It is still decreasing for now (Last update = March 28.) No inflation is building in.
http://research.stlouisfed.org/fred2/series/M2V
Pascal
Pascal: My storage rental unit is now $140 vs. $99 in 2005. The particular foods I buy are up even more, and one of my favorite grass-fed boutique dairies just closed his doors because he couldn't make a profit and he was already too expensive. Not to mention gas, health insurance, blah blah up sky high. I'm not sure there's no inflation, at least on this side of the pond. There's no housing inflation, no wage inflation, for sure. So I did a search, and this is what came up.
http://www.zerohedge.com/contributed...velocity-money
This is an interesting article about QE and the transmission mechanisms in general.
Nothing "tradable" here, but a well balanced opinion.
Pascal
http://coppolacomment.blogspot.com.a...on-and-qe.html
Last edited by Pascal; 05-30-2013 at 09:49 AM. Reason: Typos
This article in Der Spiegel discusses the possibility that German economic policy has recently undergone a significant change in approach to the EU. While I'm hesitant to ascribe any wholesale transformation based on one article, I will say that if there has been a serious shift toward growth policies by Germany, it may prove to be the final nail in the coffin for the secular bull market in bonds.
I am surprised others are not focusing on this possibility. Perhaps it's because there have been so many starts and stops in Europe, that it's difficult to know what to believe. I'm also curious what Pascal, Billy and others who actually live in Europe think.
http://www.spiegel.de/international/...-a-901946.html
The article may be what is behind this chart:Originally Posted by adam ali
Mike Scott
Cloverdale, CA
I believe that Germany cannot continue to say no to everybody else, but for election reasons has difficulties to openly say that it will fund more bailouts for the South. However, I am pretty sure that they will accept to fund a special package to help the younger generations. The package will however be small compared to the size of the problem and also compared to the size of past bailouts.
Hollande and Merkel will build a great communication campaign out of this special program for the younger generation.
This is however a distraction against the main issue, which is related to the potential disruption for bond holders and Governments when the interest rates will start rising.
Pascal
For sure, it will be tricky, but what is the alternative? Continue to focus on austerity leading to greater deficits leading to greater concerns about sovereigns' ability to repay? I think, counterintuitive to most, that a serious growth initiative out of Germany will actually be rather well received by bond markets. Interest rates may go up, but for positive reasons, i.e., growth has returned to the continent rather than negative ones, i.e., credit quality has deteriorated.
Markets are all about changes at the margin, and while Germany may delay a larger program until after the election, it does appear they are more willing to go along with the rest of Europe in trying to stimulate growth. As I said earlier, if true this is a seismic shift in the macro environment.
Why would "a serious growth initiative out of Germany" come out of Germany if not in the interest of Germany.
Such an initiative would come if it does not increase the German liability and helps Germany's economy.
If it goes out to help the South and increase German liabilities, then it will be perceived as throwing good money after bad. The South and especially Italy is not manageable right now. How will a "growth program" be managed in Italy, except if it is just free money available to be spent around?
Anyway, things move very slowly here and will be stopping soon for the holidays season. We need a very big crisis for people to meet and decide. So.... Interest rates will trigger a crisis!
Pascal
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