Inflation? Nahhhh. Even cocaine prices are up 24% this year. (That is a pic of Raekwon from Wu-Tang, whose new album drops in December.) Barry Ritholtz over at The Big Picture talks a lot about the CPI and how it is a poor indicator of inflation.
Below are two charts. The blue line is the 12 month % change in cash gold (moved forward 14 months). The red line is the 12 month % change in CPI. The second chart is the first chart with a 40 month moving average. As you can see, gold is pretty good at predicting inflation. (Sorry for the lack of labels, CPU is tweaking out.) The data is from 1970 – present. The longer term view is that CPI is going higher.
A nod to Tom McClellan for the logic behind this chart. (He runs the McClellan Market Reports service.)
Speaking of blow (ups), here is a great article on the quant mess this Summer from the MIT Technology Review magazine. (Part 1 and Part 2.)
Whenever it’s a slow day, I like to check out the posts on Ed Seykota’s FAQ.
What is the Hinderburg Omen? Here is some more background. Does the fact that it has been firing off signals recently mean the end of this bull market is near?