rss
email
twitter
facebook

Monday, March 21, 2011

Inflation Outlook - March 21, 2011

Referencing from seeking alpha ---> http://seekingalpha.com/article/259082-top-5-graphs-of-the-week-global-inflation-focus?source=email_the_macro_view

Click through link above for more in-depth inflation commentary (along with monetary policy comments)


  • This is mainly commodity driven inflation (I agree)
  • Inflation is a greater central theme for central bankers (Duh)
  • Emerging Market (EM) inflation out-pacing developed economies inflation




As long as the US inflation lags its peers and EM inflation this should continue downside pressure on the dollar in the short term. The idea with EM central banks is that continued rate hikes should induce dollar selling UNLESS the higher rates are proving to being ineffective. If monetary policy in EMs proves to be ineffective this may induce dollar hoarding as we saw back in the summer of 2008. Even still, the dollar should still be pressured to the downside as long as the EU, the UK and Canada has stronger inflation expectations and hawkish monetary policy (the bigger weights in the dollar index). 

(IF)/Once this period of volatility can normalize these fundamentals should pull through. Core books  based on an inflation thesis should be in good shape longer out. 


Alexander Lê
Managing Partner
Analyze Capital
analyzecapital@gmail.com


1 comment:

  1. V. nice post sir.

    You said it eloquently here: '(IF)/Once this period of volatility can normalize these fundamentals should pull through.'

    ReplyDelete

 
Disclaimer
This Blog has been developed by Analyze Capital LLC, and as an independent organization we provide “AS IS” information without warranty. The ideas and opinions expressed by the contributers of this blog are personal and do not represent the actions or policies of Analyze Capital LLC. The contents of this blog do not intend to assert recommendations or to offer advice of any kind. We are not responsible the consequences, be they gains or losses, that may result from using any of the information from this blog.