Did Jerome Powell, Chairman of the Federal Reserve, get himself into a pickle? With bond yields still on the rise, it´s starting to look that way. The markets seem to be testing the Fed chief’s pain threshold, which could result in an interesting game of chicken. The press conference on 17 March was arguably his best to date. It contained neither doubts nor unexpected digressions to difficult topics. Powell was as clear as he could possibly be: don’t expect tighter monetary policy until maximum employment has been reached, and there is a sustained rise in inflation to 2% in sight. Well, that’s going to take a while. But this powerful confirmation of the forward guidance may lead to an interesting showdown with markets in the coming months. … [Read More...]
Revenge of the old economy
Prices in the real economy are lagging far behind prices on the financial markets. But with a historic amount of stimulus, focused increasingly on an ‘old school’ recovery, a catchup appears to be in the making. Not before time. The graph below from Goldman Sachs is currently one of my favorites. All things linked to inflation – so, not only consumer prices but also wages and commodities – have failed to keep pace with prices on the financial markets. Not surprisingly, as monetary policy, and to some extent also fiscal policy, has focused exclusively on the financial markets since the global financial crisis. Back in 2008, that made sense. The entire system was on the verge of collapse. But in the ten subsequent years of recovery, little changed. … [Read More...]
Are Dividend Increases Beating Inflation in 2022?
The US stock market has been turbulent recently. As a Dividend Growth Investor, I usually ignore stock price fluctuations, unless I am looking to buy a quality stock at a discount. As a long-term investor, I focus on growing my dividend income. Dividends are more stable, predictable and reliable than stock prices. Dividends also tend to grow above the rate of inflation over time. The stability… To read the whole article, please click on the article title above. [Read More...]
The Dollar Has Been Inflating Against Bitcoin Since 2011
On a zoomed-out scale, the U.S. dollar has been rapidly inflating against bitcoin since the time one bitcoin reached parity with one dollar in 2011.It is my fervent wish that hyperinflation never reaches our shores. The probability that we will avoid that outcome is extremely slim. Put another way, our chances of experiencing hyperinflation are extremely high; the only question is timing. When will it happen? Many hope it’s a long way off. Some believe it’s here already and has been for quite some time. The U.S. Dollar Is Drastically Inflating Against Real EstateSome argue that hyperinflation is already here in real estate. Many Americans (and other people around the globe) are feverishly overpaying for real estate that, in some areas, is causing housing … [Read More...]