The Market Is Voting Deflation
So far, the market is voting Deflation: higher bonds, higher dollar, weaker commodities and higher tech.
There is a potential for inflation to continue at higher rates, but we'll need to see some dramatic Congressional spending along with lots of bank lending. Neither of those developments are sure things as of today.
My personal view is that we won’t see a replay of 1970s-style inflation without the banks participating by increasing lending. The indications from the cash market https://www.linkedin.com/posts/robertlloydcfa_economics-markets-activity-6815295549076447232-CloW and bank lending market https://www.linkedin.com/posts/robertlloydcfa_economics-markets-activity-6809158538120744960-2MLY indicate that cash is getting parked at the Fed and broad bank lending trend is declining.
Robert Lloyd, CFA®
Chief Investment Officer
Lloyds Intrepid Wealth Management
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