Thread by @jurajholik

Inflation vs Deflation 🙌

Just recently I bumped into an amazing interview with @MacroAlf on @RealVision where he beatifully laid out arguments against high and persistent #inflation . 👌

Let me just share some of those charts full of wisdom 🧠

#StockMarket #stocks #market

1) Inability of the QE to create persistent amount of credit. Japan provides a perfect example and the preliminary data coming out of US also suggests low credit creation 👀

2) This chart beatifully shows the high correlation between credit creation and inflation expactation with a 12 month lag; we can see that global credit impulse has already slowed down and if this chart is right then inflation expectations will follow suit ⤵️

3) Global debt has reached astounding highs. I would not say that high debt is always deflationary, but under current circumstances, when the debt is overlayed by poor structural growth, terrible demographics, falling productivity, technology etc.; it does not sound inflationary

4) This chart only stregthens the previous point. We can clearly see how over time rising debt correlated with falling real yields. True economic growth would drive the yields higher, which has recently not been the story 👀

5) And demographics are currently just purely deflationary. This chart shows labor supply growth but we could easily add statistics about aging, productivity, technology, globalization etc. 💸💸

6) Lastly the chart of charts created by @MacroAlf which corresponds perfectly to my own investment thesis. Growth data suprises to the downside, dollar rises, stock market pukes, central bank does some more QE, growth ourperforms value 👀👀

7) Also just let me make clear that I am not saying that inflation is not possible, but when I weigh the facts, I just dont see the environment where we can create it.

8) However I do have to admit that I still havent made up my mind about what is going to be the impact of that immense fiscal package that is about to be dropped into the economy, it might very well be more inflationary than I expect

Anyhow,

definitely watch the interview, Alfonzo really did a great job of explaining those concepts very simply and clearly. So, once again @MacroAlf thank you for sharing all that great knowledge and information, it really was helpful 🙏