The last three months of core PCE, the Fed's favorite metric, is growing at nearly 5%, a 30-year high.

This is being dismissed as part of the reopening process. Careful with this logic.

Friday the UMich released its latest Consumer confidence survey, which also asks about inflation.

The outlook over the next 5-10 yrs is rising and at a decade high.

The 1yr outlook spiked to a 13yr high … highest since $145 crude.

Consumers believe it is coming

But this is 2021, and inflation is measured not by prices, or expectations of what one will pay. It is what the bond market thinks.

So, you cannot have an inflation problem if bond yields are not shooting higher.

I think this is backward logic

But the bond market is "smart." We should not ignore yields. True.

But the median age of a US worker is 43. They have not experienced inflation in their career. No one remembers what inflation looks like. And the last 30 years has rewarded one for dismissing it.

The most interesting Fed Speeches are the members that leave. They stop reciting talking points and tell you what they think.

In 2017 Dan Tarillo left the Fed and said the quiet part out loud … no one knows what causes inflation.

So we see evidence of inflation but dismiss it. Why? The bond mkt is not reacting (>ylds) as it is made up of traders they never saw inflation.

Economists stick with reasons that worked in dismissing it for 30yrs, like tech, demographics and globalization.

Change is hard


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More from @biancoresearch

23 May
I have never promoted a coin in public. I have said the entire space will be transformational for the financial industry. I still believe that.

Pumping coins makes everyone look away from the changes that are coming. That is what matters to me.

Not unlike the late 1999 when many only saw tech stocks as objects of speculation and missed the bigger picture.

I remember many laughing off e-commerce as a plausible idea because when bust? How does that look now?

So, I avoid talking coins.

I've also said never invest more than you can lose, and have recommended starting with $200 or so and consider it an "education fee."

Open an account and buy a coin. Move it to a wallet and stake, it.

If you do that, you will understand why everything is going to change.

Read 5 tweets
20 May
Last month the Fed said they had five yrs to create a digital currency.
Now Powell put out this video talking about stable coins and the Fed will have a report out on it this summer.
They are getting passed by the crypto world and have to move faster.
My early take.

A Central Bank Digital Currency (CBDC) will not work.

To work it requires the Fed to take over the banking system (making it more centralized and subject to more top down control).

Otherwise it will accomplish nothing.

Bottom line, stablecoins (the concept, not any one in particular) are winning. The Fed sees the future reserve currency and it does not involve them.

I look forward to their rationakiztion to hold onto the past.

Read 7 tweets
19 May
No coiners (most of which are rich CeFi-ers that see DeFi as a threat) are gloating about the decline in cryptoland.

Yes, the casino speculation in cryptos almost demanded this would happened (when and how impossible to predict).

But if you really understand the space, it is a parallel financial system and is now getting this first real stress test. If it makes it through, it would be incredibly bullish.

Today is not the worst day ever (%24h loss). The last such days were March 2020.

What is different now is DeFI was non-existent in those days.

DeFi really took off in June 2020 and was $100B in size at the peak a few weeks ago. So, this is the first real "test" of DeFi.

Read 6 tweets
10 May
Nothing to act on now ... but worth paying attention too.

The Seychelles is a African country of 97,000 off the coast of Tanzania. It is one of the richest countries in the world. The country is full of expensive cars and high fashion, think Beverly Hills.

Seychelles has FULLY vaccinated over 60% of its population, thanks to its wealth. The country has been using the Chinese Sinopharm and AstraZeneca inoculations.

It leads the world with the highest parentage of a population fully vaxxed.

But here is the concerning part ... Seychelles cases are spiking. Remember the majority of country has been vaxxed

Read 5 tweets
4 May
"Mailed money" has changed the personal income landscape of the US. PI shot up to $24 trillion, 27% yoy. We have never seen anything close to this before.

Wages are the largest component of PI. Econ argue against inflation without wage gains, stimulus has filled that gap.

To further underscore how much this stimulus has meant, the next chart shows that 33.8% of all personal income in the last year was “mailed” from the federal government.

This even exceeds to records set with last year’s CARES Act.

This money is piling into savings. The current savings rate is now 27.6%.

Read 6 tweets
14 Apr
The broader service sector has an impediment that herd immunity/reopening might not solve.

This chart shows the Kastle Indices of the percentage of major metropolitan office usage. It is still at just 25%.

Why do we need to return to an office? How much a week? What is better served commuting in an office everyday versus the way we have it's been done the last year?

This is a nice way to say that comm real estate is in trouble and herd immunity might not fix it.
Airline travel is about 2/3s back to pre-pandemic levels. Leisure travel is near 100% back.

But, if we do not return to the office 8 hrs/5 days business travel is not returning to pre-pandemic levels anytime soon, unless leisure is about to soar to new highs.

Read 4 tweets

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