Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24
RECESSION When Yield Curve Uninverts - 8th Sep 24
Sentiment Speaks: Silver Is Set Up To Shine - 8th Sep 24
Precious Metals Shine in August: Gold and Silver Surge Ahead - 8th Sep 24
Gold’s Demand Comeback - 8th Sep 24
Gold’s Quick Reversal and Copper’s Major Indications - 8th Sep 24
GLOBAL WARMING Housing Market Consequences Right Now - 6th Sep 24
Crude Oil’s Sign for Gold Investors - 6th Sep 24
Stocks Face Uncertainty Following Sell-Off- 6th Sep 24
GOLD WILL CONTINUE TO OUTPERFORM MINING SHARES - 6th Sep 24
AI Stocks Portfolio and Bitcoin September 2024 - 3rd Sep 24
2024 = 1984 - AI Equals Loss of Agency - 30th Aug 24
UBI - Universal Billionaire Income - 30th Aug 24
US COUNTING DOWN TO CRISIS, CATASTROPHE AND COLLAPSE - 30th Aug 24
GBP/USD Uptrend: What’s Next for the Pair? - 30th Aug 24
The Post-2020 History of the 10-2 US Treasury Yield Curve - 30th Aug 24
Stocks Likely to Extend Consolidation: Topping Pattern Forming? - 30th Aug 24
Why Stock-Market Success Is Usually Only Temporary - 30th Aug 24
The Consequences of AI - 24th Aug 24
Can Greedy Politicians Really Stop Price Inflation With a "Price Gouging" Ban? - 24th Aug 24
Why Alien Intelligence Cannot Predict the Future - 23rd Aug 24
Stock Market Surefire Way to Go Broke - 23rd Aug 24
RIP Google Search - 23rd Aug 24
What happened to the Fed’s Gold? - 23rd Aug 24
US Dollar Reserves Have Dropped By 14 Percent Since 2002 - 23rd Aug 24
Will Electric Vehicles Be the Killer App for Silver? - 23rd Aug 24
EUR/USD Update: Strong Uptrend and Key Levels to Watch - 23rd Aug 24
Gold Mid-Tier Mining Stocks Fundamentals - 23rd Aug 24
My GCSE Exam Results Day Shock! 2024 - 23rd Aug 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

THE INFLATION MEGA-TREND

Economics / Inflation Apr 01, 2023 - 06:09 PM GMT

By: Nadeem_Walayat

Economics

The primary driver for stock prices is Not Innovation, Disruption or even GDP growth (though it is part of the soup), No the Primary driver for stock prices is INFLATION! It's why Turkish stocks (before this weeks killer Quake) were racing ahead despite persistently high Turkish inflation rates of as much as 85% during 2022 as they experienced their own version of the Crack up BOOM!


INFLATION! That the politicians and their central bank minions have convinced the masses is good, inflation is necessary for the lifeblood of the economy instead Inflation ensures that Wage slaves will get poorer all whilst the rich get Richer, they don't have to do anything just have the governments and central banks keep printing money whilst they are invested in assets as they watch inflation do it's compounding magic!

This is the smoke and mirrors inflation graph that gets peddled out each month that the governments and central banks want people to focus on.

Is the inflation pain over!

Not so fast! The 10 year inflation graph shows why the inflation pain is only just beginning! And this is before we consider the fact that they have fiddled the inflation indices to such an extent that it probably under reports REAL inflation by 50%! Take CPILIE and double it and that is the real inflation rate!

Imagine what this graph now looks like when allowing for REAL inflation and then you have an inkling of the PAIN that the masses are experiencing which is NOT going to lessen even if CPI LIE falls to below 3% which I doubt it will. but nevertheless it won't make any difference as the 1 year inflation rate climbs higher and with it will the compounding PAIN that every worker will experience as I warned over a year ago that Western economies are marching to civil unrest where strikes turn to ,mass protests which turn into civil unrest due to the building stress of increasing inflation pain all whilst the con merchants in the central banks peddle the line that inflation is falling, Instead the mass of workers feel the pain of RISING PRICES and other STEALTH INFLATION, such as cutting PENSIONs on either the growth front or payment front in REAL TERMS. Peoples incomes are being squeezed all whilst governments paints the false narrative of Inflation being back under control when the truth is the exact opposite which will push the masses towards revolt where the prime time for such events are the hot summer months. We are likely to see spikes in civil unrest take place every summer across the western world that ultimately could even bring governments down!

Virtually every year the UK government chips away at Britains pensions such as the recent announcements to FREEZE the lifetime pension allowance when inflation is running rampant! That is at least a 15% STEALTH TAX RISE! And now their are the likes of the Resolution Foundation peddling the narrative of capping ISA's to a total of £100k because poor people don't save much in ISA's and thus the cap would raise a lot of taxes this despite the fact that the Resolution Foundation themselves are dodging tax by registering their 'thick tank' as a charity so they can AVOID PAYING TAXES! What does shuffling paper in offices have to do with helping the poor and needy? Have they ever directly helped a single poor person in need? I doubt it!

