Inflation Regime Roadmap

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Comments of the Day


27 November 2020






Happy Thanksgiving! Comment of the Day will next be updated on Friday November 27th




Eoin Treacy’s view






Video commentary for November 25th 2020




Eoin Treacy’s view


A link to today’s video commentary is posted in the Subscriber’s Area.

Some of the topics discussed include: stock markets pause at round numbers, commodities remain firm, gold unchanged, bonds quiet, bitcoin pausing at 2017 peak.






Inflation Regime Roadmap


Thanks to a subscriber for this report from MAN Institute which may be of interest. Here is a section:


So there’s plenty to choose from here and all seven are useful to hold in mind when thinking about inflation. For our part, we think an acceleration in inflation could now be driven by a combination of the following – the first two being critical to our case:


Monetarism – expecting persistent deficit financing causing the money stock (M2) to rise relative to GDP. Some would classify this as demand-pull inflation;


Marxism – believing that it will be impossible to re-impose austerity after the Coronavirus is over and that voters will demand rising real wages to control income inequality. Some would classify this as cost-push inflation;


Neoclassical effects – the just in time, Asia-dominated global supply chain is likely to morph into a just in case, home-grown supply chain, causing a large-scale supply-side disruption;


Environmental effects – on the basis the one should never let a good crisis go to waste, it’s likely that G7 governments now use their new-found balance sheet room to accelerate the capital investment required to make their economies ecologically sustainable, which will have the side effect of raising fixed capital costs for private sector firms.




Eoin Treacy’s view


A link to today’s video commentary is posted in the Subscriber’s Area.

Some concern has been expressed this week at the impending expiry of the moratorium on evictions in the USA. This is a useful graphic.


It highlights the fact that many states have 30% delinquency on mortgages/rent. Interestingly, despite the widely held view that New York is on the cusp of being denuded of inhabitants, it is far from the worst in terms of delinquency.






Email of the day on The Chart Seminar and crypto-proxies


A very interesting commentary Eoin and thank you for all of your wisdom during these very trying times.


I have been watching crypto price action very carefully over the past 8 months and can fully comprehend the attractions as an alternative to fiat money and even gold.


However, like many investors I am very reluctant to purchase into crypto given the lack of regulation and the past references to the dark and unsavoury investors in Bitcoin and other cryptos. I think you expressed similar reservations in last Friday’s video or comment of the day.


I therefore decided upon another way to access this opportunity with improved protections and less smoke and mirrors. I purchased in May shares in Argo Blockchain (ARB.L) a quoted company on the London market. They are Bitcoin miners and as you would imagine there has been a strong correlation between their share price and the Bitcoin price action.


I am mindful to either take some profits or open a trading position if we see acceleration as part of a Santa Claus rally.


Finally, I hope that all the positive vaccination news will enable you to go back on the road with the Chart Seminar later in 2021. It’s been far too many years since I last attended in London and it will be a retirement present to myself to attend the first London date post Covid. Any up to date thoughts on the subject will be much appreciated.




Eoin Treacy’s view


Thank you for your kinds and this email which may be of interest to the Collective. I can confirm I looking forward to getting back on the road with the 52nd year of The Chart Seminar in 2021. To be on the safe side, it will probably be in the second half of the year.


I looked into holding online seminars but we did not have enough interest and the geographical dispersion of potential attendees made it unworkable. I have done online courses for select clients in the past. They do not offer even close to the same experience of working through problems in the market as a personal social setting.






Australia’s ‘Paradox of Thrift’ Risks Japan-Style Price Weakness


This article by Michael Heath for Bloomberg may be of interest to subscribers. Here is a section:


The irony of the parsimonious attitude toward pay is governments are throwing around billions of dollars in stimulus programs to support the economy and ratcheting up debt to an extent that makes such restraint almost irrelevant.


To make the new wage guidance more palatable, the federal government scrapped a 2% cap on wage gains, meaning that when businesses are boosting pay, public servants could also enjoy larger gains.


The danger is “a negative feedback loop becomes entrenched: low inflation outcomes lower the public’s inflation expectations, which in turn keeps inflation low,” said Sheard, who hails from Australia. “This in a nutshell is the story of Japan’s two-decade deflation.”




Eoin Treacy’s view


It beggars’ belief that public sector wages can increase faster than the private sectors but such is the power of unions. It seems people often ignore the fact that all public wages are ultimately paid from tax revenues. Everything possible should be done to celebrate the ingenuity of the private sector in order to boost profitability and widen the tax base.






Murderers, rapists got unemployment money in $1 billion California taxpayer fraud


This article from Mercury News may be of interest to subscribers. Here is a section:


So far, investigations have uncovered more than $400,000 in state benefits paid to death row inmates, and more than $140 million to other incarcerated people in California’s 38 prisons, according to Sacramento County District Attorney Anne Marie Schubert, who helped organize and lead a task force that uncovered the alleged dupery. In total, payments to those ineligible due to incarceration in prisons and jails could total nearly $1 billion, the prosecutors claim.


“The murderers and rapists and human traffickers should not be getting this money,” said Schubert. “It needs to stop.”


Kern County District Attorney Cynthia Zimmer, whose district has five prisons, the most of any county in California, called the scope of the scams shocking. Zimmer said her office had found about $16 million in allegedly fraudulent claims in her county alone.


“I’ve been a prosecutor for 36 years,” she said. “I have never seen fraud of this magnitude.”


Newsom on Tuesday announced a task force to tackle the problem.


“Unemployment fraud across local jails and state and federal prisons is absolutely unacceptable,” the governor said in a statement. “Earlier this year, I launched a strike team to expedite unemployment payments and to minimize abuse of the system. When we saw evidence of fraud in correctional facilities, I directed the Employment Development Department to review its practices and to take immediate actions to prevent fraud and to hold people accountable when fraud is not prevented.”




Eoin Treacy’s view


The USA is one of the most advanced countries in the world but investment in digitising the workings of the bureaucracy are absent. That’s a symptom of the polarisation in the political framework because neither side is willing to risk upsetting their base. The big question is how long that can go on given the size of deficits at both a federal and state level.






Eoin’s personal portfolio – new trading position opened October 21st




Eoin Treacy’s view


One of the most commonly asked questions by subscribers is how to find details of my open traders. In an effort to make it easier I will simply repost the latest summary daily until there is a change.

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