It Can't Happen Here, Can It?
The Solid Ground has long flagged the importance of falling inflation expectations when nominal interest rates are so low. The Fed cannot lower nominal rates, so its control over real rates of interest rests entirely with its ability to create actual inflation or manage inflation. After five and a half years of QE, inflation expectations are very near their lows. The chart below shows the break-even inflation rate of the five-year Treasury Inflation Protected security. Over the next five years investors now expect inflation to average just below 1.3%. This level of expected inflation has always previously been associated with a decline in US equity prices. There have been no exceptions until today..."
at http://www.zerohedge.com/news/2014-12-11/russell-napier-has-never-happened-without-drop-stock-prices
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