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Thursday, May 13, 2021

Inflation Reality Bites The Biden Administration

* See UPDATES below...

Uh oh...Wednesday's U.S. CPI and Core CPI data shows that inflation has dramatically spiked -- to numbers not seen in multiple decades -- as shown on the graphs below.

"Inflation cycles feed on easy money; so the odds increase with each passing day that the new inflation cycle will not prove to be 'transitory.'"

 -- Source: ZeroHedge.com

Subsequently, North and South American markets got hammered, as shown below.

Source: StockQ.org

The SPX:VIX ratio closed below the 200-day MA, as shown on the following daily ratio chart.

Following their respective trendline breaks, all three technical indicators are signalling further weakness for the SPX. If the ratio fails to retake and hold above the 200 MA, then we should see the selling continue.

If the Biden administration is not worried about today's inflation numbers -- or much else it seems, as they lurch from one self-inflicted crisis to another -- plenty of economists, analysts, politicians, and military personnel are, as evident in the following articles.

No doubt, voters are, as well...so, I think the 2022 mid-term elections will produce a rude awakening for the President and his party. For one thing, I doubt whether inflation is "transitory," as is being pushed by the Fed. One way or another, everyone will pay higher prices and taxes, as a result...not just those making over $400,000, as promised by Mr. Biden.

Furthermore, Joe Biden has garnered many other strikes against his administration and its extreme far-left socialist policies and agenda...and it's only Month Five of his first term. There is much more damage he can inflict on the country, including completely destroying its national security and infrastructure matrix (including, and especially, cyberstructure), along with domestic and foreign peace in the process, unless someone slams the brakes on his out-of-control nonsensical executive actions and orders.


* UPDATE May 14...

May's U.S. Preliminary UoM Inflation Expectations data released today shows an extreme spike, well above that which was predicted, to levels seen in 2008 (leading up to the financial crisis and market crash). It's been rising steadily all year. Markets reacted by...continuing yesterday's turnaround rally...go figure. 😕

No doubt, we'll see more volatile, large-scale whip-saw swings in both directions in markets over the coming weeks, until trends become clearer or re-established, with conviction. Although, it may take another extreme spike in June's data before investors and traders make up their minds and that takes shape, sooner rather than later.

* UPDATE May 17...

Exerpt from ZeroHedge article...
...all that Biden's high-priced advisors need to do is to look at their own grocery and gas bills, etc. to get a grip on reality (aids looking through 'reams' of data...really???...more government waste! 🤦‍♀️).

* UPDATE May 19...

* UPDATE May 28...

Who wants to bet that now that consumer prices are sky-high (as confirmed in today's Core PCE Price Index), they will ever drop? "Greed is good!" 😕

* UPDATE June 4...

It looks like someone else thinks that inflation is here to stay...

* UPDATE June 8...

Inflation reality will take a bigger bite as the 2022 U.S. mid-term elections approach...and I doubt whether President Biden, Treasury Secretary Janet Yellen, and the Fed will be ready for the backlash when it does...

Source: ZeroHedge

Perhaps China is beginning to discover the effects of what could become a massive economic shock caused by unabating inflationary pressures...and may be the first of many countries to lose...

Source: ZeroHedge

Blame China...

* UPDATE June 9...

It's about to get rough...

Source: ZeroHedge

* UPDATE June 10...

Inflation data released today shows that it's still not 'transitory'...and still hotter than projected...

Source: ZeroHedge

Hook, line and 'stinker'...

Source: ZeroHedge

* UPDATE June 11...

Consumers are beginning to reject higher prices and tighten their purse strings on major goods (homes, cars, and major household items). 

'Stagflation looms' seems to be theme I'm hearing more about these days, which threatens the advancement of markets across the board. 

The post-pandemic 'recovery' may take years rather than months...causing increased volatility and directionless, large whipsaw swings in markets for some time.

Keep an eye on the SPX:VIX Ratio, as described in my post of June 11, for clues in this regard.

Source: ZeroHedge

More on inflation herehere, and here.