Can An Idea Change The World?
The ECB (European Central Bank) shook the foundations of the financial world this morning. "Let's include housing inflation as part of our price measure!" Here is what will happen:
1. All measures of inflation will rise dramatically (again!).
2. Central banks will say their inflation objectives have been met.
3. They will cut off Quantitative Easing and raise interest rates.
What do you think that will do to markets? Just for fun, I have attached the last 30 years of Case-Shiller US Housing inflation. Enjoy!
But wait; this just keeps getting better. Now word is leaking out that the Bureau of Economic Analysis (BEA) is looking at the same thing here in the United States. How to problem of low inflation readings? Change the metric! https://www.zerohedge.com/markets/inflation-bombshell-market-based-pce-house-rent-measure-may-be-coming. There is no way this is a surprise to the Fed.
Robert Lloyd, CFA®
Chief Investment Officer
Lloyds Intrepid Wealth Management
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