It is increasingly looking like the Fed may be losing control to the other side; deflation. Create enough demand destruction from a policy mistake one way or another and the chances to create lasting damage increase exponentially. We’ve just seen commodities get crushed. Next 2 months could be brutal. Dr. Copper had already announced the bad news about 2 months ago. We are already technically in a recession and next GDP numbers should shore that up nicely. Growth is getting demolished.
Deflationary collapse? That might be worse than letting inflation run super hot. Very hard choices exist for central banks.
CPI numbers come out Friday which should express a normalization which is only annualized. I still think inflation will kick up even higher after a disinflationary event. If that is what we are seeing…..
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