And it's a lot worse than that! because the state pensions for most nations are giant PONZI SCHEMEs! US, UK, France. Italy, Germany, virtually all nations state pensions are ponzi schemes where today's workers pay for today's pensioners, there is NO PENSION FUND! Eventually the ever widening gap between workers contributions vs retiree pension payments is filled by printing money resulting in INFLATION, that governments are panicking to try and reign in prompting demonstrations as are taking place in France right now where the likes of Covid is being seen by some in power as a means of cutting pension liabilities given that across Europe there are now several million fewer pensioners than there would have been without covid, though a pinprick to the pensioner cull that they would be content to experience.

This is why stocks bear markets are TEMPORARY because Inflation os PERMANENT and EXPONENTIAL!

Back to what is going to happen this week to CPLIE and how it will impact the stock market. Well the monthly data shows that we can continue to expect falling CPI inflation on the annual inflation index i.e. Jan CPU Index 2022 was 282.6, vs 280.9 that's 0.6% leaving the indices, and there will be a marginally greater departure for Feb data (released March) of 0.7%. with the big departure of 1% coming for March data released in April that times well for a rally into May because after that Inflation falls are going to stall and could even tick higher during April (May release). So Inflation should continue to provide upside momentum for the next 3 releases than it's going to get tough especially if the Labour market remains strong as Fridays data illustrates.

Looking at the inflation spectrum where despite the 12 month continuing to trend lower the 6 month rate has already bottomed and is expected to turn higher for January data, however for the Fed to get to it's 2% target the 6 month rate would need to go negative which is not happening, in fact it's basing above 1% which implies annual CP LIE is going to find it difficult to nudge below 4% even on a temporary basis let alone achieve 2% in 2 years time. Meanwhile the 10 year shows Inflation pain is going to continue to climb higher to above 30%, that is REAL PAIN that people will experience which is NOT reflected in the annual rate, to get a taste of what this means imagine if the annual rate instead of falling to under 5% rose to over 9%. INFLATION PAIN that is invisible in the statistics that the clown economists focus upon. but it WILL have REAL WORLD consequences!

The bottom line is that regardless of what the CPLIE annual rate does over the next 3 months (declines expected). real inflation pain is NOT diminishing but instead INCREASING and thus implies that those banking on Fed rate cuts anytime soon, the so called Fed pivot are gong to be disappointed, instead post the current 3 month window annual inflation could start creeping higher and so we could so higher Fed rates being priced in to well above 5%, maybe even 6%.

This article is an excerpt from Stock Market Counting Down to Pump and Dump US CPI LIE Inflation Data Release that was first made available to patrons who support my work.So for immediate first access to ALL of my analysis and trend forecasts then do consider becoming a Patron by supporting my work for just $5 per month. https://www.patreon.com/Nadeem_Walayat.

Immediate first access to ahead of the curve analysis as my extensive analysis of the stock market illustrates (Stocks Bear Market Max PAIN - Trend Forecast Analysis to Dec 2023 - Part1), that continues on in the comments section of each posted article, all for just 5 bucks per month which is nothing, if you can't afford 5 bucks for month then what you doing reading this article, 5 bucks is nothing, if someone did what I am doing then I would gladly pay 5 bucks for it! Signup for 1 month for a taste of the depth of analysis that cannot be beat by those charging $100+ per month! I am too cheap! I am keeping my analysis accessible to all, those willing to learn because where investing is concerned the sooner one gets going the better as portfolios compound over time, $5 month is nothing for what you get access to so at least give it a try, read the comments, see the depth of analysis, you won't be sorry because i do do my best by my patrons, go the extra mile.

And gain access to the following most recent analysis -

So for immediate first access to to all of my analysis and trend forecasts then do consider becoming a Patron by supporting my work for just $5 per month. https://www.patreon.com/Nadeem_Walayat.

My Main Analysis Schedule:

  • US House Prices Trend Forecast - 50%
  • Global Housing / Investing Markets - 50%
  • US Dollar / British Pound Trend Forecasts - 0%
  • High Risk Stocks Update - Health / Biotech Focus - 0%
  • State of the Crypto Markets
  • Gold and Silver Analysis - 0%
  • How to Get Rich - 75%

Again for immediate access to all my work do consider becoming a Patron by supporting my work for just $5 per month. https://www.patreon.com/Nadeem_Walayat.

And ensure you are subscribed to my ALWAYS FREE newsletter for my next in-depth analysis.

Your buy the DIP analyst.

By Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-2023 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 30 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.

Housing Markets Forecast 2014-2018The Stocks Stealth Bull Market 2013 and Beyond EbookThe Stocks Stealth Bull Market Update 2011 EbookThe Interest Rate Mega-Trend EbookThe Inflation Mega-trend Ebook

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in