In the casino, where professional money managers get paid handsomely to play with other people's money, they are following the big man at the table as he keeps the pedal to the metal in an all or nothing bet that "surging food and energy prices won't accelerate US inflation."
Well thank you Bloomberg, this is accurate reporting. Surging food, energy and other commodity prices indeed will not accelerate US or global inflation. How can surging prices accelerate the thing that produced them in the first place? The inflation accelerator has been floored for years now, most intensely post-Armageddon '08.
Bernanke Bets Commodities Won't Fan Inflation Concern, I suppose because he intends to buy as many US Treasury bonds as necessary to keep said concern out of the psyche of the public? I don't know, but you don't get to be Fed chairman by being stupid, do you?
He must see the limits, the hard stops he is directly up against. Is the plan to just keep clicking his ruby slippers, repeating 'there's no place like home' and keep on gunning? It's really all in the way policy makers choose to gauge inflation. First, by incorrectly obsessing on prices and secondly, by culling out food and energy, as if the two most critical things on the planet don't matter so much. They should throw in copper as well, because it is inconveniently in all time highs blue sky territory.
The Fed “appears to be awaiting economic growth that is stronger than 3.5 percent, a more significant decline in unemployment and rising expectations for inflation,” Bob Doll, chief equity strategist for fundamental equities in New York at BlackRock Inc., said in a Jan. 31 note. “In our opinion, we are still quite a bit away from such an environment.”
Yes Bob, quite a bit indeed. As in, it ain't coming. Not with the effects of the ongoing inflation nipping at Big Ben's heels. What he needs now is, I hate to say it... a crash or a hard down of some kind. Something to allow, or even mandate him to continue on this path. Copper at $4.60/lb. is no such mandate.
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