tuesday Jan 24 2023
Here is an excerpt from a front page WSJ article today
_____________________
Behind this year’s improved start for markets lies a broad wager that inflation will soon post a once-in-a-generation decline.
Market-based gauges of inflation expectations project the annual pace of rising prices will tumble in the months ahead roughly as fast as during the recession that followed the 2008 financial crisis—or when Fed Chairman Paul Volcker used double-digit interest rates to crush the soaring inflation of the late 1970s.
_______________________
this is in contrast to the view of socionomic that social action is the result of social mood. Socionomics questions the causality that the media endlessly claims is the cause of events.
Interest rates bottomed in March 2020 after a 39 year decline from their peak in 1981. Rates had fallen to near zero and in fact went negative in Europe. Is is any surprise prices are rising in what is now a cycle of rising interest rates? Or that inflation is rising as the Congress and FED spend trillions they do not have?
We are early in the cycle, it is 1975 not 1981-2 when Volcker attacked rates. the article says expectations are for lower prices, yet crude oil just topped $80 from its sub 70 lows, and gasoline at the pump is back over $3.00 in Texas.
The better idea is examine price patterns described by R N Elliott's waves of social mood.
Comments