Phantom inflation will see a Fed do one and done in ’18

Since Jan. 26th more than 2,100 points have come off the Dow using Thurs. closing price. Dow futures suggest another 200 points at the open, but it’s early.

Across that same time frame, bitcoin has remained flat, down roughly $150, with much churn along the way.The yield on the 10-year Treasury was 2.66% on Jan.26th. Today it sits at 2.82, suggesting a general outflow bias from the bond pits. The US dollar index stood at 83.07 then and Friday morning it’s 83.67

The VIX index was 11.08 on the 26th, a soared in early 37 and sits at 24 this Friday morning.

Okay, so after amassing the above data, we still have a new Fed chief suggesting four rate hikes could be in order for this year. Despite this being March and we have not raised once yet.

The bugaboo on the Street and in the Fed says that inflation will rear its ugly head.

I’m old enough to know that inflation — in this environment — is like Bigfoot, I’ll believe it when I see it.

A decade of suppressed wages and household debt at historic highs tells me that the vaulted tax cut bonuses will not drive prices higher. Let’s face it, $1,000 does not go as far as it once did.

No, when all this shakes out and Fed chief Jay Powell is back in front of Congress in six months for his next take on the economy, he will have just one 0.25% rate hike under his belt.  He may also be the steward of a Dow 17K as the cost of capital will be prohibitive for stock buybacks.

Companies sitting on piles of cash from tax cuts and repatriation will use dividends as the order of the day to placate the investor class.

1 thought on “Phantom inflation will see a Fed do one and done in ’18

  1. Pingback: Phantom inflation will see a Fed do one and done in ’18 via /r/economy | Chet Wang

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