cpi

Inflation Monitor – January 2016


Inflation Monitor Summary – Composite Ranking

Inflation Monitor Summary December 2015

* The Inflation Equilibrium is a quick summary for the whole data series of the inflation monitor. If you don’t like statistics, this is the chart for you.


 

Inflation Monitor – January 2016 – Introduction

 

Happy New Year. I hope you enjoyed your holidays with lots of eggnog and holiday cheer.

2016 has started with a bang… or rather a thud. The US equity markets have had their worst start to the new year ever. I guess you could say that the thud has not happened yet since the US stock markets are still falling. The Chinese stock markets have gotten all the blame, but I think the drop in equities is overdue.

In week one, S&P 500 (-6%), NASDAQ (-7.3%), and Dow (-6.2%). Gold surprised to the upside +3.1%.

End of week two, S&P 500 (-8%), NASDAQ (-10.4%), and Dow (-8.2%). Gold is still up 1.8%.

If you have been following this Inflation Monitor for the past year you will know my thoughts on the markets. We saw strong deflationary data last year. Not surprisingly, no one noticed. The fact that it took the equity markets this long to react to this data is really the only surprise I see.

If you have not read my 2015 recap, then now is a good time to read it. Last year the S&P 500 ended with a performance of -0.7%, which is surprising since many blue chip companies were down between -10% & -20% for the year. If you did nothing but look at the index, you would have missed the large dislocation of the index performance and the performance of the underlying stocks.

The risk you should consider this year is contagion. This is the risk of assets selling off because other assets are selling off, having very little to do with underlying fundamentals. For example, if the high yield bond market continues to sell off or worse yet, crashes, then the investment grade corporate bond market may also sell off. This in turn could lead to a sell off in equities and other assets. The spread of this contagion is not knowable, but you should be aware of this risk.

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Inflation Monitor – December 2015


Inflation Monitor Summary – Composite Ranking

Inflation Monitor Summary December 2015

 

* The Inflation Equilibrium is a quick summary for the whole data series of the inflation monitor. If you don’t like statistics, this is the chart for you.


 

Inflation Monitor – December 2015 – Introduction

This is the last issue of 2015. I hope you are enjoying the holidays and getting ready to bring in the new year. While this is a joyous time of the year. It should be used to reflect on the past year and what surprises are to come in the next 12 months. While no one can know the future, we can look for signs that things are not quite right. These are what I would call new potential risks to the equilibrium of the global financial markets.

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Inflation Monitor – November 2015


Inflation Monitor Summary – Composite Ranking

inflation monitor november 2015 summary

* The Inflation Equilibrium is a quick summary for the whole data series of the inflation monitor. If you don’t like statistics, this is the chart for you.


 

Inflation Monitor – November 2015 – Introduction

Looking at the past year I have to give a hearty laugh at the people to claim that the US Dollar is losing value. I wonder if these people own a computer, or have bothered to look at the US Dollar chart. It is included below along with the chart of gold (which is a long gold/short US Dollar trade) and a few other important  assets.

The important thing to know about the US Dollar is that putting a value to it is complicated because it is a fiat currency. This means there are more than one moving variables that need to be accounted for to determine whether it is rising or falling in value.

Take gold for example. Gold is a chunk of metal. People put a price on it of what they are willing to pay for it, but that is it. Its price is only determined what someone with a specific currency is willing to pay for it. Pricing an asset like gold is easy. Prior to being removed from the gold standard, the US Dollar was pegged to the price of gold, so there was an easy relationship which could be determined.

Now let’s take a look at the current version of the US Dollar in comparison. The US Dollar is a piece of paper, but also a whole lot more.

What is a US Dollar worth?

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Inflation Monitor – July 2015

Inflation Monitor Summary – Composite Ranking

Inflation Monitor Equilibrium

* The Inflation Equilibrium is a quick summary for the whole data series of the inflation monitor. If you don’t like statistics, this is the chart for you.


 

Inflation Monitor – July 2015 – Introduction

I hope you enjoyed your Independence Day. While Greece may not have the same appreciation of our holiday, they had one of their own… A Bank holiday. While the Greek Crisis in Europe seems to be solved??? The greater problem persists. The Greek people voted a resounding “NO” on the terms and the Greek PM moved forward with it anyway. Apparently Greece is happy kicking the can down the road, and I can’t blame them. They can never pay back the debt they owe and they are getting additional loans to pay the interest in the loans they already have. Europe seems to want to keep them in the EU for other reasons, but the end result is that they eventually will have to deal with this. I’m sure the politicians would rather this problem breaks loose on someone else’s watch. Everyone wins by prolonging this and everyone loses eventually by letting this happen.

The US Markets continue to be quiet with no additional QE and a prospective tightening in the near future. The economy continues to be strong, but some signs are cropping up in small amounts showing that caution is warranted. I have added a few charts to this issue that I found interesting this month.

I hope you enjoy this month’s Inflation Monitor – July 2015.

Kirk Chisholm

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Inflation Monitor – June 2015

Inflation Monitor Summary – Composite Ranking

Inflation Monitor Summary

 

* The Inflation Equilibrium is a quick summary for the whole data series of the inflation monitor. If you don’t like statistics, this is the chart for you.


