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US credit trends support optimistic outlook

US consumer and corporate loan growth are picking up The Fed ignores money, pays attention to credit Central banks say one thing, do another US broad money growth is accelerating again after easing somewhat in late 2020.[1] In the year to February, broad money grew by 14.1%. While this was the…

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Factored in – but how high and for how long?

Markets have woken up to the inflation risk Central bankers, however, display less concern But markets may still underestimate the extent of coming inflation  Bond yields have begun to rise and equity markets have fallen, both developments apparently because market actors have woken up to the risk of higher inflation.…

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Money has to go somewhere, inflate something

European and US broad money growth is picking up, Chinese and Japanese is weaker. Unless private sector demand to hold cash is limitless, money has to go somewhere. This means continued asset price inflation, or rising consumer price inflation, or both. Late 2020 saw a dichotomy in global broad money…

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Future inflation ≠ past inflation

Recent inflation data is generally weakening.But the pandemic and various degrees of lockdowns make CPI data meaninglessBusiness and consumer surveys are beginning to hint at coming price rises The end of the month is usually when countries publish updated inflation numbers. Latest data show price pressures in the largest economies…

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More on the new Fed policy

The new policy of average inflation targeting involves a loss of clarity. Its credibility is questionable. It means rather higher inflation than markets currently expect. Last month the Fed switched to alternative inflation targeting (AIT), a change covered in a Stein Brothers Comment at the time. However, the change bears…

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Average inflation targeting > higher inflation

Markets expect Chairman Powell to signal a shift towards ‘average inflation targeting’ AIT makes sense in many ways, but also has weaknesses The medium-term effect will be an acceptance of higher inflation  Later today, Fed Chairman Jerome Powell will address (virtually, needless to say) the annual Kansas City Federal Reserve…

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An inner city renaissance

The post-COVID-19 world will see an increase in distance-working. But not everyone can or wants to work from home. Offices will remain but there will be less demand for them. Surplus CBD office space can be converted to residential use, with multiple benefits It always feels silly to intentionally position…

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The recovery begins

Economic data remains weak and Q2 GDP numbers will be awful almost everywhere But confidence is rising, if from low levels and frequently rising more than expected  It is difficult to spot real time turning points, but it does seem that the recovery has begun Q2 GDP data will begin…

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Further on why inflation

Output growth in the second half of 2020 and 2021 is likely to be well above trend Current inflation data is meaningless, but 2021 and 2022 will see high inflation  This assumes that global lockdowns end over the summer This is a follow-up to The case for higher inflation published…

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The case for higher inflation

Over the past two months, broad money growth has surged in key world economies This monetary stimulus, part of the response to the COVID-19 pandemic, will remain in place Sustained double-digit broad money growth is inconsistent with subdued inflation (It is more than a year since I last published a…

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