Quick thread on inflation
1. What the Fed can deal with
2. What the Fed cannot deal with
3. Size of each
Here we go.
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Stuff impacting inflation h/t @LizAnnSonders
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The excess demand side inflation from that chart
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The part is 'normal' demand side inflation (outlined in green).
The 'excessive of normal' demand-side inflation (the part above the green)
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Just the 'excessive of normal' demand-side inflation (the part above the green)
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Same exercise from the excess inflation from supply side
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Comparing the duration and size of excess inflation from demand (blue) and supply (green)
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My conclusion:
Excess demand side inflation been more persistent; Excess supply side inflation has been larger.
The Fed can't do much about the excess supply-side inflation which is larger part, but there is still plenty of excess demand-side inflation for the Fed to tame
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Onto oil, which the Fed has little control over, but still worth looking at bc it has been the number one contributor to headline CPI.
Start with a simple chart of Oil Prices (a bit dated)
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Two portions of inflation here.
One before the war, which was substantial, and the part after, which is also substantial.
Focusing on the increases:
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Side-by-side comparison of pre-war inflation and post-war inflation.
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And now both together with a conclusion:
* There is a lot of excess demand-side inflation that the Fed can address. So, good, do that.
* Most of the inflation the Fed cannot address (supply-side and energy) and that's bad.
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* I don’t see a reason to be excessively bullish in the immediate-term
* I do see a reason to be quite bullish with a longer-term view
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This is how we look at the market and what CML Pro does with stocks.
* Facts A, B, C
* Analysis A, B, C
* Conclusions A, B, C
If done correctly, whether one agrees with analysis and conclusion, value is had just going through the exercise.
Plug
bit.ly/CMLPro
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