Real Talk - Inflation updates

Watch the video on Youtube here: https://youtu.be/93JL4dsOrPg

Real Talk

Q: The daily headline in the media is “Inflation, Inflation, Inflation.”  Are there any signs of relief in sight?

1.)  Inflation Trends

a.    Supply Chain            

                                              i.     PMI

                                             ii.     Los Angeles -# of ships waiting

                                           iii.     Discounting by Majors – TGT, WMT, Nike

b.    Labor – Unemployment Rate

c.     Rents and Housing -  new multi-family starts (record)

Q: We hear the term “Stagflation” daily in the business media.  What does it mean and is it a threat?

d.    Stagflation- Inflation and Recession simultaneously

                                              i.     Inflation – as indicated, looks to have peaked

                                             ii.     Employment – still looks strong, but new layoff announcements are a concern

                                           iii.     Economy -  likely entering a recession if not already in one

Q: In the Great Recession, there was a financial crisis – the banks didn’t have enough cash or capital.  Is that a threat in today's world?

2.)  Bank Liquidity

a.    Money Center Banks

                                              i.     Reverse Repo usage – High and rising

                                             ii.     M2 Money – was high (enabled inflation) but now M2 growth is low and going down

b.    Shadow Banks

                                              i.     Private Equity marketing – Haven’t seen pricing resets yet, nor have yields gone up with interest rates

Q: Most other central banks are hiking interest rates.  The European Central Bank seems to be hesitating.  Is this a problem?

3.)  European Central Bank

a.    Current Rates

                                              i.     Inflation - high

                                             ii.     Rate hikes – hesitant because some countries are quite weak (Italy, Spain) while others are strong (Germany) – they need different policies (strong argument to go back to a central bank for each country and separ