Inflation

BarroMetrics Views: Inflation 

Last night we saw one of the strongest rises in the CPI.  The stock market response was interesting – it chose to ignore the CPI. The pundits claimed it was just one month.

What is interesting for me is the last couple of reports of the Fred-AMB (Figure 1) had been flat i.e. the banks had not added or subtracted to their reserves at the St Louis Fed. So, my question is: did the falt reading augur the CPI rise or was this merely a coincidence?

Only time will answer that question. We have another AMB chart due out on June 20. I am eagerly awaiting it to see if there have been any change. A withdrawal of funds, (i.e. dip in the line) will bring us closer to the 3,800 B. This represents a 200B retracement from the high. In the past such a retracement has coincided (led?) to a sharp decline in the S&P – usually a 2-week to 6-week lead time.

 fred-amb-2014-06-20.png

FIGURE 1 FED-AMB 

2 thoughts on “Inflation”

  1. Hi Art

    Here you are.

    I have updated the chart to the most recent one, June 20. You see that the deposits again climbed.

Leave a Reply

Your email address will not be published. Required fields are marked *