In case you hadn’t noticed, the Fed is winning the “hearts and minds” on inflation, but losing in reality. Both CPI and PPI came in quite negative this week, but still the drum beating for buying gold, Bitcoins or just about anything to avoid holding cash goes on. Even though the price of gold is falling steadily, nearly 30% off its peak. Of course, Europe is wrestling with deflation as well. Abenomics, a last-ditch attempt to overwhelm deflation in Japan, is shaping up as a colossal failure as wages fall and growth lags.
Markets continue at extremes of fundamental wrong-headedness – stocks and high-yield bonds are overvalued, Treasury bonds are undervalued, inflation is feared… Insanity rules. Thanks, Ben.