The Fed won't be able to get inflation back to 2%
The Fed says they are trying hard to get inflation down however the commodities chart is sticking out it's tongue at the Fed.
Everyone on social media is screaming: The Fed is going to cause a major RECESSION; MAJOR RECESSION IS COMING!!!
Yet this chart is not screaming a major recession is coming (nor is it at all scared by the Central Banks "hawkish" talk)?
Let's look at past recessions (notated by the vertical red lines):
July 2008-Notice how commodities plummeted after the high was made...literally just straight down due to the nature of the recession. (During the recession commodities dropped about 57%)
March 2020-Commodities started to plummet in Jan 2020 and then plummeted hard during the short lived recession. (During the recession commodities dropped about 40%)
April 2001-Commodities started to weaken after double topping in 2000 but didn't come down too much during the recession. (During the recession commodities dropped about 27%)
What does this analysis tell me?
1. That we are not on the brink of a severe recession (like 2008). At this point; commodities are just in correction mode.
2. During a recession commodities plummet along with all the Indexes. Therefore, if this chart plummets so will just about every other chart.
4. We have a double breakout in commodities from the LT downtrend line & the LT horizontal trend line...any good pullbacks in commodities will be met with buyers hence inflation is NOT transitory and will remain sticky.
5. The soft landing narrative is a farce because you cannot get commodities to plummet unless you cause some sort of recession.
6. Commodities are saying the FED is actually not being hawkish enough.
7. The reason for inflation is very simple: money flowed into commodities. It all starts with raw materials.
So are the Central Banks around the world really trying to get inflation under control? Or are they just "talking the talk"?
At this point, the only way to get inflation down to 2% would be to cause a major recession but the rate hikes thus far have NOT scared the commodity chart into submission therefore Powell and all the other central bankers around the world are actually not doing enough at this point.
So.....Stagflation continues!
(BTW...the bond market has spoken: Cheap debt won't be making a comeback anytime soon!)
Everyone on social media is screaming: The Fed is going to cause a major RECESSION; MAJOR RECESSION IS COMING!!!
Yet this chart is not screaming a major recession is coming (nor is it at all scared by the Central Banks "hawkish" talk)?
Let's look at past recessions (notated by the vertical red lines):
July 2008-Notice how commodities plummeted after the high was made...literally just straight down due to the nature of the recession. (During the recession commodities dropped about 57%)
March 2020-Commodities started to plummet in Jan 2020 and then plummeted hard during the short lived recession. (During the recession commodities dropped about 40%)
April 2001-Commodities started to weaken after double topping in 2000 but didn't come down too much during the recession. (During the recession commodities dropped about 27%)
What does this analysis tell me?
1. That we are not on the brink of a severe recession (like 2008). At this point; commodities are just in correction mode.
2. During a recession commodities plummet along with all the Indexes. Therefore, if this chart plummets so will just about every other chart.
4. We have a double breakout in commodities from the LT downtrend line & the LT horizontal trend line...any good pullbacks in commodities will be met with buyers hence inflation is NOT transitory and will remain sticky.
5. The soft landing narrative is a farce because you cannot get commodities to plummet unless you cause some sort of recession.
6. Commodities are saying the FED is actually not being hawkish enough.
7. The reason for inflation is very simple: money flowed into commodities. It all starts with raw materials.
So are the Central Banks around the world really trying to get inflation under control? Or are they just "talking the talk"?
At this point, the only way to get inflation down to 2% would be to cause a major recession but the rate hikes thus far have NOT scared the commodity chart into submission therefore Powell and all the other central bankers around the world are actually not doing enough at this point.
So.....Stagflation continues!
(BTW...the bond market has spoken: Cheap debt won't be making a comeback anytime soon!)
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