Inflation Accelerating Again As Fed Talks Tough But Takes No Action.

September 26, 2021

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1. Current Inflation Spike Already Rivals Stagflationary 1973 and 1980.

“The US Consumer Price Index has risen from 0.3% annualized to 5.3% over just the last 15 months. The last two times we saw this big of a rise over this short of a time were in 1973 and 1980, the two most notorious episodes of stagflation and rising gold prices in US history.”

When Stagflation hits it can reverse the stocks to gold mining ratio dramatically.

https://www.crescat.net/three-themes-coalescing/

2. Tough Talk. No Action. Fed Policy Error Extended?

“Fed watchers are rightly concerned about a forthcoming policy error, but the truth is that the accumulation of global economic and market imbalances and inflationary pressures after many years of taking the path of least resistance with quantitative easing and low interest rate policy has already been the gigantic policy mistake. These misjudgments are not isolated to domestic affairs but have aided and abetted massive credit bubbles in other countries too, particularly China.

We believe it is only a matter of time before investors begin stampeding out of S&P 500 index funds and FAAMG stocks and into tangible assets.

As Warren Buffett’s mentor, the legendary Ben Graham, said:

“In the short run, the market is a voting machine that requires only money, not intelligence or emotional stability, but in the long run it’s a weighing machine.”

 

3. Oil Closes at 52 week high. Poised for a long term breakout?

https://thefelderreport.com/2021/09/22/is-oil-about-to-breakout-of-its-long-term-downtrend/

4. US Oil Inventories are at a 3 year low.

https://twitter.com/LizAnnSonders/status/1440995390069919745

5. Buybacks are back and very revealing.

“The primary purpose of share buybacks is to undo the dilution of their EPS metric that occurs due to massive executive stock-based compensation packages. These share buybacks hide the cost of stock-based compensation on EPS; and many of those share buybacks are funded with debt, but debt doesn’t impact EPS.”

https://wolfstreet.com/2021/09/25/top-10-share-buyback-queens-big-tech-except-intel-big-banks-except-wells-fargo-buffett-buy-back-most-shares-ever-in-q2-the-rest-lags/

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