 

Inflation Monitor – June 2015 – Introduction

It is officially summer and most markets are becoming more quiet. This is of course excluding the ongoing crisis in Greece. They must love the attention because they have been dragging out this “crisis” since 2011. Everyone involved in this mess (on both sides) has a reason to kick the can down the road forever, but forever will not last that long. Greece has call for a referendum vote from the people. We will find out what the people want next week.

While the US markets have been quite, there have been some disturbing signs cropping up in some of the economic indicators that we follow. These are: the velocity of money, PPI, and market cap to GDP. While many of the numbers listed above show deflation, these three are especially concerning. One interesting and potentially inflationary sign is a sharp pickup of the Baltic dry Index.

Enjoy this month’s Inflation Monitor – June 2015.

Kirk Chisholm

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Inflation Monitor – January 2015

 

inflation monitor
 

Inflation Monitor January 2015 – Introduction

I hope you had a pleasant holiday season. Now that the eggnog has run out (although probably more likely the rum), your trees and menorahs have been put away until next year, and you are getting back to work in this cold weather (what else is there to do when it is this cold except work). Lets see what the new year has brought for us as a present. In this month’s issue I will mainly be discussing oil prices and the US Dollar. The two areas which are generating the most interest.

To start the year I am going to play around with the format a bit to see what works best for people. In this months issue I am planning on breaking the bottom section of the Inflation Monitor into separate excerpts through out the month based on thoughts or ideas that I have had rather than wait until the end of the month. I will try to spread this out a bit more a see if this is a more desirable setup. While this might be a bit scatterbrained, it might get back to what this section was supposed to be: inflation monitor data, then some ideas, not a lengthy dissertation. This month was difficult to focus on much else since oil has played such a large part of the public’s interest. So we will focus more on oil and the US Dollar.

This is the first issue of the Innovative Advisory Group Inflation Monitor in 2015. We continue to receive a lot of positive feedback on our first few issues of the Inflation Monitor. As you will notice, we have taken some of this feedback and make some minor adjustments to our issues each month. As always, please contact me to send your feedback on how I can make this monthly Inflation Monitor a better tool or resource for you.

Thank you for reading and I hope you enjoy this month’s issue – Inflation Monitor January 2015.

Kirk Chisholm

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Inflation Monitor December 2014

inflation monitor
 

Inflation Monitor December 2014 – Introduction

This is the third issue of the Innovative Advisory Group Inflation Monitor. As you will notice, we have made some additional changes to the inflation monitor based on your feedback. Keep the feedback coming, since this will ultimately benefit you.  As always, please  contact me to send your feedback on how I can make this monthly Inflation monitor a better tool or resource for you.

This month I have added the following indicators:

  • US Population

In this month’s issue I will be discussing interest rates, gas prices, Gold and Silver, and more. Given the recent sell off in the price of oil and drop in interest rates, I think it would be a good time to discuss the effects on the US economy.

Thank you for reading and I hope you enjoy this month’s issue of the  Inflation Monitor.

Kirk Chisholm

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The Inflation and Deflation Balancing Act

inflation and deflation

“The test of a first-rate intelligence is the ability to hold two opposed ideas in mind at the same time and still retain the ability to function.” – F Scott Fitzgerald

The US has become a two choice society. We are consistently bombarded with the idea that our choices are binary. You have to vote republican or democrat, pro-life or pro-choice, for this idea or against it. Why is it that our choices in life are being limited to only two choices? Neither of which is chosen by us. Two positions in a debate are chosen and we have to choose from which one we like the best, or more commonly which one we dislike the least.

If you watch most news stations, they bring up two people to discuss an issue and usually both are extreme views, and you are supposed to pick a side. When did we become a binary choice society? During the next presidential election, we will have to choose between two people. I cannot remember the last time that I spoke to anyone who “liked” either choice. The conversation always ends up with the phrase, “yes I know he isn’t great… but he is certainly better than the other guy.” I’m willing to bet that the majority of people in the US (whether they know it or not) vote for the lesser of two evils. This means they are not voting for a candidate, they are voting against the other candidate. Really??? Our voting choices really come down to a dilemma? Our choices for the future of this country are based on who we can tolerate the most? It astounds me that more people don’t realize that they do this. But I digress,

The Inflation and Deflation Balance

The balance between inflation and deflation is much the same idea as many of our choices between two opposing ideas. It is a false dilemma. It is not a binary choice. Technically if you subscribe to the theory that inflation or deflation are measured by the CPI, then actually inflation and deflation would be measured by degrees rather than a binary choice. However, this assumes that the CPI method of measurement is an accurate measurement. What if inflation and deflation are not your only choices?

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Inflation Monitor November 2014

inflation monitor

Inflation Monitor November 2014 – Introduction

This is the second issue of the Innovative Advisory Group Inflation Monitor. We have received a lot of positive feedback on our first issue of that Inflation Monitor. As you will notice, we have taken some of this feedback and made some minor adjustments to our issue this month. As always, please contact me to send your feedback on how I can make this monthly Inflation monitor a better tool or resource for you.

This month I have added the following indicators:

  • The Rogers International Commodity Index®,
  • US 10 year TIPS,
  • Personal Expenditure Consumption Index,
  • Real median income to the list for reference.
  • US Debt as a percentage of GDP

In this month’s issue I will be discussing Japan, Deflation, US Oil production, Gold and Silver. Given the most recent US market sell off, I think it would be a good time to discuss the other side of inflation… Deflation.

Thank you for reading and I hope you enjoy this month’s issue – Inflation Monitor November 2014.

Kirk Chisholm

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