“The only problem with heroin is that it is so moreish.”
That’s one of the comments on an FT story ($) about remarks made by the outgoing chairman of Britain’s Financial Services Authority, Lord Turner, in favour of limited money printing for direct funding of government spending. In Turner’s words: “I accept entirely that this is a very dangerous thing to let out of the bag, that this is a medicine in small quantities but a poison in large quantities but that there exist some circumstances, in which it is appropriate to take that risk”.
It’s interesting to juxtapose his comments with a ZeroHedge article noting that the commodity-heavy S&P GSCI Index “widely recognized as a leading measure of general price movements and inflation in the world economy” has never been as high at this stage of the year as it currently is. Currency wars inevitably lead to higher commodity prices. As ZH states: “with global growth stagnating at best, it seems a tough call to blame 'recovery' for this inflating (fastest pace in 8 years) raw material price leaking cost-push inflation (and margin-compression) into the real economy.”
The capping of gold at $1,680 continues, with silver still held south of $32. Platinum paused for breath in mid-to-late January but has resumed its upward move over the last two trading sessions, while palladium – taking cues from the broader commodity sector – is continuing its now month-long march higher. Stock markets continue to attract hot money flows, with the Dow and S&P 500 close to record nominal highs reached in the autumn of 2007, with the S&P 500 recording its best start to a year since 1997. Until we see more bearish shocks like last week’s US GDP data, this is unlikely to change.
