We have seen TIPs move in lockstep with equities for years now, until that divergence formed last spring with a lower high on TIP.
Long before the recent “bond meltdown,” TIPs started to swoon.
And they still are!
What do you think this means for stocks? Red herring? Bad omen?
Feel free to chime in below.
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Validates the theory that QE does equal an expansion of the monetary base, hence inflation is non-existant.
Though that says nothing about the possibility of impending deflation even in the name of high liquidity.
DOES NOT*
Nice, thanks.
with Harper on this one…deflationary whiffs in the air, but the stank has been stinking for a while with copper, commods, strong dollar (ex this weeks mauling due to usd/jpy unwind) etc…
I’d expect small caps to do better in low inflation environs as pricing power isn’t a concern
Thanks, jj!
The market is always right. QE and a strengthening economy have created strong demand for equities at the expense of various sectors, bonds included.
Thanks, dominator!
My friend you are still the only purist candle guy I even see anymore. Without getting into a myriad if examples and discussing time frames my rebuttal to dominator is “the market is NEVER right” at inflection points. Today most market players have adopted several incorrect macro views and cling to them until proven wrong beyond all reasonable doubt. As always.
Low inflation is bullish for stocks. Lots of evidence the economy is improving, I don’t think the speed of improvement is what the market is concerned with, simply the fact that there are improvements. I spoke with a relocation agent in the Boulder area, she said there are 2-3 buyers for homes coming on the market. There is not enough supply. She said the low end is tight also because you have 1st time home buyers, empty nesters, and lower income folks all looking in that zone.