| Yesterday, Bernanke spoke and the market yawned. Today, it is Draghi's turn, and the markets are selling off. The markets are showing us that deflation, not inflation, is still the prevailing trend. The mainstream continues to anticipate inflation justified by a loose monetary policy around the world, but we are not in the inflation camp, not yet anyways (we also are not mainstream, but that is another story). We prefer to use data and facts instead of speculation before forming an opinion and taking a position. Just Tuesday (7/31), the infamous Bill Gross released his “Cult Figures” with the conclusion that inflation is inevitable. That may or may not come to fruition, but he has said this for well over a year as he continues to short treasuries, much to his misfortune (and underperformance to his benchmarks). Yesterday (8/1) the market found out that Bernanke is not going to perform his next magic trick and QE3 is again put on hold, at least for another day. Why not just wait until we get real signs of inflation actually occurring before trying to pick a bottom? It would have saved a lot of money and heartache over the last few years. Below are some of the assets we are following to tell us if inflation is indeed right around the corner. Right now, that answer is no, but if it does occur, we will let price tell us instead of trying to guess. |
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