Garden variety inflation… or Stag?

More indicators are triggering to the inflation view

Giving the finger to the Fed’s pretense as inflation fighters (taper: ooh, they must mean it) more market signals are tripping inflationary. There are still a couple holdouts and a caveat here or there. But my indicators are coming in line and as they stand now are biased to flipping the bird to the Fed and its supposedly hawkish stance.

Remember, you have to invite the damn Vampire into your house, right? The Vampire is consciously bringing about the very thing that will puke up the invitation. A market correction at the instigation of some well placed jawboning (Ms. Brainard being the the latest).

So assuming it is ‘inflation up’ from here on, what kind of inflation might it be? A nice, comfortable ‘lift all boats (and life rafts)’ kind of inflation as in 2020 into 2021, or maybe the economy impairing Stag variety?

One item to watch is the ultimate cyclical metal vs. the ultimate counter-cyclical one. If signalers like the Continuum are putting in a low due to a resumption of inflationary effects and sentiment the Copper/Gold ratio may well advise about the nature of what’s to come. Doctor Copper likes to prescribe vibrant reflationary economies and old Professor Gold likes the opposite, failing economies because he is an honest value anchor who abhors the ginned up mechanics of the modern Keynesian system (of Inflation onDemand).

Think about it and keep an open mind. The next several months are going to be pivotal. As a side note to the 30yr yield Continuum in the lower panel, you can see the monthly EMA 100 limiter that has roughly contained the yield through decades of a deflationary trend (manipulated though it has routinely been) against which the Fed has had carte blanche to inflate. NFTRH does, however, have an alternative and unpleasant upside target to go along with a routine one that would ping the limiter again. If long-term yields stretch too far in rebellion against the inflationary regime that too would fit a Stagflationary narrative.

copper/gold ratio

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