2022/10/11 (086) Column

„Inflation Rise Since 2021
And The Inflation Of Inflation Rates 2022“


Since his inauguration, Sleepy Joe Biden and his US Democrats discredit their predecessor Donald J. Trump in the public media. No, they even try to stop him formally juristically to come back in the white house. The US Democrats’ strategy is simple and stupid; and ultimately cost the majority of the US population higher taxes and/or higher inflation. Because they declared a political war on their own domestic, profitable energy sector, after Trump managed to organize an export surplus for the first time in over 40 years. Who is surprised either that domestic US inflation has been rising and rising and rising since the inauguration. Even if many observers tactically fall for the strategy of distraction, of focusing on their predecessor. On the personality of Donald J. Trump and his us republicans, far away from sleepy joes and/or us democrats non competence. True to the motto; there could still be something immoral, even criminal, in Trump’s behavior. There are even said to be people who sit on their PCs, laptops, tablets, smartphones all day and do nothing all day but try to talk the former incumbent into a bad habit.

However, let us come to the expected Biden inflation, which is now having the effect of a self-inflicted cancer in the wallet. And all because Sleepy Joe not only underestimated, with his US Democrats, his nephew and/or predecessor Donald J. Trump, along with his us republicans. Rather, since his inauguration, he has tried to inquire historically, almost pastor-like, in a Caine revancism! If I may use this metaphor for once?

I don’t want to fool you, my lovely readers (all arounjd the globe); today’s rising inflation, due to green political paranoia about the future, sends our so-called west back in monetary terms to the 1950s or 1960s, if I’m not mistaken. I mean that exclusively in a monetary material context. And/or also in a green Soviet Union, green DDR, and/or also green Yugoslavia. Remember back than most of them, from former Soviet Union, from former GDR, and/or also from former yugoslavia, wanted to go to our so-called west. What a cultivated private economy that our political parents, our political grandparents, knew how to preserve. And since the end of the 2nd WW we have called capitalism, market economy, our so-called West! Where is this ghost that freedom-loving conservative spirit right here right now? Who embodies him if not you, yes exactly you, my dear reader! If not us, my faithful companion, no one is in favor of it! So let’s start with it right away in everyday life, outside of us wallstreet, outside of the financial market, in daily communication with our fellow human beings…
DEVISE 2 DAY 48h
– My Last Thoughts About Market Price Actions

This week, the Fed’s FOMC Minutes are overshadowed by the Bank of England, which is to be expected from central banks. Because the British central bank has to clean up politics. The new British Prime Minister is causing chaos on the financial markets with her budgetary policy. Which is jazzed up by most colleagues, in the newspapers (all around the world). Because Biden has been pursuing such a policy with his Democrats for 2 years. But the focus is on her, in London. However, that`s why the Fed is forced to raise interest rates due to high US inflation. But without publicly, openly criticizing US fiscal policy, let alone misguided economic policy – FED Boss Powell is far too polite for that.

Next to the Bank of England this week, all attention this week should be on Thursday’s US inflation numbers. A better-than-expected figure for the Sep`22 should then possibly counteract the bears’ pressure on the stock market. In addition, us producer prices on wednesday as well as us retail sales on friday should not be ignored either. So that we can get a better picture of the us economy over the weekend. UK unemployment rate on Tuesday is equally important. As well as inflation rate and trade balance from China, on Friday.

In OIL_BRENT, CBOT_MINI-YM1! & DXY we currently have open 4XSetUps. And EURUSD, GBPUSD, US10Y, XLF & MSFT we should watch mainly this week to get a feel for the financial market price action mainly. And/Or US Dollar, Euro, British Pound, US Basis Yield – even 10Y, US Bank Stocks, and/or US Techs.
DEVISE 2 DAY 48h
– Some Last News About Market Price Actions

Stocks in US Hit 22-month Low
US500 decreased to a 22-month low of 3569

Gold Recovers Slightly
Gold moved towards the $1,680/oz level, rebounding from an over one-week low of $1,660/oz hit earlier this session, as a weaker dollar and fading Treasury yields lent optimism to bulls. The non-yielding metal also enjoyed some safe-haven demand stemming from a deteriorating outlook for the global economy, with the IMF slashing its growth forecast for next year to2.7% amid mounting macro headwinds. Investors now look ahead to FOMC minutes on Wednesday, US inflation data on Thursday, and more appearances from Fed officials this week for more clues about the central bank’s rate path.

Dollar Pares Gains, Still Holds Close To 20-Year Highs
The dollar index paused a four-day rally to traded around 113 on Tuesday, after touching 113.5 early in the session, which was the highest level so far this month. Bond yields also retreated as traders take a wait-and-see approach ahead of FOMC minutes release tomorrow, the highly-anticipated CPI report Thursday and the kick-off of the earnings season which will provide more clarity on the Fed’s hawkish stance. Still, the greenback remains close to levels not seen since mid-2002 as the Fed has been raising rates aggressively and is expected to deliver another 75bps rate hike next month. At the same time, the US economy remains more robust and resilient than others, despite high inflation and increasing borrowing costs.

