For years now analysts, and the media have been trying to convince everyone there is no inflation despite central banks’ massive quantitative easing programs. Of course this is ridiculous. They just choose to ignore where the inflation has manifested.
In 2008 inflation spiked in the commodity markets contributing to the severity of the last recession. One could even make a strong case inflation was the main cause of the recession. From 2011 until recently inflation has focused mostly in asset markets, especially the stock market. But it’s also appeared in healthcare, housing prices, insurance premiums, education, etc. So to claim there has been no inflation one has to willfully turn a blind eye to where the inflation is. We’ve actually had massive inflation, it’s just that it has run mostly in sectors that people don’t mind seeing inflation, namely the stock market. I think that is about to change.
As I’ve noted many times in the past, virtually every time the price of oil has spiked 100% or more in a year or less it has led to a global recession. The pressure that puts on the middle class is too extreme and discretionary spending grinds to a halt.
In previous articles and videos I have noted that the CRB is now forming a right translated multiyear cycle. Right translated multi-year cycles are indicative of bull markets. As you can see in the next chart all of the weekly indicators are turning up for the commodity complex. This is in stark contrast to the stock market, which I will show later in the report, that is starting to turn down. (Don’t get me wrong, I don’t think the stock market has topped yet, but we are in the final innings of this cyclical bull market.)
In fact the weekly charts are starting to look constructive in more than just the CRB. The momentum indicators are starting to turn up in the metals sector as well.
I might even go so far as to suggest that the bond vigilantes have finally woken up, and the breakout above 3% is a signal that inflation is finally going to start leaking into the commodity complex.
