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The Inflation Hub

• Can this market rally continue!? May 20, 2013
  With US markets up 17% and Japan up 47% year to date, can equity markets rise any higher? The S&P 500’s Price to EBITDA has risen from 7.2 at the start of the year to 8.2 now, some 20% above its long term average. Technicals are looking very overbought, economic numbers are grim and commodity […]
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• Is the Topix just the Yen in disguise?? May 9, 2013
  Investors love to find deep and academic excuses for the movements of markets, but sometimes things are so obvious they fail to be noticed. The chart below shows the progression of the Japanese Yen and the Topix over the last year. It is nothing short of remarkable how correlated the two are. One could argue […]
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• Brace yourself. Equities are in for a rough ride May 3, 2013
  Valuations are stretched, corporate profit margins are at record highs (can they go any higher?) inflation is falling and commodity prices are pointing to a significant fall in demand. How long before equities fall? The Fed’s preferred measure of inflation, the personal consumption expenditure (PCE) deflator, has been declining consistently for a year sittin […]
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• Will Japan experience hyperinflation? April 18, 2013
  The broad definition of hyperinflation is generally regarded as excessive price rises, usually over 50% a month. Such rises are hugely damaging to economies leading to a huge loss of productivity, severe economic depression and mass unemployment. Central bankers have fought for decades to take control of inflation and, in most cases, have done a […]
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• Has gold peaked or is the bull run still underway? April 16, 2013
  Commentators love simplicity.  Most news sources blame gold’s precipitous fall on the expectation that the Fed will tighten monetary policy soon. If that’s the case, why have bond yields been so muted? It doesn’t add up. QE has been supporting numerous assets, the main one being government bonds which have been the main beneficiaries of […]
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• Move aside Bernanke. Bank of Japan blows away expectations with its boosted QE April 5, 2013
  On April 4th the Bank of Japan announced an enormous shift in policy and the largest monetary injection ever announced by a major Central Bank. The new governor, Haruhiko Kuroda, had been expected to come up against opposition from other policy members who had been tied to the BoJ’s previous philosophy on monetary policy. The […]
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• Japan economy to grow 2.5% in fiscal 2013. Really??? March 28, 2013
  Japan has unveiled its growth forecast for the fiscal year starting in April, saying the economy is on track to expand 2.5% thanks to fresh stimulus and a recovery in key overseas markets. Prime Minister Shinzo Abe’s cabinet approved the forecast on Monday morning. The government is trying its very best to convince everyone that […]
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• The Fed pushes, the economy pulls. Who wins? March 27, 2013
  It depends who is asking. The under-employment rate remains above 14%, the employment ratio is the lowest in decades (today’s younger generation will probably be the first to be poorer than their parents), GDP growth has stalled and income inequality is rising.  The economy is under serious threat. The Fed’s solution is clear: do whatever […]
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• Central Banks are seeking to devalue currencies. Will it ultimately destroy trust? March 22, 2013
  Fiat money is worth nothing without trust. History has shown that the general populace has great distrust of paper money, hence the need for its backing with some form of physical currency such as gold, silver or copper. Yet here we are, with no such backing (the gold standard was abandoned some 40 years ago), […]
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• How will we ever get out of this mess? March 11, 2013
  Developed nations are heavily indebted (governments, business and individuals), unemployment is high, prices are on the rise and income inequality is only getting worse. Is it even possible to get out of this mess? According to Richard Duncan, author of the brilliant yet very gloomily named book ‘The New Depression“, the answer is very much […]
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