London Stocks Remain Under Heavy Selling Pressure
The FTSE 100 fell over 1% to end below the 7,000 level on Tuesday, tracking global weakness in equity markets as investors continue worrying about high inflation, rising borrowing costs, and a looming recession. Adding to the gloomy outlook, volatility in the gilts market forced the Bank of England to expand its emergency bond purchase program to include inflation-linked British government bonds to avoid a meltdown in the UK pensions sector. Meanwhile, London’s Heathrow airport has warned of slowing demand for flights over the winter, citing a rebound in Covid-19 and a rising cost of living. On the data front, new figures showed the unemployment rate fell to a new low since 1974, as those considered inactive increased while real wages continued to fall.

European Shares Decline For Fifth Session
Equities in Europe extended losses for a fifth consecutive session on Tuesday, with the DAX 40 and the STOXX 600 falling over 0.5% each, dragged again by defensive stocks such as utilities. Investors grew concerned about the impact of central banks’ aggressive tightening and stubbornly high inflation on the economy and earnings results. The International Monetary Fund has uncorked a sobering outlook on the global economy, cutting its growth forecast for next year to 2.7% on mounting macro headwinds. Meanwhile, the Bank of England expanded its emergency bond purchase program to include inflation-linked British government bonds to avoid a meltdown in the UK pensions sector.

Russian Stocks Rebound On Tuesday
The MOEX Russia closed 1.6% higher at 1,948 on Tuesday, erasing last session’s decline and rebounding slightly from the five-year low hit yesterday. After declining due to dividend gaps among commodity-backed giants yesterday, shares in all sectors closed in the green as heightened geopolitical tensions between Russia and Western states took the center stage,highlighting the disconnect between movements in Russian financial markets and the external background. Estimates from Bloomberg point to Russia already having lost 60% of its seaborne crude oil market in Europe ahead of the full embargo early next year, while Russian efforts to squeeze energy in the continent resulted in a virtual halt of natural gas supplies, seriously hurting the government’s revenues. Also, lower oil prices and export volumes pressured goods and services exports to fall in Q3. In the meantime, the Bank of Russia said that economic activity in the country slowed considerably in the end of September.

British Pound Remains Under Pressure
The GBPUSD continued to weaken to $1.1 in the second week of October, pressured by a stronger dollar and as investors shrugged off the latest intervention by BoE in the bond market. On Tuesday, central bank announced it will widen the scope of its daily gilt purchase operations to also include purchases of inflation-linked gilts. It follows an announcement on Monday of an increase in its long-dated, temporary, gilt market purchase program from a daily maximum limit of £5 billion to £10 billion for the rest of the week. The moves aim to support market functioning and contribute to an orderly end to its gilt purchase scheme on October 14th. The sterling has been under heavy selling pressure amid persistent concerns about the country’s economic outlook and a new tax cut plan announced last month, high inflation and doubts whether the BoE will be able to protect the economy and control inflation, at a time the Fed continues with its hawkish stance, sending the dollar higher.

Oil Drops For 2nd Session
WTI crude futures fell nearly 3% to below $89 per barrel on Tuesday, extending the decline from the one-month high of $93 with pressure from a continuously appreciating dollar and demand woes from major consumers. The greenback extended its rally on expectations that the US Federal Reserve will push ahead with its aggressive tightening plans, making dollar-priced oil more expensive for buyers holding other currencies.DEVISE 2 DAY 48h
– Where I Was Wrong, Where I Was Whright

The USD more or less (still) on the upside. Oil prices up nearly 20% last week. And the stock market with an historically high volatility, in which 1.000 points in the Dow Jones Industrial Average Index is no longer a headache price action. When was it even more exciting? When was it even more volatile? However, I could have been writing this for weeks!

For a year now, Nourinel Roubini has argued yet, that the increase in inflation would be persistent, and that its causes include not only bad policies but also negative supply shocks, and that central banks’ attempt to fight it would cause a hard economic landing. „When the recession comes“, he warned, „it will be severe and protracted, with widespread financial distress and debt crises. Notwithstanding their hawkish talk, central bankers, caught in a debt trap, may still wimp out and settle for above-target inflation. Any portfolio of risky equities and less risky fixed-income bonds will lose money on the bonds, owing to higher inflation and inflation expectations.“ In fact, we have had stagflation in the USA since the middle of last year 2021. Because since July 2021, inflation has been higher than GDP in the same month. According to the formula: Inflation Rate (since July 2021) – GDP Annual Growth Rate (of the same Quarter, even since 3Q2021) = Stagflation. And that`s why the US yield curve in Chicago has become more expensive since then, since the FED cannot and does not want to sit idly by and look at it. And that’s just as well. But that’s why it’s also bad for stock markets in New York. Whether it will be a “long, ugly recession and a correction in equities, by around 40%“, as Roubini feared, remains to be seen at this point. Which is why we should keep this fact in the back of our mind. Because it obviosusly hides a positive future economic perspective! No doubt…

Anyway!
The price of oil had not reckoned with such a strong recovery last week. So there is a real danger this week not only of losing our booking profits again, but possibly also closing our short 4XSetUp in the oil price. And/Or wait and see again. With respect to the USD, we pull the ripcord at 110 points on our 4Xsetup. And let’s go long above back again if it’s just a brief pullback. Because we have experienced a huge movement so far. That`s why aour new stop price at 110 points in the DXY, this week. Because as more I think about it, I get cold feet. I don’t know if this is my personal, individual, subjective fear of my own courage!? And/Or may be also veteran experience to take profits in time?!