned to consider these and other factors carefully and not to place undue reliance on forward-looking statements.

These are my own views, please enjoy these insights