Close X Cookies are necessary for the proper functioning of 24hGold.com. By continuing your navigation on our website, you are accepting the use of cookies.
To learn more about cookies ...
EnglishFrench
Gold & Silver Prices in
In the same category

Central Bank Hubris Bubbles to the Surface

IMG Auteur
Published : April 14th, 2017
504 words - Reading time : 1 - 2 minutes
( 1 vote, 4/5 )
Print article
  Article Comments Comment this article Rating All Articles  
[titre article pour referencement]
0
Send
0
comment
Our Newsletter...
Category : Editorials

Albert Edwards at Society General commented today on Central Bank Hubris, deflation, and the flattening of the US yield curve. Here are some email snips.

How’s this for Grade 1 central bank hubris?

Peter Praet, the ECB’s chief economist said in a recent interview that, “Since the crisis, we have had serious concerns about deflationary risks on several occasions in the euro area, but now we can say they have disappeared.

Really? Has he seen the chart above, which shows core CPI in the Eurozone heading sharply lower and now approaching its all-time low seen at the start of 2015! Not only that, but Eurozone inflation expectations are also declining again, after surging in the aftermath of Donald Trump’s election. To be fair, Praet was focusing on the rise in headline inflation in the Eurozone, which touched 2% in February before dropping back in March to 1½%. After some 18 months bobbing around the zero mark, I can understand why central bankers might be heaving a sigh of relief, but for them to take credit for a recovery in headline inflation is totally disingenuous given it has been entirely driven by a recovery in the oil price.

Similarly, Janet Yellen was quoted saying the Fed is “doing pretty well” in meeting its congressionally mandated goals of low and stable inflation and a full-strength labor market. It’s this sort of comment that has led Marc Faber to want to short central bankers, the only way being to buy gold. The increasing volume of central bank hubris may even explain the recent breakout of gold to the upside!

It is not just eurozone inflation expectations that seem to be in retreat. The same thing is happening in the US too (see chart below). I am always surprised how dominated 10y inflation expectations are by short-term movements in the oil price and headline inflation, but it was noticeable just how rapidly inflation expectations ran up in the wake of Trump’s election – way in advance of what might have been expected by the bounce in the oil price.

One might have thought the surge in the oil price from its trough some 12-18 months ago might have had more impact on wage inflation, but so far that does not seem to be the case.

Despite the euphoria in the markets about the “reflation trade”, survey inflation expectations have continued to drift downwards. One thing is certain: for central banks to call victory over deflation may prove very premature indeed. Nemesis awaits.

Reflation Trade Is Over

The reflation trade is over. It is fitting central banks now brag about oil-related and Trump-related phenomena over which they had zero control.

I discussed similar ideas in a series of recent posts including:

  1. Yellen’s Self-Serving Assessment: Fed is “Doing Pretty Well”
  2. “Secular Low in Bond Yields Remains in the Future” says Hoisington’s Lacy Hunt.
  3. PPI Services Shows No Price Pressures
  4. Hard-Boiled vs Soft-Boiled Economic Egg Debate: Cracking the Shells
  5. Six GDP Estimates: ZeroHedge, Mish, GDPNow, Nowcast, ISM, Markit

Mike “Mish” Shedlock.

Source : mishtalk.com
Data and Statistics for these countries : Georgia | All
Gold and Silver Prices for these countries : Georgia | All
<< Previous article
Rate : Average note :4 (1 vote)
>> Next article
IMG Auteur
Mish 13 abonnés
Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management. He writes a global economics blog which has commentary 5-7 times a week. He also writes for the Daily Reckoning, Whiskey & Gunpowder, and has over 80 magazine and book cover credits. Visit http://www.sitkapacific.com
WebsiteSubscribe to his services
Comments closed
Latest comment posted for this article
Be the first to comment
Add your comment
Top articles
Latest Comments
Supply Side Economics – 42 Years Later – Paul Craig Roberts
23 JulDoom-1
Lots and lots of things aren't in wikipedia, because they don't fit the Leftist narrative, and many entries have an extraordinarily biased presenta...
Meow
21 JulDoom0
>>For all his blunders and stumbles...<< To be fair, all presidents blunder and stumble like this. This is just the first in a long while ...
The Gold Industry is in a Deep State of Dysfunction, Delusion and D...
21 Julkevthorne
Just hold on to it - you will win. A cautionary tale: I wish, back in the early 90's, when I took out a pension - it was "cast iron, copper...
The Gold Industry is in a Deep State of Dysfunction, Delusion and D...
20 JulDRGEORGE
Yep, hard to argue with any of that. But this poor, disillusioned, confused, swindled, isolated, powerless, 'smart'(HUH) precious metal owner has n...
This Feels Like the Action in 2008 Right Before the Collapse - Dave...
18 JulThe Recusant
Will we witness a battle-royale between the CBs and traders shortly?
Guess What Happens In States Where Food Stamp Recipients Have To Work
18 JulThe Recusant1
As a left-leaning independent, community service seems like a great idea as a prerequisite for food stamps for single childless recipients. But, as...
Watch: Trump Was Hammering CNN In 1990 For Fake News: “When People ...
18 JulThe Recusant
Yes, there is sensationalism in today's news media. On a sliding scale, however, the news media is far more honest than ANYTHING the Trump administ...
Guess What Happens In States Where Food Stamp Recipients Have To Work
18 Julkevthorne2
Then, how about making the banksters do some real, productive work in return for the taxpayer funded bailouts they received - like rebuilding worn-...
Most commented articlesFavoritesMore...
World PM Newsflow
ALL
GOLD
SILVER
PGM & DIAMONDS
OIL & GAS
OTHER METALS